Despite the differences in size and scale of family businesses, they face many common issues.
Family businesses can be small, medium or large operations and are found in most industry sectors.
They are capable of performing particularly well, despite, in many cases, having limited access to growth capital.
Family businesses can achieve a higher return on assets than their non-family counterparts for the following reasons:
- They generally take a longer-term view of success, often being satisfied with returns generated over a relatively long time (called ‘patient capital’).
- Typically, they are flexible because they are run by a member of the family which owns them, rather than having a complex hierarchy of management.
- The association of the family with the business increases the accountability of those who control and manage the business, potentially leading to a stronger customer focus, a community reputation for integrity, and special care for employees.
Along with all the issues that face every business, family businesses present unique challenges which can include:
- selecting the right person to take over the business
- deciding which family members will take on which roles
- giving family members the scope to consider the business as a career option without creating an expectation that they must be involved
- being prepared to relinquish control of the business to the next generation
- committing profits to the development of the business versus paying dividends to shareholders, especially if some owners work in the business and some don’t
- managing disputes between family members
- distinguishing between family, business and ownership issues – and dealing with them appropriately.
This content was first published on www.business.tas.gov.au