The Family Business: Benefits and Challenges

by: Dave Robertson


Family businesses play a very significant role in our economy. They provide over 62% of our nation’s employment and 78% of all new job creation. Working in a family business when you aren’t part of the family can have benefits as well as challenges that make it quite different from working in a large corporation.

Family businesses play a very significant role in our economy. They provide over 62% of our nation’s employment and 78% of all new job creation. Working in a family business when you aren’t part of the family can have benefits as well as challenges that make it quite different from working in a large corporation.

One of the best programs that the UAFS Family Enterprise Center (FEC) provides to its members is the “Peer Groups”. These are small groups of up to ten representatives from local family businesses that meet monthly for lunch and confidential conversation. The FEC supports nine of these small groups with seven for family members leading their respective organizations and two groups especially for non-family managers working in family businesses.

Working with these groups over the last seven years I have heard from both sides about the benefits and challenges of family business. There are several recurring themes that are discussed in these groups that are interesting and enlightening that I would like to share with you in case you also lead, or work in, a family business.

Treated like family

Benefits of working in a family business primarily relate to being treated like family. Family business owners tend to be benevolent towards non-family employees in several ways including being more forgiving of employee shortcomings and understanding of employee needs as if the employee is more like an extended family member.

This occurs naturally when employees are there for the startup of a business and have shared experiences with the owners of both the lean times and the good times. These same employees may see the owner’s children being born and growing to maturity until they eventually join the family business.

The benefit to the employee comes in knowing that the family business is committed to long-term success and not just short-term profits. The family has roots in the community and will be more willing to circle the wagons and weather tough times together with long-term employees rather than folding up their tents and moving to greener pastures.

The downside to this can be the effects that an underproducing or perhaps even a toxic employee can have on the morale of the other employees when a benevolent employer keeps the employee and gives them multiple chances. Many times I have had family business owners report that they know they should have initiated a separation much earlier and how multiple employees come up to them afterward and report how happy they are that the ex-employee is gone. Regardless of this the owners generally report that they still feel like they could have or should have done more. Sound like family?

Contributions to success

During recent lunch meetings with my two non-family manager peer groups, I asked for their input on the benefits and challenges of working for a family business. They all agreed that the benefits included being treated like family but they also mentioned that they felt like they had a greater impact on the operations of their respective companies. They felt like their input and ideas received greater consideration and that their contributions directly affected the success of their employer leading to greater job satisfaction.

The challenges we discussed related primarily to the impact of working with family members and the way that family issues overlap into the business. This is the biggest challenge for a family business owner, to keep family and business separate as much as possible. Easier said than done in most cases but it is still worth attempting in order to maintain as much professionalism as possible.

Blood is thicker than water and sometimes positions of responsibility are assigned to family members for which they may not have the best experience or training to draw upon. When faced with having to work with or for someone that is not at the top of their game you may wind up either having to make up for their deficiencies and/or training them to help them grow into the position.

We encourage family business owners to let the next generation explore their ideas and to encourage creative thinking but sometimes this winds up being an extra burden for the non-family managers to help manage that learning situation or the results of a failed attempt. This can be difficult to participate in and it can be hard to convince other non-family co-workers to work with or support the next generation through the process leaving the burden on the key non-family manager.

Key non-family managers often become a bit of a buffer between the family and the employees. Employees will come to the non-family manager and ask, “Why in the heck did they do that!?” Often times it comes down to the simple explanation that this is a “family business” and sometimes the family considerations lead to decisions that employees just have to accept.

Plan for succession

One piece of advice for family business owners is to consider that when a clear ownership or leadership succession plan is not in place and communicated to the employees a situation of uncertainty can prevail and may cause key employees to seek other opportunities. Headhunters will call on key employees and if they happen to call when a situation is unclear, an otherwise loyal employee may check out the opportunity and make a move to another engagement that they see as more secure.

In working on this article I visited with my two non-family manager peer groups over the last couple of months and asked for their input. One of the final questions I posed to the two groups was, “Given all that we have talked about the challenges and benefits of working with a family business, would you say that it is, overall, better to work in a family business?” Without hesitation, in both groups, the immediate and mostly unanimous response was, “Absolutely!”

Dave Robertson is the Director of the Family Enterprise Center and the Center for Business & Professional Development at University of Arkansas–Fort Smith (UAFS). Contact Dave at for more information on the business outreach programs at UAFS.