Family business, in no way, is different from the norm. Business is, after all, a productive activity conducted to earn a profit, produce necessaries and luxuries, bring betterment to many lives. Family businesses are a step ahead as they are conventional.
The importance of family business is noteworthy. Social binding is paramount for any civil society to survive and family business provides the chain that not only binds a family but the generations together.
Socio-Economic Importance of Family Business
Why family businesses are important? Because they have socio-economic effects on society. Unlike their contenders, family enterprises have an impact on all the sectors of the society comprising of the two main sections.
- The societal importance of family business
- Economic importance of family business
Social Importance of Family Business
Behind any creativity lies motivation. It is the first step for any action; the first step is always difficult. Family businesses act as a vital feature to motivate others to start own business as a family entrepreneur. A society grows together as a result of more passionate entrepreneurial activities.
Bringing unity is another importance of family business from a social perspective. All the members of the family work as a unit, they become closer generation by generation. The social structural building is beautified by this process as families are strongly in contact.
Value of business
The young professionals of the family have brawny affection for the efforts and uphill struggle of their ancestors. They value their practices more than any hired personnel. This phenomenon turns in favor of society as the business activities are handled with great values rather than just monetary. Strong family values also bring more productivity.
Provides training platform
Family-run businesses cater to the young generation to have their hands onto the different jobs in the enterprise at a very early stage. These businesses furnish as the training ground for the youth to be trained.
The data reflected by different researches about the beneficial activities of family businesses in startling. A survey disclosed that 81% of the family business world-wide participated in social welfare out of which 47% have their running family foundations across the globe. These numbers highlight the importance of the family business.
Economic Importance of Family Business
Contribution to GDP
The contribution of family businesses in connection with the GDP of the country is considerably important. According to studies, the total impact of family businesses in the economic context around the globe is about 70% of GDP.
The family businesses contribute a large %age of employment in the country. The family businesses participate in the healthy economic growth of the country by providing better job opportunities.
Long term existence
Family businesses are focused on long term retention in the market. This is because the business goes through the succession process. This longevity is important to facilitate profitability and less turnover as compared to short term, profit-oriented businesses.
The importance of family business cannot be neglected in terms of wealth creation. They prove profitability over a long period of time which reflectively generates significant revenues for the government in the form of corporate taxes as well as employees’ taxes.