When we hear family business traditionally, we think it’s business passed down from one generation to another, but it includes more than just that. More than 75% of the entrepreneurs in 48 economies across the world have family involvement in their businesses. With 111 publicly traded family-run companies valued at USD 839 billion, India is home to the third-largest number of family businesses across the world. When it says family business, it does not have to be just father to son; it can have involvement of siblings, cousins, and parents.
Types of Family Business Entrepreneurship:
- Family-Owned Business: This is the most dominant type of business, where ownership is typically handled by family members, who often serve as the majority of shareholders. Decisions related to the company are taken collectively by family members. An example of a family-owned business is Aditya Birla Group, founded by Seth Shiv Narayan Birla in 1857.
- Family-owned and Managed business: In this type of business, the handling of the ownership lies in the hands of a single family or person. The family members not only manage the business with active participation but also hold key leadership roles such as CEO, CFO, or other managerial positions. The management team usually includes family members. Some of the family-owned and managed businesses are Reliance, the TATA Group, etc.
- Family-owned and led company: In this approach, family members have a significant role in decision-making but do not involve themselves in day-to-day activities. JCB, Dyson, and Arcadia are leading family-owned and led companies. The family members influence the decisions taken in the company, which is felt through their leadership positions.
- Sole practitioner: Sometimes the business does not involve all the family members; instead, a single member runs the entire business. This individual manages the entire operation without the involvement of other family members.
- Associated partners: Family businesses collaborate with external partners in this kind of business. These partners contribute capital, expertise, or other resources to the business. The family retains ownership, but they benefit from the partnership. Microsoft, Intel, Coca-Cola, and McDonald’s set a very good example of associated partners.
Advantages of The Family Business:
- Commitment and unified leadership: In family business entrepreneurship, there’s often a sense of commitment and unity in the decisions and the company’s success. Family members stay together through thick and thin with active involvement, which leads to cohesive decision-making and strategic planning. Tata Group has set an excellent example in maintaining commitment and unified leadership. In the past 150 years of journey, members of the TATA family have had active involvement in the development of the company, which has helped Jameetji Tata to successfully launch the four ideas of establishing an iron and steel company, a hotel, a learning institute, and a hydro-electric plant. These ideas were successfully launched with the help of proper commitment and unified leadership.
- Stability: Family business has more stability as they focus more on long-term plans than short-term goals. Individuals in key roles tend to hold their positions for longer periods, which promotes stability in the company’s plans, and they prioritize resilience over immediate profits, which helps maintain constant stability.
- Trust and Authenticity: Since the business is handled within the family members trust is inherent in the family. Customers and employees often prefer family businesses as more authentic and trustworthy.
- Flexibility and versatility: Family businesses can easily adapt to changing circumstances. Because of this flexibility and willingness to give more than expected, it drives continued success, enticement, and a better understanding of the industry.
- Vision and long-term plan: Family-owned and run businesses focus more on long-term plans and strategies. The plans and strategies, once properly moulded and utilized, bring in stable growth to the organization. The pressure in a family business is not to make reports for every quarter, but to make decisions on the long-term goals
It’s important to know how to run the family business and plan the strategies to achieve success and make a greater contribution to the company’s future. To know more about how to run and take over the business, it’s important to have proper training. With the help of EIMR, you can learn a lot about the family business and how to maintain it. Join EIMR to learn more about family business entrepreneurship and achieve success.
