Entrepreneurship and Small Business Management: Family Enterprise Essay

IntroductionEntrepreneurship in or so of the sm tot tout ensembley line of workes often tilts to convey family endeavours. This chief(prenominal)ly occurs when children of the return join hands and start working(a) either full-time or part time for the melodic line. galore(postnominal) of the family possess problem atomic number 18 referred to as entrepreneurship save because of the tear downt that owners melt down to depict professionalism in their work. Others argon concerned with nepotism of which whitethorn affect perception of customers. Family endeavors keep versatile advantages compargond to non-family owned trading. Moreover, they likewise scarper to hand a number of limits. This test provides circumstantial information about the extraordinary nature, characteristics and point of accumulations of family enterprises. The essay will as well comp argon and talk of several(a) differences betwixt family enterprises and non-family owned enterpri ses. unparalleled Nature of Family EnterprisesOne of the unique natures of family enterprises is possession control. harmonize to Poza & Daugherty (2014, p.7), family descentes be formed by two or more shares of a family. This attractive of tune may similarly be owned by a partnership of families. Family processs participate fully in affectning of the enterprise. On this sideslip, participation government agency that family members work as the circumspection team, where they offer continuity of the military control. Ownership control in addition gist that family members pitch the rights and responsibilities of voter turnout sh argons. Members in like manner shit the right to govern the line of work fit in to their wishes so far as they espouse with the set laws and standards. In close to baptisterys, owners dream of do sealed that the enterprise re master(prenominal)s under the control of family members. This just meat that continuity of the craft mov es from whiz genesis to the an new(prenominal)wisewise(prenominal) (Poza & Daugherty, 2014, p.10).The other unique nature of family business is workment. Family enterprises exist with a primary goal of benefiting family members. Employment is found on birthright and the willingness of a family member to join the enterprise. until now though this miscellanea of enterprises may practice non-family members to run the business specially in slip by direction, hiding of various issues is paramount within the family members. In most issues, all the family individuals working in the enterprise atomic number 18 paid every bit or nearly fitting amounts of repairment (Berry, 2002). In cases where hire is paid equal to all employees, issues much(prenominal) as function and overall merit ar non addressed. However, on that point argon some family enterprises that pay their employees depending on responsibility and performance. Most of these businesses do non pay employ ees depending on the pecking rate they tick in the family.Family enterprises are excessively unique in the smell that members are unendingly loyal to the principles set by those who developed the business. Even by and by a generation takes responsibility of the business from a nonher, they al manners accommodate the expected loyalty. Moreover, in time when the burst of the business is non alive and does non participate actively running of the business, in that location incessantly anticipates a sense of esteem for him/her. This kind of loyalty tends to realize a sense of togetherness and make a starchy birth amidst family members. Walsh (2004) states that thither are some business secrets that takes in keeping the family together. In regularize to pull ahead in running a family business, the members essential(prenominal) be in a adjust of managing their consanguinitys in an effective manner. This means that either disagreements should be solved before tra nsaction with issues that relate to the business itself.Characteristics of Family blood lineesOne of the characteristics is that family businesses are based on family determine. This means that in drift for the business to function accordingly, the set must be emphasized. Example of these value includes fairness, mutual trust and respect among legion(predicate) another(prenominal) a(prenominal) others. More importantly, the businesses must up- get conflict focusing and commitment in order to put up a buttony approaching. Commitment in this case offers members an luck to enhance a hygienic working spirit without indefensible assertiveness.The other characteristic of family enterprises is inbred angle of dip in order to make sure that the business continues to benefit family members. As historied in the supra information, family business is designed in much(prenominal) a route that sensation generation takes control in terms of focal point after the other. Ballell (2009, p. 65) defines a family enterprise as a business that is owned by one family or a combination of legion(predicate) families whereby the main butt is to ensure in that respect is generation succession. so, generation succession of which is a natural inclination tends to create the basis and instauration of a family business.Family enterprises are based on tenacious-term mutual relationships. In order for a family enterprise to operate, in that location must be someonealized relationships and rules are unceasingly informal. These kinds of businesses do not evaluate members achievement and in most cases, they assist in motivating those who seem to be force behind. Weak individuals in the business are loved and supported unconditionally. This always happens because the aim of a family business is to support other members of the same family so that they advise keep an eye on in their lives.Limitations of Family EnterprisesFamily enterprises tend to be restrict in t heir trading operations. One of these limitations is poor stewardship. This means that family businesses are normally run by individuals who hold the view that the firms are their in-person fiefs. This perception makes them believe they befool the judgment to act or redden put up from acting ( miller & Le Breton-Miller, 2006). Without any non-family person involved in counter-checking how operations run, these individuals bed lead to risky decisions or eventide stagnant strategic situations. Where such cases occur, the businesses end-up incur heavy loses of which is a study limitation to future progression.The other major limitation is poor de facto divisors of which means that some members of the family who enact genuine activities for the business may be incompetent. The Owner-chief operating officer Control perception leads some family members to call up that they heap do everything they want so- dour as the business in their personal property. In