Small Businesses

A REPORT ON FAMILY OWNED BUSINESSES AND THEIR ACQUISITION BY EXTERNAL ENTREPRENUERS

INTRODUCTION

A family owned business is one which is owned , operated and controlled by members of a family . Non family members can be incorporated in the business as employees for instance laborers , accountants , lawyers secretaries , legal advisors etc but the management of the company is done by members of the family

The main aim of the business is to generate income , earn profits an increase wealth of owners . It is therefore of paramount importance that family members participate

in the running of the business

A family business can take many forms of business available in the economic environment . These include sole proprietorship , private limited companies , public limited companies etc . There should be emphasis though that the parties who are owners of the business are family members either nuclear or extended (Burkart et al , 2003

Review of Literature

There are privileges that come with operating a family business which include

Quick decision making as there are no parties with diverse interest who are part of the business and at the end of the day , all the parties have the same goal in regard to the business

Enjoyment of all the profits generated in the course of the business fiscal year 's operation . This is because the family is one unit and therefore the revenue is retained in the business

The owner is his own boss . This can be justified by the fact that each family member 's decision will represent the entire family 's decision and is answerable o another . In short there is no on in authority above the other as is evident in the non family business

Uplifting of family status . These businesses operate in the interest of the family and since the revenue collected goes to the family then the family is in a better position to upgrade it

On the other hand there are disadvantages of operating a family business and the most challenging is family conflict . The following can however qualify as the challenges faced by family owned businesses

The tendency of retaining a family member who is less competent and underperforming or even one who embezzles the business funds at the expense of the company

Lack of professionalism

No legal documentation - Most family owned businesses do not have legal books required by law since they do not take it seriously . Some of them are neither registered nor licensed especially those that do not have physical location and are operated within the house

Lack of written policies . - Most family owned businesses do not have written policies and ethics that guide the employees . This therefore means that each employee does whatever he wants at whatever time he deems convenient for him . Most businesses are operated informally

Lack of rules and regulations- These family run business do not have e guidelines that they can apply in circumstances of indiscipline of an employee

Role confusion is common in these businesses because roles and duties are...