Family businesses are pretty common in a country like the United States. Some of them can grow big. For example is Walmart, which has over half a trillion dollars in sales. The company is also fairly old which was founded in 1962. Another example of a family-run business is Ford, which has a net worth of $257 billion, making it one of the world’s largest automobile and family-run businesses.
Most businesses in the United States are family businesses. But they don’t start the same way traditional businesses do. Instead, a few key differences set them apart right from the beginning. Here are some of the most important ones.
The first key difference is that family businesses are often started with personal savings rather than venture capitalists or other investors. This is because most families don’t have the same kind of access to capital as larger businesses do.
The main problem with using personal savings for business is that getting enough money to start a company can be difficult. This is especially true if the company is a new or innovative idea.
Personal savings usually aren’t enough to cover the costs of starting a new business, like renting office space or hiring employees. However, if you consider that startup businesses typically cost around $180,000 to maintain for the first year, that’s probably your family’s entire life savings.
If you’re given a choice, get a loan. A loan is smarter than personal savings because it’s not your own money. This way, you won’t have to worry about depleting your family’s savings.
Another critical difference between family and traditional businesses is that families usually have more control over their businesses. It’s because they own 100% of the business, rather than just a tiny percentage.
It can be both a good and a bad thing. On the one hand, it gives families the freedom to make business decisions without getting approval from investors or shareholders. But on the other hand, it also means that families are fully responsible for the business, which can be a lot of pressure.
If the business fails, the family will lose everything they’ve put into it.
Family businesses are usually smaller than traditional businesses. This is because they’ve started with personal savings rather than from venture capitalists or other investors.
The average family business has about ten employees. This is compared to the average traditional business, which has more than that.
The downside of being a small business is that you’ll have to wear many hats and do many different jobs yourself. The upside is that you’ll have more control over the company and its direction.
Now that you know the critical differences between family and traditional businesses, you must set yourself up for success. So here are some essential things you need to have when starting a business.
A Reputable Lawyer
A lawyer can handle the paperwork of starting a business, but that’s not the only reason they’re there. For example, families tend to get into fights, and sometimes partners get into the idea of divorce. A reputable family lawyer can handle these kinds of situations. If a fight breaks out, they can mediate. They can negotiate a fair settlement if a divorce is supposed to happen. That’s why it’s essential to have a lawyer around.
A Good Bookkeeper
Another essential thing to have when starting a family business is a good bookkeeper. Family businesses can be hectic, and it’s easy to lose track of where the money is going. A bookkeeper can keep track of all the finances and make sure that everything is in order.
When looking for a bookkeeper, ensure they’re someone you can trust. This person will have access to all your financial information, so you need to be sure they’re honest and reliable. Make sure that they’re not part of the family, too.
A long-term commitment is the last thing you need for starting a family business. This means that you must be prepared to work in the business for many years. It’s not something that you can start and then stop when it gets too difficult.
You need to be in it for the long haul if you want your family business to succeed. Of course, you’ll have to make sacrifices, like giving up vacations and nights out with friends. But it will all be worth it when your business is successful.
Starting a family business is no easy task. It takes a lot of hard work and dedication to making it successful. But with the right tools, you can set yourself up for success. So make sure to have the right things in place before starting a family business to avoid all the troubles down the line.