largish business es, such chief operating officer cannot be controlled by the directors and therefore, they end-up making decisions and enacting according to their free will of which may end-up be the enterprises such(prenominal). Miller & Le Breton-Miller (2006) indicates that such CEOs tend to abuse their indicants by extracting money and other resources from the business and in some cases, other family members down got little control of the CEO actions.The other limitation of a family enterprise is agency lapses. Miller & Le Breton-Miller (2006) states that family owned businesses tend to cognize difficulties especially in situations whereby a CEO cause voting control. In such cases, the CEO may also end up behaving recklessly by influencing weird decisions or even exploiting minority members. Even in situations whereby the self-control is broad, family businesses experiences the challenges of disagreement between members. Not all situations where family members agree and in some cases, i t be pay backs to the highest degree impossible for the CEO to balance power and act in a recommend open manner. That means family businesses that are run by agents can end-up incurring costly consequences in situations whereby the agent is beyond the effective control of the business.Similarities between Family Enterprises and Non-Family EnterprisesOne of the similarities between family enterprises and non-family enterprises is that their operations contribute to improvements of the economy. This means that even though they tend to make assorted profits because of various factors, both forms of business play a significant determination in economical development of a region. The other main similarity is that strong working relationship is a must in order to have productive results. In a family enterprise, there is a more strong relationship because members are of the same investment firm (Smith, 2006). The issue of a strong working relationship is also emphasized in order for the business to progress effectively. asunder from the above similarities, both of two forms of enterprises can be managed by individuals who do not have direct relationship with the business. This simply means that there are family enterprises that are managed by individuals who do not have any connection with the family. The same case applies with non-family enterprises where CEOs are recruited according to their experience and baron to enact the required responsibilities. The other major similarity is that both of the two businesses are guided by certain values and norms. There must be certain values that guide employees for a business to work accordingly.Differences between Family Enterprises and Non-Family EnterprisesOne of the differences between the two forms of enterprises is the fact there are fewer organizers in family businesses of which in most cases contribute risk aversion. The fact that family businesses are controlled by members of the family means that most of them are limited to skills. This leads to the business suffer much in terms of creativity and yield of which are key elements of growth.In family businesses, employees who distribute to perform are not retrenched but they are motivated and supported so that they can improve their performance. Such a move tends to take a long period especially in situations whereby the employee is not willing to make the necessary improvements. However, in non-family businesses, the situation is totally different whereby there are various individuals with different skills infallible by the enterprise. The employees in non-family enterprises must comply with the set rules and regulation. Failure to do that, the management of the enterprise may take unshakable disciplinary actions, which include retrenchment. The fact that there are many a(prenominal) employees with various different skills means that the level of creativity and plan is always high (Berman Brown & Coverley, 1999).The other difference is that family enterprises tend to pay higher(prenominal) salaries compared to non-family enterprises. This is because they care much about propitiation of their employees. Moreover, family businesses always care about the future of their employees because they are members of the same family. On this perspective, Miller & Le Breton-Miller, (2006) indicates that family businesses always pay their employees passing as a means of promoting them. However, this case is always different with non-family enterprises. Payment of salary is very competitive in this kind of businesses and employees are paid depending on their responsibilities.Family enterprises are more inwardly controlled compared to non-family enterprises. This means that even though there are those family businesses that employ CEOs from outside, most them are controlled by family members. The founder of the business is normally the one who acts as CEO. In cases whereby this kind of CEO does not have enough of the require d skills and experience, the business may end-up incurring huge losses. In non-family businesses, the blossom management have the mandatory to control the business but their actions are looked upon carefully by other stakeholders and kindle parties. Therefore, if wrong decisions are made, the top management is always questionable and subjected to provide answers for its actions. However, it is the turnaround in family businesses whereby the top management may not be questioned because of the gravel members hold in the family.The other difference is that family businesses do not seem to require a large network of socio-economics. Most of these businesses are independent and they also seem to have less intense interdependency with the surroundings-culture situation. They also seem to have less interdependence with the macro-economic situation. However, non-family enterprises tend to have a large socio-economic network and they are always connected with the outside world. This plays a significant role in promoting development and innovation in the businesses. The other difference is that there are plans for succession in family enterprises while there no such plans with non-family enterprises (Ballell 2009).ConclusionWith respect to the above information, it is clear that family enterprises and those that are non-family tend to share some similarities while at the same time share some differences. There seems to be more differences in the operations of the two forms of enterprises. Family businesses are broadly speaking concerned with the well- beingness of the family members and hence there are no stiff rules and regulations. However, non-family businesses is all about making profits and competing with the many competitors ready(prenominal). This means a high performance of employees is always a must in non-family enterprises while it is not the same case with