Family companies come with their set of advantages and disadvantages. Efficient Management: The management of Joint Hindu Family Business is centralised in the hands of Karta of family. As a final note, most family businesses also consider both the older and younger market because the business is usually passed from the parents to the sons and daughters, thus the needs of both the older and younger individuals are usually considered when appropriate for business. It turns into a reality by starting a family business, more often than not. Family members are not typical workers; they will necessarily tighten the belt in order for the business to survive. Benefits Financial Security: If you properly structure the transfer for your business-owner clients, they can receive the amount of income they need or want during and after their exit, even if the business value does not justify that sum of money. In a family businesses, people typically understand that their individual actions do more than bring in a personal paycheck.
It is well- balanced and maintained in Joint Hindu Family Business. For more information, here are a few helpful sites:. Many robberies in day time take place because nobody presents in home, so if there would be a joint family, robbery cases will also decrease. Acquisition of raw material from abroad,which is cheaper in cost. Secondly,family members are also sensitive to one another's need. To further curtail the risk of ruining the family business is to take a cue from Mayer Amschel Rothschild, who delegated duties to his children according to their strengths, skills and weaknesses. There is also high reliance on business knowledge and skills acquired by the family Lee, 2004.
Transfer of technology,capital and entrepreneurship. This can be avoided if the family business is has a well structured policies and guidelines. Each and every person will share their opinions and take a good decision. This makes it easier to approve major projects, pursue certain contracts, and implement new ideas. And while the media plays up the idea of angel and venture investors backing startups, in actuality, they fund only 1 — 2% of the companies that pitch to them.
Disadvantages: There are often disputes between the management and when the management involves family members, solving these disputes are a huge challenge. I will list in 2 separate sections the pros and cons that I have found thus far. There may be problems as they are the part of our life as we face in day to day life but that cannot be made as a reason to blame and escape to nuclear life after enjoying all benefits. Employees may be motivated and attracted to the business by the inventive to become a partner Disadvantages of a partnership 1. Family quarrels could greatly affect the stand and performance of the company.
One of the reason crime organizations have thrived over the century is because of the effectiveness of their management system, which is very simple, well organized and efficient. So they tend to take a long-term view regarding their investments. It can be a great idea or a downright horrible idea. The inability to find a point of compromise can result to serious problems. He has not to depend on others. You can pass on the business to your own kids, leaving them the same — or an even improved version — of the legacy your parents left you. This is because of the feeling of entitlement of being member of the family.
Limited Sources of Capital: The capital is limited only upto the resources of one family. This is why such business is likely to have similar leadership although some may opt to add something new to the system. There are hundreds, probably thousands, of advisors who specialize in family business representation perhaps you are one , hundreds of books about the dynamics of family businesses, and dozens of family business centers dedicated to the success of family-run businesses. Families also tend to be more willing to make sacrifices for the sake of the business. Meaning of Joint Hindu Family Business : The Joint Hindu Family Business is a distinct form of organisation peculiar to India.
Any income is declared as the partners' personal income tax returns, therefore there are no corporate income taxes. Cons : Government, government, and government. Direct knowledge of operations provides information needed to support sound decisions. Most family businesses are tightly run by the family and very few outsiders. Even when the head of the family writes a will and split the assets accordingly, there still tend to be hate and rivalry. Jobs and career opportunities at home and abroad in connection with overseas opportunities.
Governance and management When external corporate rules and internal hierarchies are taken less seriously, family firms experience governance issues. Advantages of Joint Hindu Family Business: The chief advantages of Joint Hindu Family Business are given below: 1. As an example, employees who are always late should be reprimanded and it is also the same rule for a family member working in a company, so that they can be a great example for other employees, even if they are member of the family they still have to follow the rules and regulations. But some disadvantages to a partnership business is thateach partner is 'jointly and severally' liable for thepartnership's debts; that is, each partner is liable … for theirshare of the partnership debts as well as being liable for all thedebts, there is a risk of disagreements and friction among partnersand management, and each partner is an agent of the partnership andis liable for actions by other partners. The reason is because the business hierarchy is very simple.