family owned business essay

Essay on Family Businesses

Family business overview.

Currently, business family is becoming more influential and simpler to manage. This type of business is mainly owned by people with close relation to other forms of business internationally (Aguila and Briozzo, 2020 pp 49). Therefore, a family business can be defined as a business type in which two or more family members or related people form a cartel, thus operating as one firm. In most cases, the business’s complete control lies within the family members since they have common objectives to achieve. According to the research, the family business is recognized as one of the international forms of business contributing to the growth and development of most countries’ economies. Nowadays, the family business is believed as the engine of industrialization in most countries since they have contributed significantly to revenues and tax provision, especially to the governments (Ahmad and Yaseen 2018 pp 345). For any country to achieve its Gross Domestic Product (GDP), micro-business, such as family business and other small operating businesses, should provide taxes and revenues to the government.

Even though family business is categorized as micro, multinational family corporations can operate in more than two countries. Most of these multinationals’ family businesses are located in the United States of America, the United Kingdom, and Colombia. Basing the research conducted by the Institute of Family Business (IFB) 2012, about 5millions micro-businesses operating internationally are private sectors. These macro businesses contribute approximately 76% internationally to create job opportunities for the family members and other none related people (Antcliff  et al.;  2020 pp 34 ). In the United States of America, micro-businesses such as family businesses are more considered than governmental sectors. Family businesses are believed to have contributed positively to providing affordable products and services to most unstable people.

In most cases, the family business is owned and directed by family members, thus minimizing the chances of loss due to poor organization. The main strength of a family business is that there are no interferences since its characterized by monopolistic. Here are some examples of the most successful family business in the world.

Family-owned businesses are believed to be the oldest form of business organizations. Since the 1980s, the research shows that family business has distinct significance, especially in raising the county’s Economy; that’s why most countries consider operating micro-businesses as big firms and companies.

These family businesses are currently recognized as crucial and dynamic participants contributing to the highest world economy (Brenkman, 2020 pp 67-89). Basing U.S statistics, 90 percent of the United States of America owned family business. The growth and development of family business have mainly contributed in some countries such U.K. and Colombia. According to the IFB, the United Kingdom record more than a 4.8million family business which occupies more than 88 percent of the total business conducted within the United Kingdom. Currently, family businesses are the backbone of the United Kingdom economy, thus contributing about $ 150 billion annual tax. Within the age of huge businesses, it is significant to understand why family businesses are emerging to be the most successful than other forms of enterprises. In the United Kingdom, family business is growing at a higher rate, thus tending to outperform other close companies in physical markets. Naturally, United Kingdom is a unique country dominated mainly by heritage and encourages most families to inherit their parents’ work even if they pass away (Caputo  et al.; 2018). The aspects of origin in the country elaborates on why the percentage of family businesses is rapidly increasing every year. In most cases, the family businesses are operated depending on the types and complexity of each. For instance, the chart below shows different kinds of family businesses and how they are managed.

The main reasons family businesses are more than other private sectors are that they are easy to perform and operate since they do not need to hire specialists or managers. Instead, they are primarily used and ran by related people. Additionally, these types of businesses do not incur much labor costs since they mostly rely on family members who are always available to offer free assistance (Seaman  et al.;  2019 pp 345). According to Bolton Consulting Groups (BCG) arguments, the analysis shows that family businesses contribute about 45 percent of all the companies and organizations. To prove this, Dyson and JCB are good examples of the most prominent family businesses in the United Kingdom, which participate within their country and internationally. In connection to this, family businesses are the largest employers in the United Kingdom. So, it’s clear that family businesses have more benefits since people are derived by their determinations and what they need to achieve after operating their business.

Characteristics of Family Business

Family businesses are characterized by several features, which makes them operate successfully, unlike other companies. Family businesses are monopolistic by nature since only family people, and other relatives can run the business. In most cases, the business will only operate depending on the culture and norms of the family, thus not satisfying customers’ needs. From a perspective, a family business has operating hours and mostly may limit people from purchasing since customers have different times of purchasing. Basing the analysis of 33 countries, family businesses are simple to manage since their structure is less complex than other operating businesses (Chang  et al.; 2020 pp 56). The design and characteristics of a family business depend on the number of people involved in the business operations. Concerning this, some features can be tangible while others are intangible. One of the most crucial characteristics of a family business is its strong trust and the inter-relationship between the family members.