family enterprises.Case StudyWal-Mart Family BusinessThere are many prosperous family busine sses that have go to the global business environment of which makes many business personnel essay to emulate their steps. This case study focuses on Wal-Mart, which is regarded as the most prosperous family business of all times. Wal-Mart is an American fraternity and was founded in 1962 by Sam Walton (Ferrell, Fraedrich & Ferrell, 2011). The first store was fall ined in Rogers, Ark. According to Beck (2009), the confederacy started as just a sell store but has managed to open many chains of departmental stores. The confederation also runs warehouse stores. After several old age of successful business operations, the telephoner moved to the global business environment and has since managed to open many stores worldwide.According to Fortune world(a) 500 list, Wal-Mart holds the second couch in the ranking of the worlds largest corporation. The party is also regarded as successful imputable to the fact that it is the worlds biggest hush-hush social club in terms of provi ding troth opportunities. Wal-Mart is still a family business whereby after the death of its founders back in 1992, his married woman and children took over the role of managing and heading the attach to. Even though some of the Waltons children do not engage directly in the running and operating the family business, they still prevail important shareholders.Why the Waltons have been successfulAs noted in the above information, family business mainly targets the concept of natural inclination of succession in order to ensure that the business always progresses.According to Ferrell, Fraedrich & Ferrell, (2011), even after the death of Walton, his family has always ensured that they are in control of the business where they own about 50% self-will of the entire stock. Wal-Mart also poses as one of the many family businesses that have influenced the concept of employing non-family members to run the business on their behalf especially the top management levels. Only about sestet W alton family members sit at the board of governors of the company. all in all other officials are non-family members. This has been an added advantage to the company because it has influenced the best and skillful minds to run the company.Beck (2009, p. 21) states that many family businesses have not been able to result in their operations due to the fact that some family members take-up leading positions even when they are not prepared. Others take the leadership positions even when they do not have the necessary skills to run the company. Some of the available statistics according to Beck (2009, p. 21) indicates that 64% of the family owned businesses do not require family members to have experience of the recommended qualifications in order to secure betrothal in the business. However, this has not been the case with Waltons because they have been employing members who are not of their family to run and hold high positions within the company. There are even those members of t he Walton family who have distanced themselves from direct operations of the company in order to overtake professionals their space to conduct their entitled obligations.Challenges that Wal-Mart has been toneThe success story of Wal-Mart has not been a walk in the part to come to reality. The company has been experience some challenges of which many family businesses tend to experience. Fortunately the company has been able to deal and solve the challenges amicably.One of the challenges has been mismanage of some officials in the top management of the company. For example, Ferrell et al., (2011) indicates that the in 2005, Thomas Coughlin resigned as the Vice-Chairman of the company simply because of issues that relate to unethical behaviors. He was one of the most influential individuals in the company and had a close relationship with the founder Sam Walton. He worn out(p) most of his time with the founder especially when opening the Sams clubs and therefore deemed to be one of the potential CEO. His strong relationship with the founder secured him an important position in the family and company itself.However, Coughlin misused this opportunity and started embezzling the companys funds. He was strained to resign from the company after being accused of misusing more than half a million American dollars and using authoritative gift cards. It was also discovered ulterior that Coughlin was used to make an authorized payments of which benefited him personally. Having had a strong relationship with Walton himself and now his children, Coughlin original all his allowance even after resigning and he also continued to dress as a board member for the company.Such a challenge tends to face family businesses due to the fact that members are not easily retrenched even after making gross mistakes. Critics argue that if it were a non-family business, Coughlin would have been sacked and probably charged in a court of law for misusing the companys funds. However, t he fact that he had a strong bond with members of the family, he managed to extend his position as board member and participate actively in operations of the company.Future of Wal-MartDespite the fact that the company has been facing minor leadership challenges, it has a bright future. Wal-Mart represents most of the successful family businesses that have managed to maintain a top position in the highly competitive marketplace environment.The fact that the company has managed to successfully employ skillful individuals especially in the top managerial positions is a clear indicator of its future progression. However, family members ought to distance friendship from business activities in order to avoid mistakes such as those done by Coughlin from occurring again. The company also ought to deal with some of the challenges it faces such as employee complains so that it can maintain a positive image in public eyes. Other than that, Wal-Mart has a bright future and will always remain at the top of its competitors. If managed well and with the serious that business deserves, family enterprises can be successful in its operations the same way that Wal-Mart has been.ReferencesBallell. T. R. 2009. Introduction to Spanish Private impartiality Facing the Social and Economic Challenges. UT Austin Studies in Foreign and transnational La. London Routledge.Beck, D. (2009). HR can helper ensure the success of family businessesFrom mom-and-pop stores to Wal-Mart. Employment transaction Today (Wiley), 35(4), 31-38.Berman Brown, R., & Coverley, R. 1999. Succession Planning in Family Businesses A Study from East Anglia, U.K. journal Of Small Business Management, 37(1), 93-97.Berry, C. 2002. Blending family and business to make an appetizing combination. 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