How is My Family Business Different From a Public Company

Public companies and family business are very different from each other. Here are some of the strengths and weaknesses of owning a family business.

Weaknesses

1) Nepotism: There is an increase amount of nepotism in family businesses. Family businesses will often overlook employees with much higher credentials, in order to hire one of their relatives.

2) Different Goals: Often family business owners will donate to charities which they strongly believe in, using company money. Though it is a good thing to donate to charities and even using the company money is good, provided you have permission from the other owners, it can go too far. Sometimes small family business owners will donate more than their company can afford. In public companies, though this can still happen, it is rare that a public company will donate a significant amount of money to charity, as it feels pressure from its share holders.

3) Don't Care as Much About Profits: Most family businesses want to make their customers happy, and will often do this, in lew of increasing profits. Often they will try to make the customer too happy, by providing a better product, for a cheaper price than they can afford. Though this happens to public companies also, they usually have enough capital to absorb the shock of this, when it does happen.

4) Lower Profit Margins: Private small businesses have a tendency to have lower profit margins. Sometimes they are half or less of what the public or larger private companies are.

Strengths

1) Company Loyalty: It is rare in a small business to see employees leave, and go to a competitor. In public companies this happens all the time. Employees will leave to work for a competitor in order to get an increase in pay. Sometimes the employee may even create his or her own company to directly compete with his previous employers.

2) Greater Sacrifice: Often employees or owners of family businesses will work much longer hours for less pay, because they know that they are benefiting their family, and that they are helping out their future generations.

3) Teamwork: In family businesses employees don't have to question the motives of their coworkers. They know that their family members are looking for the companies best interest, and are very unlikely to try to cheat the company or hurt it in any way.

If you are a small business owner, you must learn your strengths, and learn to apply them, and you must learn your weaknesses and how to minimize them.

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