Over a period of time, the owner must reflect seriously on family talents and interests as they relate to the future of the firm. The plan for ownership can then be firmed up and modified as necessary when it is discussed with the children or other potential heirs. In discussing exit strategies in Chapter 13, we explain a variety of possible financial arrangement for the transfer of ownership.
In this chapter, we have tried to make one message very clear to prospective family business owners-families and businesses are interrelated. Trying to separate them would be like trying to unscramble eggs. The better you understand that going in, the more successful you can be in both areas of your life. Despite what many people believe, family members can work together not just successful, but also happily. Planning in advance can avoid a lot of problems.
1.Define the term family business.
- The word family refers to a group of people bound by a shared history and a commitment to share a future together while supporting the development and well-being of individual members.
- Most businesses in the United State and other countries with free enterprise economies are family-owned and controlled.
- A family business comprises the individual, the family, and the organization, yet each maintains its independent identity.
- A family business is an organizational entity in which either the individuals who established or acquired the firm or their descendants significantly influence the firm or their descendants significantly influence the strategic decisions and life course of the firm.
- The advantages of a family business include the guidance strong by the family business culture and values, the strong commitment of family members to the success of the firm, the competitive advantage derived from firm specific knowledge, a focus on long-term goals, a stable culture, the ability to make speedy decision based on trust, and reliability and pride in the firm’s reputation.
Disadvantages of a family business include resistance to change because of family influences and limited options for raising capital.
2.Expain the forces that, can keep a family business moving forward.
- The organizational culture of a family business is composed of the patterns of behavior and beliefs that emerge from the interaction of family and business.
-The founder often leaves a deep imprint on the culture of a family firm.
- The long-term survival of the business is dependent on the commitment of family members. They may be commitment to the family business for different reasons (emotional attachment, sense of obligation, calculated costs, and personal needs), and these reasons will likely determine the nature and strength of that commitment.
-Because commitments among individuals can vary, family unity becomes an important factor in moving the business forward.
3.Describe the complex roles and relationship involved in a family business.
-Couples known as co-preneurs join in business together, which can strengthen or weaken their relationship.
-A primary and sensitive relationship is that between founder and son or daughter
-Siblings and other relatives may similarly strengthen or weaken their working and personal relationship through a family business.
-In-laws play a crucial role in the family business, either as direct participants or as sideline observers.
- The role of the founder’s spouse is especially important, as he or she often serves as a mediator in family disputes and helps prepare the children for possible careers in the family business.