What Is a Family Business?

A family business is an enterprise in which capital or shares are mainly controlled by a family, and family members take the main leadership role of the business. Family business can be said to be an ancient and "transient" corporate organization.

Family business

A family business is an enterprise in which capital or shares are mainly controlled by a family, and family members take the main leadership role of the business. The family business is arguably an old and "transient"

Family business as the most universally significant in the world

1. Pure family business

This family-owned business is all from the boss to the manager to the employees. This kind of business is the purest family business. This family-owned business is generally very small and is often called a workshop.

2. Traditional family business

In traditional family-owned enterprises, the head of the family controls the power, and the key positions are basically assumed by family members. Outsiders can only be in non-essential positions.

3. Modern family business

Modern family-owned businesses are those in which the family holds ownership and the management is given to capable families or non-family members. In other words, the family holds ownership and equity, but the management right is not necessarily a family member. If the family member has the ability, the family member assumes the management responsibility; if the family member does not have the ability, it is given to the capable non-family member. This is a trend of modern family businesses, and many large international-level family businesses are basically following this path. The key to this path is that ownership and management rights must be separated.

Equity is fully concentrated in the hands of family members;

High concentration of power in the hands of family parents;

Family members hold important positions in the business;

Seven aunts and eight aunts make trouble with relatives;

The culture of chairman and general manager is corporate culture.

In short, home is business, and business is home; parental culture is business culture, and businesses have very distinctive personal characteristics.

Family business in all

Accompanied by these innate advantages is the particularity of the family business also leads to many inherent defects. These inherent defects are determined by the particularity of the family business, and they are born from this particularity. When family businesses need to grow bigger and stronger, these shortcomings become

Three major disadvantages of family businesses

There are many characteristics suitable for the survival of family businesses in the contemporary Chinese social and economic environment. Therefore, after nearly 20 years of rapid development, family-based management has become a common management model for 70% -80% private enterprises. From an international perspective, even in countries with a developed market economy, family businesses are the most common form of business, and many large companies that are known around the world still have a family color.

However, with the gradual development of the market economy system and the increasing globalization of the economy, pure family businesses only have limited survival and growth space in certain industries and certain scopes, and cannot become the real protagonists in market competition. As the market changes faster and more fiercely, the disadvantages of closed family management, which is entirely controlled by family members, become apparent.

Disadvantages I. Organizational obstacles

With the growth of family businesses, various types of interest groups will be formed within them. Due to the complex emotional relationships, leaders will be in a more complicated, even dilemma, when dealing with interest relationships. When relatives and family members of business leaders violate the system, it is difficult for managers to treat them the same as ordinary employees, which leaves hidden dangers to the internal management of the company.

Another common feature of family-owned companies is that they can share the same but not the same. In the early days of entrepreneurship, all the contradictions were covered by the passion of entrepreneurship. It often hinders the healthy growth of the organization. When opinions on honor, money, and rights diverge, brothers, fathers, and sons can all stare.

Disadvantage two, the limitation of human resources

Family-owned businesses seem to have a repulsive effect on foreign resources and dynamism. Especially in family-owned enterprises, it is difficult for outsiders to enjoy equity, and their mentality is always just a migrant worker and it is always difficult to integrate into the organization. In addition, because it is difficult to absorb external talents, higher-level development of the company will be limited. As President of New Hope Group

How to Manage Family Business

The first rule is that a family member cannot work in the company unless they are as capable as any non-family employee.

In order to maintain a balance between shareholders, some family business owners have to accept the family member of a lazy and mediocre second largest shareholder and arrange it in the company.

The Central United Front Work Department, the All-China Federation of Industry and Commerce, and the Chinese Civil (Private) Economic Research Association surveyed 2.03 million private business owners and published the Survey Report on Chinese Private Enterprises in 2003. After a five-year survey of 38,000 family businesses by relevant US agencies, the "2002 American Family Business Survey Report" was also released in the same year. The vast majority of private companies are family-owned, so the five similar aspects of the two reports are compared.

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