A family business is an existing commercial enterprise in which multiple generations of a particular family, usually related by adoption or blood or marriage, have both the ability and the commitment to impact the direction of the enterprise and the determination to utilize that power to achieve distinctive individual goals. Often, a family business can be traced back through several generations to a single location, such as a ranch, farm, shop, or manufacturing plant. However, other family businesses may trace their origins to the original company where they were created. A family business can be a very valuable asset to any franchisee looking to expand their current business, or to start a new venture in a highly competitive field.
There are many reasons why family-owned businesses may be appealing to franchisees, including the obvious advantages of the ownership stake, financial resources, and experienced management teams. Additionally, these businesses tend to operate at a much lower cost than other similar ventures, such as retailing, which tends to draw more attention to quality and quantity of products rather than quality and volume of service. As one might expect, family-owned businesses may also have access to more personalized customer service options and marketing and advertising resources than other businesses.
However, there are some situations in which it may not be advantageous to establish a family business of one's own. One of these situations relates to the succession of one's employer, for whom one wants to act as a business owner or as a successor. In most industries, it is virtually impossible for one person to simply hire another to fill a role that is currently vacant. Instead, one must develop a written succession plan, which details succession expectations and responsibilities for each employee. If a succession plan is not in place, then an employer may choose to implement various methods of filling roles, including those described above and others. The end result could be a situation in which the business that one leaves behind may not survive long enough to fulfill its intended purpose.
Family businesses may also be more difficult to monitor than larger businesses. Since most family businesses operate in an informal manner and involve several family members, one will need to consider how to effectively keep tabs on daily operations and finances. This can include a consideration of short-term cash flow as well as long-term strategies to ensure profitability. A review of cash flow forecasts may be required, especially if there are substantial increases in expenses or if some family members are working from home or from a different location. The monitoring of expenses and of accounts receivable and accounts payables can help determine the profitability of family businesses. You'll want to check out what are the 5 behaviors for business improvement.
Another problem often associated with family-owned businesses may relate to the ownership structure itself. Often, the percentage of ownership is too low to make sense. Alternatively, the ownership may be too high, leaving too few family members or employees to properly run the business. If there is an inherent conflict between the wishes of family members, then ownership may need to be re-negotiated. A re-negotiation can also help ensure a greater sense of financial security for employees and other beneficiaries of family-owned businesses. Do check out positivelypeople.com/services/family-business for more insight into business management.
Finally, if a family business incorporates, it may provide opportunities to take control of important decisions regarding the company's growth and expansion. Family owned businesses can be a good choice for a first investment in your future, but they also require a great deal of responsibility. They can be difficult to run and manage and can introduce risks to all members of your family. That is why it is strongly recommended that a family business consultant be used in the initial formation of a family business. Family consultants can help you take control of your future and make the company a success. Get more small business advice here: https://youtu.be/0PbjZ01ObLA