Essentials of a Successful Family Business (Research Paper Sample)

Family Business
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Family Business
A family business entails a business owned and operated by members of either one or several families. Some of the companies that are started as a family business end-up being publicly held. Non-family members normally operate many family businesses, but, predominantly, in smaller companies, the top positions are usually allocated to family members. Many people start up family businesses but fail within a short period. This is because they do not equip themselves with the necessary knowledge and paper work before commencing them (SCHWASS 2005). It is therefore imperative to conduct a thorough research and seek for advice before commencing any family business no matter how small it is. This paper explores what a family business entails.
Essentials of a successful family business
Factors, which lead to a successful family business, apply universally irrespective of size of the business or family members involved. Since in any business there should be only one boss, the same should happen to a family business. It is important that in a family business each members knows his/her obligations before the business starts. Each family member taking a role in the running of the business should be treated and compensated according to their performance in the business, just as it happens in publicly owned businesses.
Communication is the key to realization of successful business regardless of the people running the business. With family members, it can be to some extend challenging to communicate effectively in course of running the business. There is the tendency of people feeling that their loved ones know them well that they should not air out their feelings or expectations. However, for a family business to succeed, this assumptions should not be taken into consideration rather communication should take place in a clear and open way just as it is when working with a non-family business partners (ALDERSON 2011, p.76).
A family business needs to be formalized a much as possible, regardless of how strong one's relationship is. In running a business, it is normal to have disagreements with the core-workers. It is therefore essential to draw up a written agreement on how the business should be operated. Many entrepreneurs tend to be reluctant to take this initiative on the basis that a written agreement depicts lack of trust. However, a written document is the key to future success of any business and most important, it protects all the involved parties.
Every person desires to be a successful entrepreneur and take part in transforming the world to a better one. However, it is essential to always put family relationships before anything sort of business dealing. In formalizing business operations, it should be done while taking caution not to interfere with family relationships. It is heartbreaking to have reports of families torn apart because of business or financial disputes (FISHMAN 2009). A business can be restarting after it fails but to re-earn a relationship back, one has to pay a steep price. It is therefore necessary to avoid engaging family matters with business. Family issues should be left back at home.
Advantages of family businesses
Family businesses are not stressing to operate because they are not subject to pressures from shareholders to deliver quarterly results and pay dividends as it is in running big firms. Instead of paying out dividends, family businesses normally reinvests that money back to the business enhancing its growth.
Another advantage of running a family business is that they are easy to start and manage as compared to big firms. A person running a family business can detect any problem easily and initiate the necessary measures to evade it, without having to consult somebody else, as it is the case in companies (ALDERSON 2011, p.53). In addition, family businesses do not make their workforce redundant, and they do not usually make deep cuts during recession as it is with other types of businesses. As a result, their staff is more loyal as compared to other firms.
Drawbacks associated with family business
Despite the many benefits, which can be derived from family businesses, they are also associated with several drawbacks. For instance, when disagreements occur in the business,