The Nature and Problems of Family Businesses and How to Handle Them

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The world is filled with family-run businesses. These businesses are typically small and require the entire family to work together to keep the business running smoothly. Sometimes, though, family businesses can be large and even international.

Walmart is an example of a large, family-run business. The company was founded by Sam Walton in 1962 and is currently run by his son, Rob Walton. Walmart is the largest retailer globally, with over 11,000 stores in 27 countries.

There are many benefits to running a family business. One advantage is that families typically have a strong sense of loyalty, which can make for a very committed and hard-working team.

Another benefit is that families usually have a strong sense of trust, making it easier to delegate tasks and make decisions. Finally, running a family business can allow you to work closely with your loved ones, which can be an enriching experience.

However, the very nature of family businesses means that it’s bound to fail. But how come some of the biggest companies in the world are family-run? Here’s what you need to know about the nature of family businesses and how to handle them.

The Nature of Family Businesses

You need to know a few critical things about the nature of family businesses to understand why they’re so prone to failure.

Small Businesses Fail

First, family businesses tend to be small. Statistically, there are only a handful of prominent and successful family businesses worldwide. The vast majority of family businesses are small businesses, less likely to be successful than their larger counterparts. Considering that half of the small companies fail by their fifth year, it’s a miracle how a company like Walmart reached its peak.


Family businesses are also often based on nepotism. This means that decisions are often based on family relationships rather than merit. For example, in a large company, the most qualified person is typically given the position for the job. But in a family business, the job may go to the son or daughter of the boss instead of to the most qualified candidate.

Nepotism can lead to some severe problems. For example, if the person who gets the job is not qualified, it can lead to the company making bad decisions that can ultimately lead to its demise.


Another problem with nepotism is that it creates a sense of entitlement among family members. The feeling of entitlement can make family members lazy and unwilling to work hard. It can also lead to conflict within the family, further damaging the business.

Lack of Professionalism

Another critical thing about family businesses is that they often lack professionalism. This is because family members may not have the necessary qualifications or experience to run the business.

For example, a family member may be given the job of managing the finances even though they have no experience in accounting or financial management. This can lead to the company making bad decisions that can ultimately damage the business.

Scared child due to parents fighting

Broken Families

Lastly, family dynamics often change. Separation is a common issue in family businesses. Once it happens, it can break a family apart. It can also be very costly. If both partners can’t bear to work together, it’s often better to sell the business and move on.

How to Handle Family Businesses

If you’re thinking of starting or are already running a family business, there are a few things that you can do to increase your chances of success.

Get Professional Help

Walmart didn’t become a multi-billion company through family initiatives alone. It hired professional help. The same is true for other large family businesses. Hiring professional help can give you the edge you need to succeed.

Consultations can be expensive, but they’re worth it if you have a better chance of success. You can also get help from business books and online resources.

Be Willing to Change

The world is constantly changing, and businesses need to change with it. If you’re unwilling to adapt, your business will eventually become outdated and fail. To avoid this, always be on the lookout for new opportunities and be willing to take risks.

Focus on the Future

It’s essential to have a long-term vision for your business. It will help you make decisions in the best interest of the company rather than decisions based on short-term gains.

By following these tips, you can increase your chances of success. But even if you do everything right, there’s no guarantee that your family business will be a success. Ultimately, it all comes down to luck.

However, the odds are stacked against you. So, if you’re thinking of starting a family business, make sure that you’re prepared for the challenges that you’ll face. By the end of the day, it might be better to sell the business than having a broken family.

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