Family Business

Abstract:

Family business begins with the best intentions, as time goes by most family members learn to work together, although emotions from time to time may obstruct business decisions. Conflicts possibly will arise as the family members see different growth perspectives in the business. The daily operations are troubled by conflict; when relatives as coworkers cannot derive to an agreement.

Introduction and Problem Identification

An article from the Family Firm Institute states, “the greatest part of America’s wealth lies with family-owned businesses. Family firms comprise 80% to 90% of all business enterprises in North America." (J.H. Astrakhan and M.C. Shankar, "Family Businesses’ Contribution to the U.S. Economy: A Closer Look,” Family Business Review, and September 2003) What this means to the U.S. in the global perspective is that; an American family business contributes the majority of our global trade. We need to ensure the business culture and livelihood of our next generations and the business scenes that preserve our global trade powers. Obtaining key family values, from the examples of successful family entrepreneurship, can help to mold success for future family business.

Problems associated with managing a family-owned business

Studies have often shown that the family owned company is a major strength to the US economy and that 35 percent of those companies are in the leading fortune 500 list. Additionally, 50 percent of the U.S. gross domestic product, 60 percent of the country's employment, and 78 percent of all new job creation are generated by family businesses. A particularly large amount of America's prosperity can be attributed to the family-owned businesses. Family businesses consist of 80 to 90 percent of all business initiatives in the US. Small businesses, including many family firms, employ just over half of U.S. workers. Of 119.9 million non-farm private sector workers in 2006, small firms with fewer than 500 workers employed 60.2 million and large firms employed 59.7 million. Firms with fewer than 20 employees employed 21.6 million. Research shows that the family businesses is less likely to lay off employees regardless of financial performance. (Astrachan, J. H. and Shanker, M. C. 2003). Merely about 30% of family businesses survive into the second generation, and 12% are still sustainable into the third generations, plus only about 3% of all family businesses function into the fourth generations and beyond. The statistics expose a divide between the positive belief of today's family business owners and the reality of the substantial failure of the family companies to endure through the generations. It