The benefits and challenges of the family business component [Part 2]

The benefits and challenges of the family business...

Family members in business tend to demonstrate a greater sense of loyalty to each other and to the family business.

Partner, Global Head of Family Business

KPMG in France


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The benefits and challenges of the family business component

We recently looked at the causes of conflict in a family business. It's the interlocking nature of the family, the management, and the ownership of the business, and the way they interact that creates challenges, as well as unique opportunities within the family business.

So what are the benefits of being a family in business?

The benefits of the family business component

  1. Loyalty. Family members in business tend to demonstrate a greater sense of loyalty to each other and to the business. They also tend to be more committed to the business’ success and are more passionate about what the business stands for.
  2. Legacy. Families in business have an opportunity to create a lasting legacy that brings with it a sense of accomplishment and a strong sense of pride. Building on the efforts of their forefathers is a strong motivator for subsequent generations to become stewards of the family business and carry it to new heights in the name of the family.
  3. Labour pool. Multigenerational family businesses have access to a labour pool of family members who tend to be more loyal and committed to the business. Family members also tend to be more flexible in taking on different job functions and filling in for others.
  4. Key employees. Non-family employees appreciate and enjoy the unique work environment created by a family in business. The workplace tends to be less formal, and more hands-on and personable. Many key employees are treated like extended family and develop a strong bond with the family and business.
  5. Patience. Family businesses tend to be less driven by short-term financial results and are prepared to sacrifice short-term gains for the achievement of longer-term goals. This allows the business to align the deployment of resources with their strategic objectives. This long-term approach to investing is often referred to as “patient capital”.
  6. Values. Family business owners have the opportunity to teach and pass along their business and personal values to the next generation. Family members take pride in upholding these family values and build them into their day-to-day work and personal activities. The work culture is often a reflection of these family values.
  7. Career opportunities. Family business owners pride themselves on being able to provide family members with career opportunities in the business. The family business can be a great training ground for family members who aspire to pursue business careers elsewhere or within the family business. Family members are also afforded the opportunity to become managers and owners of the business.
  8. Relationships. The opportunity to work with family members to pursue common business goals can be a very rewarding experience. Years of bonding among family members can create a strong sense of belonging and interdependency. Effectively managing these relationships will go a long way in ensuring long-term family and business harmony.
  9. Financial rewards. Successful family businesses are able to provide financial rewards to both active and non-active family members. It is not uncommon for family businesses to reward family members more than they could obtain elsewhere. This is often viewed as one of the privileges of being family.
  10. Succession. As well as providing career opportunities, family businesses also favour passing the business along to the next generation of family members. The opportunity to be an owner of the business can be both motivating and rewarding.
  11. Community and philanthropy. Most family businesses are active in their communities. These communities benefit from both the family members as volunteers/supporters, and from the business providing financial support and employment opportunities. This commitment to the community tends to permeate the generations and provide family members with the opportunity and rewards that stem from this ongoing community support.

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