What are the advantages/disadvantages of working in a family business company?

dis adv.:-

no system

no management

fake work

owner didn't expert for work

adv.:-

sometimes u face a good owner and family

Advantages:

1. Trust

2. Less pressure

3. Flexible working hours

Disadvantages:

1. Personal problems

2. Incompetency

3. Less rules

4. Conflicts

Thanks for the invitation

Good question

For the advantages the  most important features that you will work in your

own company, your own business & you are mostly  the director of yourself .

 For the disadvantages , I think it will be stationed in the family

problems with relatives in management decisions for this work

so that everyone will work to prove his views and decisions of

administrative & physical differences between the partners may occur.

Main advantage, is that you usually feel free to take initiatives and be creative. In addition to having a more social environment

The main disadvantage is that you usually don´t know who is the boss, or you may feel you have many bosses.

• Mixed interests

In a family business, there is a risk that your family interests would be mixed with the corporate interest. Misunderstandings at home could also be brought to the office and the family expenses could be deducted from the business. However, some businessmen have solved the problem. Take it from Abdulrahman Al Zamil, chairman of Al Zamil Group. He supports transparency and even came up with documents to separate the interests of family and business.

• Poor performance

One truth about running a family business is that some of the family members might become too comfortable, knowing that they are in the business with the people closest to them. The result of this nonchalant attitude is poor performance, lack of formal planning and budgeting.

• Management with Sentiments

Family businesses also tend to appoint family members even if they lack training or experience. The head of the family wants to turn over the business to his first son or favorite child, even if such a person is not competent. Take for instance the chairman of Kikkoman Corporation, Yuzaburo Mogi, he went to Columbia University to get a degree so as to avoid ruining the business.

He is even the first Japanese to get an MBA from the said university. To further curtail the risk of ruining the family business is to take a cue from Mayer Amschel Rothschild, who delegated duties to his children according to their strengths, skills and weaknesses.

• Lack of openness

Another big disadvantage is that there is a temptation of keeping the business to the family. Most family businesses are tightly run by the family and very few outsiders. Now outsiders may work in the business but they won’t be in the top management or have decision making control.

Note that outsiders might have ideas and skills that can be useful to the family business but their ideas won’t be incorporated because they are outsiders. Take it from the Auchan Group which is owned primarily by the Mulliez family, while about12% of shares are owned by the employees.

• Rivalry between family members

Of course, not all family businesses succeed all the time. If it goes down, there is a risk that family members start to hate and blame each other. If the head of the family dies, there tend to be fighting and scrambling for the business assets among the kids. Even when the head of the family writes a will and split the assets accordingly, there still tend to be hate and rivalry.

• Lack of business continuity or successful succession

Most family businesses lack a continuity plan. The business is run entirely by the family that the head feels that the smooth operation of the business will continue even after his demise. Lack of a succession plan is the reason why most family businesses don’t survive after the death of the founder. The founder’s survivors usually lack the competence and passion to run the family business.

• Family members understand each other better

The biggest advantage of running a family business is the fact that family members go along well with each other. You can just consider how Guido and his brothers Paolo and Luca improved their father’s Barilla Group. They did not only make profits but also expanded internationally.

• The organizational structure is simple and effective

It is much easier to start a family business and manage it too. The reason is because the business hierarchy is very simple. Many of them even started with an owner, manager and staff like Mornflake Oats. One of the reason crime organizations have thrived over the century is because of the effectiveness of their management system, which is very simple, well organized and efficient.

• Family members are committed

The family owning and running a business is also much more committed, though in reality; they are usually committed to the family than the business. The reason I say this is because such commitment usually wanes when the founder or head dies. Many of them are like Bob Rich of the Rich Products.

Most of the individuals in a family business want to protect the family reputation. For instance, Rich worked hard to ensure that the business operates ethically. This even prevented him from expanding just to avoid government corruption or risking the safety of his employees.

• Most family members have a solid informal training

Most of the leaders of a family business are trained by the parents or grandparents. For example, Gareth Ackerman of Pick n Pay has been in different divisions of the company before becoming the chairman, replacing his father. This is why such business is likely to have similar leadership although some may opt to add something new to the system.

It' s too risky for the growth and development of the company in itself !

Big conflicts within the one family each one try to pull the most self profit  

regardless the overall company benefits.

I will go to another company rather than family business! For me family business is complicated and difficult to separate between professionalism with personal interest (feeling) and having lack of decision making. Except that you are the founder one or the family business had have health management that examined and supervised by public auditors.

Advantages and Disadvantages of the Family Business

There are benefits to a family business, but there are disadvantages that must be considered as well. Starting a family business is not for everyone.

