Advantages and disadvantages of family business

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The family business that decided to enter the Spanish market a few years ago is now positioned at the level of reference companies at a national level. Not all of them, of course, but this type of business currently makes up 57.1% of the GDP of the private sector , according to data from the Institute of Family Business .

Some success stories, such as the Inditex empire , have even managed to establish themselves as one of the most internationally recognised brands in the textile sector.

Taking into account the basic pillars that constitute this type of organization is essential to understand a large conglomerate that, according to a study by the IEF , "is consolidating itself, year after year, as an asset of great importance for the Spanish economy. It is estimated that 1.1 million companies are family-owned in Spain, 89% of the total number of companies ."

Do you want to know more about how it works? At Negocios we want to emphasize the chile number data importance of the family business as a business endowed with multiple qualities applicable to all entities.

Advantages and disadvantages of family business. You may also be interested in: " How to achieve business scalability "

Key elements that make up the family business The basic concept governing these types of institutions is based on the ownership of the company, which must be acquired 50% by one or more members of the family (regardless of whether or not they hold any job within it).

Likewise, management positions are usually occupied by one of the members who are related, taking into account the importance of the succession of the family business to a second generation.

Therefore, it is important to ensure that the acquisition of knowledge and skills is correct when a change of leadership arises . That is, regardless of this, the objective of survival over time is common in all these organizations; the business vision is shared by all its members.

Advantages of family business
As with any business organization, the search for economic profitability is the main reason for its creation and maintenance over time. The mission and strategic vision of the business must be very well defined and all members must be involved in them.

One of the main advantages of a family business is its own culture , in terms of feelings of unity and identification with the company's values, commitment and passion for achieving the common goal that drives them.

All of this constitutes an important incentive in terms of the capacity for growth and obtaining good results, since good relations with suppliers are guaranteed , as a consequence of the multiplicity of existing communication channels.



Disadvantages of family business
On the other hand, there are several disadvantages that affect this type of corporation both economically and emotionally. Firstly, the tendency towards self-financing is one of the basic pillars on which they are based, which leads to several problems of profitability and sustainability of the company in the long term.

On the other hand, caution should be exercised regarding the emergence of individual or personal interests that are not aligned with the corporate culture . This can lead to the loss of competitive advantage and numerous family conflicts.

Furthermore, the absence of qualified and competent successors in the workplace can be the source of numerous disputes when a change of management is made. It is therefore advisable to initiate the succession ten years in advance .



In conclusion
Knowing how to distinguish between the subsystems within the family business , in terms of the separation of strategic and operational functions from the emotional part, is essential. Therefore, the relationship between the two must be managed to ensure its success in all areas of the organization.