There are numerous benefits of a family business. A business man or a woman grooms his children to succeed him or her. The reason is that there is no risk because the baton is handed over to the own blood. At the same time, the next generation also doesn’t have to find a new job. They just have to carry forward the business of their parents. The same process is repeated when the children of first generation have to pass on the business to the children of second generation. The process goes on generation after generation.
Every coin has two sides-positive and negative. If there are advantages then there are disadvantages too. The most important is the lack of professionalism. Since the business revolves around the family members, it is not essential that all will be the experts of the field. It is mainly valid for the industries which continuously change and evolve. Let’s take an example where a family managed business takes over a new company, run previously by professionals. Now, after owning this company, they will start replacing the professionals by their own family members. Once that happens, the business may run into trouble. Since the family members don’t have the expertise of the particular field, they are likely to make mistakes that could prove to be harmful to the company’s interest. Another disadvantage is the division of the business when there is more than one stake -holders of the business. Many a times, the division of the business has led to many disputes and law suits, again detrimental to the business.
Whether merit or demerit, the family managed business is a reality in our country’s business community. The transfer of the business to the safe hands of members within the family has been a long tradition. Even in the family managed business, some amount of professionalism always does well to the prospects of business.