In contrast to the other companies, there exist constant ideological differences between the management and other stakeholders within the industry. Regardless of the type of ownership and management team, the entire family members remain the critical participants in the company and can immediately decide to manipulate the nature of products they deal with. Another characteristic of a family business is that the management is always informal, and it’s hard to recognize any mistakes arising from the way of operations.

Most managers of these businesses have no definitive ideas to promote the business’s operations from one level to another.

The excessive intermingling between the company and family members may encourage financial problems since most of the business’ capital can be directed to family issues that were not planned in the money. In some family businesses, there is no working time and private hours. Therefore, the operation of the company may become monotonous to some members. Naturally, doing one thing over a long time reduces interests (Pham  et al.; 2019). Even though a family business may consist of other non-family members, the ownership and management of the company lie within the family members only. The figure below shows an example of business ownership and its structure. This is one of the main characteristics of family business currently

Therefore, the family business needs more management teams to ensure proper supervision is achieved. In some countries such as Canada and Australia, family business focuses on the companies’ long-term sustainability rather than gaining considerable profits. Most family businesses have limited access to goods and services; therefore, all characteristics of family business are passed from one generation to another. The generation to come will have to use unique features but what they think it’s good. However, according to Ryann’s arguments, family businesses have supported entrepreneurship since most family members another characteristic of a family business is complete control in terms of productions since the family is responsible for any required materials. However, most companies produce limited goods and services, such that there are no suppliers that can benefit none family people. To have a robust business, most families form cartels and partners with other more developed cooperation’s thus getting more chances of thriving in business.

Challenges facing family business

Even though family business is simple to manage, there are several challenges. The main challenge affecting family businesses is a generation gap. When many generations of different families are administering the company, the rate of changing from one technology to another might take long since not all people may understand it (Friar and Clark, 2021). For instance, the founders of some family businesses may resist handing off the management responsibilities to other upcoming families. This action creates characteristics of monopoly since most leaders make decisions based on their perspectives and ignoring the opinions of others. Even though younger generations may have some great ideas on how the business can operate efficiently and accurately, they are never involved in the business operations. This means that the company will continue working within flawed and outdated technologies since they lack the knowledge and skills to implement the new ideas (Heinonen  et al .;2020 pp 1-34). Due to this, there may occur conflicts and frustrations since some employees feel that their voices and opinions are not considered in the implementation of the business.

Currently, most family members fail to understand that everybody can contribute positively to the industry. To overcome such challenges, the family should negotiate towards the succession of leadership without chaos. Another challenge associated with family businesses is business culture. In this type of business, it’s tough for the company to accept all cultures and values from different families. Even if related people form the industry, some people have different cultural opinions that may not match other family members involved. For example, Samsung business involves different families with different ideological thinking thus may be difficult to operate within the same culture. In this case, most family businesses use basing the cultural system of the paramount families. The interferences of business can lead to low turnover rates, thus reducing the productivity of the company. Setting up payment strategies can currently face other problems facing family business (Núñez  et al.,  2018). Determining payments in the industry may raise conflicts because some members cannot be paid equally. The prices should be determined based on the duties and responsibilities of the individuals; however, some family members may demand equal payment, thus building uncertainty and mistrust. Some employees may get annoyed in the reaction to such cases since they don’t expect to work hard and get fewer payments.

When employees are not positively encouraged, they may lose morale, while others may decide to leave the job to look better. Therefore, this means some family members will lose business morale and, with time, will seize supporting business operations. Another challenge affecting family business is mixing business with home life. According to the research, when family members work in the same companies and organizations, it becomes challenging to make definitive decisions without basing personal feelings. (Kanade  et al.; 2020) Due to this, family businesses can operate poorly due to family events, whereby families may decide to make frequent holidays that do not concern business operations. The issue of holding every family member in the same standard is another challenge facing family enterprises. For instance, some employees may be spending a lot of time in the breakfast rooms than in the business desk operations. The aspects of some members westing time in the busines may contribute low output thus reducing the business’s productivity.

When some people in the business are not operating according to business formalities, the other employees may develop negative implications. They may not work smart to achieve the objectives and anticipated target of the organization. Additionally, these behaviors will create laxity and mistrust in the organizations. According to the research, the most family business faces interferences and challenges from within the family members especially those in the top management (Michiel  et al.; 2017 pp 369). Planning for the future is another upcoming challenge facing the operations of most family businesses. Since most family enterprises are characterized by solid planning, it becomes difficult to modify the planned decisions.

