5 Reasons Why Family Businesses are a Safer Bet
In recent years, many entrepreneurs have opted for starting their own businesses. While being an entrepreneur has a certain appeal, it comes with plenty of risks. Finding the perfect business model can be hard, let alone securing a good profit. So, what does make a business successful and worth your investment? This is where family businesses come in: they are a safer bet than startups or corporate companies. Here are five reasons why.
1. Shared Vision and Values
A family business is built on a foundation of shared vision and values. As the family members share a common background and a set of values, they are more likely to work towards the same goals and objectives. This shared goal helps to maintain a high level of motivation, as each member feels they are part of something bigger than themselves.
2. Reduced Turnover Rate
Family businesses tend to have lower turnover rates than regular businesses. A study conducted by the Family Business Institute found that family-owned businesses had a 7% lower turnover rate than non-family-owned companies. When family members are involved in a company, they are less likely to switch jobs as they are invested in the success of the business for the long term.
3. Strong Work Ethics
Family businesses tend to have a strong work ethic that is rooted in the family’s values. The family members understand the importance of hard work and are less likely to take shortcuts. A study conducted by PwC found that family businesses were more likely to reinvest their profits compared to non-family businesses. This reinvestment helps to fuel growth and keep the company financially stable.
4. Better Financial Performance
Family businesses tend to have better financial performance than non-family-owned businesses. Studies have shown that family businesses grow faster, generate more revenue, and are more profitable than non-family-owned businesses. As the family has a long-term vision for the business, they focus on strategies that generate sustainable growth.
5. Strong Trust and Loyalty
Trust and loyalty are two essential factors for any business. In a family business, trust and loyalty come naturally, as the family members have known each other for a long time. This trust and loyalty extend to customers, suppliers, and other stakeholders. Customers are more likely to do business with a family-owned company that they trust and are familiar with.
Conclusion
Starting and running a business can be challenging, especially if you are not an experienced entrepreneur. However, by choosing to invest in a family business, you are making a safer bet. Family businesses have a shared vision and values, reduced turnover rates, a strong work ethic, better financial performance, and strong trust and loyalty. These factors make family businesses a safer investment, both financially and emotionally. It is important to note that family businesses still face challenges, but they are often better equipped to handle them thanks to the close-knit relationships and shared values. So, if you are considering investing in a business, give a family business a chance.
