A family business is any type of business operation in which a group of relatives have controlling interest in the corporation. These types of businesses may range from a local mom and pop retail store to a commercial family farm and even to large corporations operating in multiple locations. In many instances, a family business is passed from one generation to the next, with children often training to enter the business at certain ages and take over various functions from their parents over time.
While there are exceptions, it is not unusual for the owners of a family business to be involved in the day-to-day operations of the company. The degree of involvement will depend on the actual roles that family members play within the operation as well as the total interest held by each member in the operation. Typically, family members will hold key roles in terms of being decision makers, augmenting their skills and talents by hiring employees that are capable of managing other essential tasks.
There are a number of benefits associated with the family business model. One has to do with providing a means for successive generations to earn a living. By creating a viable business that continues to be profitable from one generation to the next, offspring can choose to enter the business and establish careers without dealing with a great deal of competition. Since younger members are often mentored and groomed to enter the business once they complete their education, the transition is normally seamless for both those who are handing over responsibilities and those who are assuming them. This type of continuity is often reflected in the maintaining of an efficient company operation as well as allowing the business to consistently turn out goods and services that comply with the company’s quality standards.
One potential drawback in any family business operation is the potential to exclude valuable employees who are not family members. When this type of activity is common to the business model, there is often a regular turnover of non-family employees who find that they have limited potential for advancement and choose to seek opportunities with another employer. For this reason, the owners of a family business will often take steps to ensure that non-family employees are not marginalized in the culture of the business and seek to offer opportunities for growth and advancement based on expertise, experience, and merit.