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The Pros And Cons Of Running A Family Business

2013 October 29
by Annie Wallace

family-businessRunning a family business can be a great opportunity for you and your family.  It can be a source of income as well as a legacy that you can pass on to future generations, but it does come with some risks as well as rewards.  While stability is a great reason to start a family business, as you can see in the example set by Alexander Bouri and Seament, it can also be a source of conflict within your business and family.

PRO: It Instills a Sense of Stability in Your Investors

Whether you’re a publicly traded Fortune 500 company or a small-town company, when investors are interested in funding your company, one of the things they’re usually looking for is a sense of stability.  When you have a clear line of succession, it can help put the investor’s mind at ease.

CON: Possible Source of Conflict Within Your Family

Having a family has its own set of conflicts, as does running a business.  Once you mix your home and professional life, it can sometimes be difficult to separate the two when you need to.  Family drama should be left at home, but if it follows you to work, it can start to affect you work relationships and can be a cause of stress for you throughout the day.

PRO: The Company Remains in the Family After You’re Gone

It may be a long time from now, but knowing that your business and family are in good hands after you’re gone can put your mind at ease; it can really help if you are able to combine the two worlds to make sure that both are looking out for each other.  For some, a company is a legacy or nest egg that they can pass down to their children.  One of the beneficial things about owning a business that can be passed off to the next generation is that you can usually be sure that the company will continue to operate in the way you had originally intended.

CON: A Possible Sense of Entitlement

If you remember back to The Godfather series, the Corleone family had three sons: Santino, Fredo, and Michael.  When both the father Vito and Santino died, the family business was left to Michael, the younger surviving brother.  This caused a riff between Fredo and the rest of the family.  Now, you may not be in the same sort of business, but this sort of drama happens all the time.  The problem is that, while there may be a seemingly obvious pecking order, you sometimes have to bypass that in favor of everyone’s best interests.  Your older son may feel like the company is rightfully his, but if he doesn’t show any skill (or interest) in the company you’re running, you may need to make a tough decision.

As you can see, there are plenty of perks and plenty of risks that go along with running a family business.  It’s up to you on whether it is something you prefer to accomplish.

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