What Are the Pros and Cons of a Family-Owned Business?

A family-owned business is a business structure where most of the major decisions and operations of a business are controlled by the family members. Even though a family business can become successful, it can have some short comings too. Following are the pros and cons of a family owned business

Pros:

Better customer service: Due to better understanding of each-other and business operations (brought up within a business culture), family owned business can provide better customer service in some businesses such as hotels, restaurants etc.

Better tradition: Better traditions that flourished in a generation can be transferred to next generation of family owners.

Flexibility: Family businesses can provide greater flexibility to working parents, students or retirees who may need flexible schedule or, work part time, or, take break on some period of the year.

Trust: Being family members and having a shared value, family business personnels shows better trust in business secrets.

More dedication to business: Family members feel more dedication and responsibility to the business since they feel business activities as a part of family responsibilities.

Cons:

Managerial incompetence: Since most employees are hired through nepotism and get promotions through relation to family, they may lack proper qualifications for managerial positions.

Lacking experience: As most crucial positions are hired among the family members, they may lack the business experience that can be brought from external businesses.

Family and work dilemma: Due to business responsibilities within the family, members may work extended hours in business, which may reduce time for exclusive family-time.

Communication bottleneck: Some strong and important decisions cannot be made since some family members' interest may not be satisfied.

Retirement dilemma: Some family members can work beyond retirement age and be inefficient due to attachment with the business.

Family rivalry: There can be unhealthy competition among the progenies of the business owners for future top positions within the business.

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