Family Business

What is Family Business?

Before answering the question "How to grow family businesses", it is necessary to explain what a family business is. A family business is a type of corporate business where family members are involved in the decision-making positions of the institution, family relations and commercial relations are intertwined. In other words; Organizations in which founders, partners, and shareholders belong to a particular family are called family businesses.

Manage your business by Prosoftly

You can use Prosoftly Business Management Software to manage your business more effectively.


90% of the companies in America are family businesses. Family businesses can be established in many ways. For example; There are family businesses established by two siblings, cousins, and relatives, as well as family businesses that have been passed on to the second, third, and subsequent generations. In order for a business to be a family business, there must be at least two family members in the establishment of that company.

One of the reasons why family businesses are so common today is the problem of not being able to trust anyone. When a company is newly created, most people want people they can trust around them, and they also hire relatives to work for it. Someone who wants to start a business starts to establish order by including family members in the business management, because both the money does not go out, and he knows his relatives and thinks that their dialogue can be healthier. Sometimes the situation can get out of control, and then the company may consist not only of senior management but also of relatives up to blue-collar employees. This can cause many problems with it.

There are 6 rules to manage and grow family businesses:

  1. Include Innovation
  2. Be independent of persons
  3. Split Business with Family
  4. Invest in the Future
  5. Work Patiently
  6. Create Value For Customers

How to Grow Family Businesses?

There are many ways family businesses can grow. These may vary depending on institutions and individuals. The problems of each institution and person may be different, but the reasons for not growing are often common. Here are 6 key aspects that answer the question "How to Grow Family Businesses";

1- Include Innovation

While establishing every company, the foundations are laid by spending effort, time, motivation, and many different things. Certain successes and respectability are achieved by providing services that are suitable for the conditions of the current situation and that are in response to the demands of the market. Along with this, the way of doing business is settled in family companies and by transitioning to the safe area, "We have been doing this for years and earning it. It is called. There is something that is not taken into account; success cannot be achieved only with the way of doing business. Success is not a victory brought by one method. The current success of the company depends not only on the way it does business but also on the market, economy, and luck of the moment. Methods that were made 30 years ago and were successful may not work today. This has nothing to do with the way the company does business, it has to do with today's conditions and the direction in the market is evolving. In our age, today's method can be outdated tomorrow. For this reason, the first rule that long-established family companies should pay attention to is to be open to innovation.

The successes gained over the years can be lost in a short time if not open to today's innovations. Innovation is a phenomenon that people are insatiable for. A phone that came out today works one year later and can show the same performance, but people are turning to a new one because a higher model has been released. Is the phone replaced because the phone is broken, does not work or the system fails? No. People go to change because they like new and innovation.

If family businesses are open to innovation in their services without leaving the framework of their vision and missions, innovation opens new doors for them. In order to satisfy the existing customer and attract the attention of the potential customer, the concept of innovation should be adopted by family companies. In this way, the market is not left behind and a more solid company can be handed over to the next generation. Otherwise, if the innovation is rejected and the service provided continues without changing or improving the way of doing business, downsizing will be inevitable.

Innovation in family businesses is to keep up with the sector, market, and time. Family businesses are generally well-established and passed on to generations. For this reason, innovation should be accepted as an indispensable principle in order to create an institution that can be operated in the age of the next generation and actions should be taken in this way.


2- Be independent of persons

Family businesses need to be institutionalized by becoming independent from individuals. Being dependent on people means that in the absence of that person, all the work gets messed up, and this can cause great damage to the company. Considering that most of the employees working in family businesses are made up of relatives, it is inevitable that emotional actions will also come into play and things will become more difficult to get out of. For this reason, family businesses should be institutionalized and not dependent on individuals. For this, it is necessary to determine the operational processes in the company and to record the business forms in written, visual or video form. In this way, in the absence of the relevant person, the work in the company will not be interrupted or the adaptation time of the replacement person will be shortened.

Eliminating the loyalty to the person prevents the emotional decisions made and also prevents the working relatives from manipulating the company. Keeping every process under record and being accessible offers family businesses a transparent and streamlined process. This brings early diagnosis and fast action in possible risk situations.


3- Split Business with Family

In family businesses, when commercial relations and kinship relations are mixed, things become difficult to get out of and the company is shrinking. If there is any uncertainty, there is always chaos and therefore family companies should prepare a family constitution. The family constitution includes everything from the way the company does business, share transfers, salaries, and the positions that future generations will take. While creating this law, decisions should be taken in line with the results that all family members will agree and be happy with. A family member who is not satisfied with this law in the company may return in the future as two, three, four, or more, which can lead to even bigger problems.

In family businesses, not only employees but also non-working family members can be included in the work. The car someone buys can make someone else in the family nervous and say, "Why can't I buy it?" It can create problems with thoughts such as. In family businesses that consist of family members who see the right to make every request, a family constitution should be prepared and everyone should be relieved to turn the focus to work.

Along with the family constitution, question marks, financial concerns, future uncertainty, etc. situations become clear, each individual can be satisfied and everyone can focus on their work.

4- Invest in the Future

Some business owners start investing in themselves as soon as they are successful and start earning. For example; their cars, homes, furniture, etc. change their luxury. Every person wants to invest in himself/herself with the money he/she earns, especially if it is their own success and sweat, this is a natural reflex. When it becomes excessive and permanent in luxury, it starts to harm both themselves and the company. The subject family business creates even bigger problems because other working relatives can see this as a right in themselves and want to take action in this direction. In this inefficient chain shopping, a harmful company comes out.

If the earnings obtained in family businesses are invested in the business, success can be continued and growth can be achieved. This is the case with all jobs. The work is a dynamic structure that continues. It is not a structure that can be left once success is achieved and gain is achieved. The earned income cannot be regained unless it continues to work and invest. For this reason, company owners can ensure growth by investing in their company and the future of their company before investing in themselves.

5- Work Patiently

Success can be gained with a one-time study, but it is a phenomenon that can be continued with continuous work. A one-time success can create instant happiness for the family company, but if the work is not continued, the advantages of that success begin to disappear one by one. This can lead to the downsizing and destruction of the family business.

When we look at the stories of famous business people, there is only one common element; work. Working ensures growth by making the current situation sustainable. Family business owners must patiently work hard if they want to grow, prosper and gain a foothold in the market.

6- Create Value For Customers

The priority of companies should always be their customers and the value they create. Overtime spent, products produced, marketing stages of products, etc. the processes all serve a single purpose; reach the customer. Therefore, the service provided to the customer and customer satisfaction should be considered as the biggest output of a company. Customer satisfaction means the realization of the next purchase, the arrival of other customers, and the realization of growth. A satisfied customer creates potential customers by speaking of the company's service word of mouth. At this point, family businesses can grow in a healthy way if they provide maximum service to their new customers while maintaining product quality.

If the customer is not satisfied, the promised service is not provided and the price-performance ratios do not meet each other, this will cause the company to shrink. For this reason, it must be meticulously hard to add value to the customer. Of course, there may be unsatisfied customers. In this case, the responsibility should be taken to eliminate the dissatisfaction and trust should be established and that customer should be tried to be regained to the company. In this way, mutual communication is strengthened and the customer will feel valued and want to give a more moderate approach to the negative situation.

It is very important for family businesses to see their customers from the family. Every customer is special and every customer satisfaction brings another customer with it. If this chain is used in a positive way, growth can be achieved in the company.


Prosoftly is All in One Business Management Software. Prosoftly provides you to manage relationships with your customers, delegate tasks, and structure your organization schema. Try Prosoftly for free now!