Family businesses range from small local stores to large corporations, often passed down from generation to generation. Family members typically fill key decision-making roles, but non-family employees should not be excluded. The model provides a means for later generations to establish a career and maintain business continuity.
A family business is any type of business operation in which a group of relatives has a controlling interest in the company. This type of business can range from a local mom and pop store to a commercial family farm and even large corporations that operate in multiple locations. In many cases, a family business is passed down from one generation to the next, with children often training to join the business at certain ages and taking over various functions from their parents over time.
While there are exceptions, it is not uncommon for family business owners to be involved in the day-to-day operations of the business. The degree of involvement will depend on the actual roles family members play in the operation, as well as the total interest each member has in the operation. Typically, family members will fill key decision-making roles, augmenting their skills and talents by hiring employees who can handle other essential tasks.
There are a number of benefits associated with the family business model. One has to do with providing a means for later generations to make a living. By creating a profitable business that continues to be profitable from one generation to the next, offspring can choose to enter the business and establish a career without facing great competition. Since younger members are often educated and prepared to enter the business upon completing their education, the transition is usually seamless for both those handing over responsibilities and those taking them on. This type of continuity is often reflected in maintaining an efficient business operation, as well as enabling the business to consistently deliver goods and services that meet the company’s quality standards.
A potential downside in any family business operation is the possibility of excluding valuable employees who are not family members. When this type of business is common to the business model, there is often a regular turnover of unfamiliar employees who find they have limited advancement potential and choose to seek opportunities with another employer. For this reason, family business owners will often take steps to ensure non-family employees are not marginalized in the company culture and seek to offer opportunities for growth and advancement based on skill, experience and merit.
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