What are the disadvantages of a family-run business? How to improve?

Family-run businesses have the following drawbacks and corresponding improvements:

1, classical family business. Classical family business ownership and operation rights are combined into one, a family has absolute control over the enterprise.

1.1 Unitary ownership structure, not conducive to the expansion of business scale. Highly centralized ownership and management of enterprises, determining the unitary nature of the main body of enterprise investment, making it difficult for enterprises to absorb external capital. Under the condition of limited resources within the family, it is difficult to meet the needs of enterprise expansion.

1.2 Unscientific decision-making, not conducive to the long-term survival of the enterprise. In most classical family enterprises, not only the major business decisions, but also the daily general management decisions are mostly made by the family business parents.

1.3 Unclear property rights. The phenomenon of ambiguous property rights in the family business is common, manifested in:! Unclear property rights between members within the family. Due to the weak concept of the rule of law and the influence of traditional Chinese culture "family and", "people and" concept, in the beginning of the creation of the enterprise is generally not divided into property rights, which sooner or later will bring a crisis to the development of the enterprise, and even make the enterprise to the end." The relationship between family enterprises and outside property rights is unclear. In order to obtain government support, some enterprises often rely on state-owned or collective enterprises, becoming "red hat" or "fake collective" enterprises. This will lead to property rights disputes and increase the operating costs of the enterprise.

1.4 Financial opacity and financing difficulties. Classical family enterprises have a natural "closed", it is difficult for outsiders to understand the financial situation of the enterprise, and dare not enter.

1.6 "Successor" problem. This has been plagued by countless family businesses, scholars studying the history of family business found that in the transfer of all the wealth to the next generation of the family business, at least 80% of the second generation in the demise of the family business, only 13% of the family business by the third generation to inheritance, as the so-called "one generation of entrepreneurship, two generations of guarding the business, the third generation of the failure of the business".

1.7 Other. The classical family business itself is a defective supervision system, the rules and regulations of the enterprise for the family members are virtually non-existent, so that the enterprise "parents" wandering between the affection and the system affects the work. In addition, most of the classical family enterprises have not formed a corporate culture, do not pay attention to social benefits, disguised exploitation of non-family members, and deterioration of labor relations.

2. Modern family business. The relative separation of ownership and operation of modern family enterprises, due to the introduction of external talent or absorb external investment, resulting in two situations: one is that a family still holds the controlling shares of the enterprise, commissioned by external experts or enterprises to operate the target enterprise, that is, "high ownership - - low control" mode. This is the "high ownership - low control" model. Under this model, the family has ultimate substantive control over the enterprise because it holds a controlling stake in the enterprise. The other is a family to absorb external investment, the loss of controlling shares, but still firmly in control of the enterprise, the formation of substantial control, that is, "low ownership - high control" mode.

2.1 Difficulty in forming corporate culture. Corporate culture is the concentrated manifestation of the spirit of all employees, the inner beliefs of the family business due to the influence of the family internal relations, corporate culture is inevitably with a strong family color, non-family members are difficult to integrate into it, the formation of a cohesive corporate culture.

2.2 Difficulty in establishing scientific constraints and incentives. Because of the difficulty of forming the culture of the family business, in the incentive system, can only be linked to money. Because the money is in the hands of the family, more awards less awards by the family said, so easy to go into whenever the mention of rewards will think of the money of the misunderstanding, and the family business incentives are subjective arbitrariness are larger, the enterprise does not pay attention to meet the other aspects of the needs of managers, and not be able to establish a scientific incentive system.

2.3 Employment mechanism is backward. Mainly manifested in: 1. Employing heavy loyalty and light talent. 2. Employing no long-term plan, generally do not train employees, do not visit the study, do not carry out practical investigation. 3. Highly skilled personnel and management personnel do not get the status and respect they deserve, they always have to work for others "working" feeling is not conducive to the full play of their own talent.

2.4 Parents' rights trap. It is generally difficult for a corporate "parent" to accept the reality of stepping down from the top of the corporate ladder, and thus is unwilling to make a premature transfer of power, so that a new, more capable person can take over from him. Enterprise "parents" also often can not deal with the relationship between decentralization and centralization, often resulting in "want to set can not, want to put intolerance" of the embarrassing situation.