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1IntroductionA family business refers to a company where the power to vote lies majorly in the hands of the controlling family i.e. in the hands of the founder and his successors who are supposed to handle the business in the future. In the case of family business, the tasks are managed and controlled bymore than one member of the same family. Owning a family business is a matter of concern more than a casual entrepreneur as it becomes very important to ensure that not only your company survives but also manage to do good for the sake of the future generations to come and take the hold. While some perceive it to be a home-based business, others relate it to the community business, and for the rest, it is a traditional business. Important resources that every family business must possess are- human resource- when the expertise of different family members are synchronized with clear division of labor, the probability of succeeding increases, social connections- networking capabilities and other external relationships must conform to the owner’s expertise set, financial resource- in the form of equity funds, as well as debt financing- acordial relationship between the investors as well as the owner, reduces the danger of liquidation,the family business’ owners should try to reduce the cost of security systems, policy manuals to the minimum possible level by creating trust with the employees.Accumulating an organizing these family resources and allocating them in a well-synchronized manner improves the business chances of success (Davis, P.,1983).Advantages of family business1)Stability- Family business has predetermined list of who all people of the family will be managing the business thus ensuring the long life of leadership that indeed lead to overallstability in the organization itself. Moreover, generally, leader stay intact to that position
2for years to come until any circumstances like illness or death or retirement force them tosurrender.2)Accountability- The families as the business owner show the highest dedication since they have to earn profits to be reinvested for the long-term growth of the business to be overtaken by their descendants. So many family members work harder to get certain other additional benefits also such as a better understanding of the industry, maintaining healthy consumer relationships and learning better marketing strategies. 3)Cost effectiveness- Unlike the outside workers, family members working in the company are willing to serve for their own expenses for durable success of their organization. This involves contributing for the capital investments or taking a pay cut. This is beneficial specifically during the hard times of the company i.e. during the economic challenging period and phases of the downturn. Disadvantages1)Disputes within family- Family conflict can happen at any time. Quarrels and fights over principle decision-making issues can be the most common reason for a conflict to get serious. Since family members are indulged, it becomes more difficult to solve the issues and lead to difficult conclusions of the split. 2)Informal Governance- Since most families run their business by themselves, there is usually very less interest in setting well-articulated code of conduct and norms to be followed by the employees. Governance problems relating to a hierarchy in the company and loose- form of rules can gravely affect the business as it expands and many inefficiencies may creep in (The Australian, 2017).
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