Many people have a business at home, regardless of the size. However, some of them hesitate to call it a business. This may happen as they do not know the characteristics of family business. Lack of vision in business may lead to lack of interest or vision to grow it in a professional way. As a result, the business owners will be trapped in the effort of surviving the business every day. Meanwhile, envisioning the future will be hard. Shifting mindset on the business is critical if you want to grow it into a bigger one.
Characteristics of Family Business: Check The Following Aspects
Planning the business in an appropriate way is crucial. Therefore, make sure to check if your business meets the following characteristics of family business:
A business has certain definitions. As noted by Rochelle Carke on Forbes, family business refer to a company, in which majority of decision making is in the hand of the controlling family. They are usually the founder(2) or their descendants. Yes, element of control is one of the most notable characteristics of family business. A family business is mainly controlled by the family members.
If you are not still unsure about the definition, ask yourself another question: “how long do you plan to control the company?” An entrepreneur is differentiated from a family business based on the strategic mindset of the leader. If you plan to control, manage, and grow the business for short term and then exit in a clean and profitable way, then you are an entrepreneur. However, if you want to control the business for long term and want to maintain it even after you’re gone, then you are a family business owner.
Person You Trust the Most
You can identify one of the characteristics of family business by answering the question “Who do you rely on or trust the most in the business?” Do you rely heavily on family members to help in the business? If more than fifty percents of essential positions (such as daily operation, finance, accounting, advisors) and even employees are controlled by family members, then you should consider it a family member. However, if you select the managers or controlling figures in the business based on competence and professionalism, then you are an entrepreneur.
Characteristics of Family Business: Do They Matter?
As a pure entrepreneur, you should always focus on how to run the business into a successful one. However, family business needs another layer of preparation to make sure it lasts. The business owner needs to prepare his descendants or relatives to make sure the business is always successful for long time. When you are gone, one of your descendants automatically takes control of the business.
However, a family business owner may be faced with more challenges when preparing the relatives to continue the business. Family businesses are often associated with lack of discipline, relational complexities, informality, and other emotional aspects. When a business fails to manage those problems, the result is predictable, namely failure to survive. So, make sure to check out those characteristics of family business and plan it accordingly.