Advantages

A family business offers the following advantages:

·        One of the popular misconceptions about family businesses is that they are unable to adapt easily to increasing competitiveness and technological progress. The reality is that family businesses frequently have the advantage of entrepreneurial spirit, flexibility, and opportunism. [10]

·        It is believed by some that family firms are “too soft” and rarely reach their potential. The reality is that family businesses actually outperform public companies. Oftentimes, the marketplace forces public companies to make short-term decisions, whereas a family business has the advantage of having more freedom to make its decisions. Family businesses can adapt to market fluctuations more easily because they can afford to be patient. They have common goals, shared values, and a commitment to brand building. [11]

·        Family-owned businesses are often seen as ideal because family members form a “grounded and loyal foundation” for the company, and family members tend to exhibit more dedication to their common goals. “Having a certain level of intimacy among the owners of a business can help bring about familiarity with the company and having family members around provides a built-in support system that should ensure teamwork and solidarity.” [12]

·        The culture of a family business is very different from that of a company you will find on Wall Street. “Family businesses frequently take a very long-term point of view. They’ll make investments that they don’t expect to pay off for5 or15 or25 years…Culture in a family business is more frequently based on very personal and emotional values. It’s stronger because there are deeper roots and closer connections to the history of the company.” [13]

·        Family businesses are becoming more and more attractive to undergraduate business students who face a bleak job and salary outlook for new grads. These undergrads are choosing to return to their family businesses directly after graduation instead of trying to find a job in corporate America or on Wall Street. [14]

·        There is a common misperception that family businesses are less professional and rigorous in their behavior because of the relational nature of the businesses. [15] However, like all other businesses, family businesses face global competition and rapidly changing markets. This creates more pressure on those who join to make sure that they produce. “This emphasis on professionalism has made family businesses both more daunting and more attractive—and has created new interest in them, from family members, outsiders, and business school students.” [16]

·        Many family-owned businesses tend to be stable and optimistic, even when economic times are uncertain. They seem to be better able to weather economic difficulties and stabilize the economy than their nonfamily counterparts. [17] However, this is a function of the industry and the size of the business.

·        In general, family businesses feel that they are stronger because family members are involved in their activities. Family owners believe that their family members can be trusted, will work harder, and care more. [18] This can help create competitive advantage in the marketplace.

·        Family businesses may be more open to flexible or part-time schedules or choosing your hours. This presents a very attractive work environment for people who need to tend to children, parents, or other family members in need. [19]

·        Family businesses tend to operate more ethically. In fact, many family businesses believe that their ethical standards are more stringent than those of their competitors. In addition, family businesses are often deeply embedded in their communities, and this proximity is seen as an important factor that increases the likelihood of ethical decision making and moral behavior. [20] As members of the local community, any ethical problems with a family business will be quickly visible.

·        Family businesses also exhibit more social responsibility than their competitors. This has been attributed to their concern about image and local reputation [21] as well as their closeness to the community.

·        Family businesses may incur lower costs because of the greater willingness of family members to make financial sacrifices for the sake of the business. Accepting lower pay than they would get elsewhere to help the business in the longer term or deferring wages in a cash-flow crisis are examples of family altruistic behavior. [22]

·        Family businesses, in general, have greater independence of action because they have less (or no) pressure from the stock market and less (or no) takeover risk. [23]

·        Family businesses tend to be more resilient in hard times because they are willing to plow profits back into the business. [24]

·        Family businesses are less bureaucratic and less impersonal, which allows for greater flexibility and quicker decision making. [25]

·        Family businesses offer the possibility of great financial success. [26] This can manifest itself in interesting ways. “As the family of a media conglomerate once mentioned, ‘The name I have has certainly helped me to get access to top executives of companies, persons who under other circumstances would have kept their doors shut.’” [27]

·        Family members have the chance to learn the business early. This extensive expertise can create an important competitive advantage. [28] “One executive recalled how as a child he would take long walks with his father, during which they would visit stores to look at competitor’s products. Afterwards, his father would ask him which products he liked most, and this would lead to lengthy arguments about each product’s quality. This man felt that the expertise he gained during those informal outings proved invaluable later in life.” [29]

Agree with excellent descriptions and answers by all experts.

Agree with Patel.

advantages :

• You're collaborating with people you trust and care about. This can be a very nurturing environment, and it can give all family members more self-confidence.

• The work environment may be more relaxed. For example, it may not be an issue if you occasionally arrive late or leave early, which it may be in a traditional corporate culture where 'flexi-working' isn't built into your contract.

• Family members usually understand that they're all in this together, and are working toward a common goal. They may be much more willing to make financial sacrifices for the company, if things get tough.

Disadvantages :

• Working with family members may sometimes lead to conflict. Because you know your colleagues so well, it's easy to think you know what they want, or how they're feeling. These emotional ties can cause problems in the workplace.

• Family members are often promoted even if they're not an ideal fit for a new position. This can lead to business problems, as well as angry and resentful non-family staff, who may have been denied the promotion.

• Personal issues are easily carried into the work environment, and work issues may be carried back into home life. This may lead to family problems that impact the company and the other workers.

• Because family members often have the same background and upbringing, the danger for group-think and resistance to change is very high, especially if an older family member is running the company.

• Family members may find it hard to take tough business decisions that will have a negative impact on another family member, or give them negative feedback about their performance when appropriate.