Consequently, making decisions becomes tedious because of the extended channels to be followed. If the business involves more than two families, the decisions are made based on both families’ final discussions. Therefore, before plans and decisions are made, there must be consultations from all the family and relatives. Nowadays, there is a need for family members to understand how the business should be conducted to avoid such challenges.

Recommendations

To overcome the social and economic contributions made by the family businesses, there are crucial aspects that we need to look at. Both characteristics and challenges associated with family businesses can be overcome if the family members get serious with business and stop focusing on things that do not relate to the business (Michiel  et al.;,  2017 pp 369). According to the discussions, most family businesses are affected by top management’s ignorance since they think they control everything in the business basing their knowledge. According to my perspective, family businesses can only improve if the management team considers the opinions of others. To have good business, there is a need to involve all the employees in the decision-making process. To have a better understanding of family businesses, the following recommendations should be taken into account. The performance of the business should be optimized and act as a reference to other generations to come. Family businesses are believed to have contributed positively to providing affordable products and services to most unstable people.

In most cases, the family business is owned and directed by family members, thus minimizing the chances of loss due to poor organization. Additionally, the operation of a family business should not base on the specific family since it may promote hatred and non-stoppable conflicts within the related people (Musso  et al.;  2020 pp 23). Also, the business should be in the position to serve the general population without considering if the buyers come from the same clan. The family business will act as a catalyst that speeds the growth and development of the Economy. For better family business success, the younger people should be involved in the management team since they might have more technical skills to help family businesses thrive well.

To have peace and harmony within the industry, there should equal distribution of the profits gained from the company since its efforts of every individual performing in the industry. For instance, when some industries are not operating according to business formalities, the other employees may develop negative implications. They may not work smartly to achieve the objectives and anticipated target of the organization (Musso  et al.;  2020 pp 23). The family should be considered as the primary influence both on the companies’ operations and strategic orientations. For this reason, the management and combination of the several families will positively contribute to the growth and prosperity of the business even in the future.

Self-reflection on family businesses

The family business is one the best enterprise to operate despite its challenges. Basing the research analysis, the family business is simple to use compared to all other forms of business internationally. Basing my views, the family business has benefited most people worldwide by providing employments to non-employed people. Even though the company operates without physical interference from governments, it faces some challenges which can be solved basing its structure. This reflection is a way of considering all the characteristics and challenges that have been facing family businesses. According to my arguments, a family business can improve if they follow all the above recommendations. Additionally, there is a need for the managers and supervisors to understand that the success of most companies depends on decision-making.

To sum up, the family business has contributed to social-economic growth, especially in European countries. According to the research, these businesses have contributed about 67% of Gross Domestic Products, especially in the United States of American and the United Kingdom. Regardless of the type of ownership and management team, the entire family members remain the critical participants in the company and can immediately decide to manipulate the nature of products they deal with. Another characteristic of a family business is that the management is always informal, and it’s hard to recognize any mistakes arising from the way of operations. Even though family business is categorized as micro, multinational family corporations can operate in more than two countries. Most of these multinationals’ family businesses are located in the United States of America, the United Kingdom, and Colombia. The prosperity of many family businesses depends on their structure and operational structure. Basing the research arguments, the family business will continue been in the top in European’s countries since families believe in amalgamation is more effective than individualism.

Aguilar, V.G. and Briozzo, A., 2020. Family businesses: capital structure and socio-emotional wealth.  Investigación administrativa ,  49 (125).

Ahmad, Z. and Yaseen, M.R., 2018. Moderating role of education on succession process in small family businesses in Pakistan.  Journal of Family Business Management . pp 345

Antcliff, V., Lupton, B. and Atkinson, C., 2020. Why do small businesses seek support for managing people? Implications for theory and policy from an analysis of U.K. small business survey data.  International Small Business Journal  pp 34

Brenkman, A.R., 2020.  Exploring the management succession process in small and medium-sized family businesses  (Doctoral dissertation, North-West University (South Africa)). pp 67-89

Caputo, A., Marzi, G., Pellegrini, M.M. and Rialti, R., 2018. Conflict management in family businesses.  International Journal of Conflict Management .

Chang, A.A., Mubarik, M.S. and Naghavi, N., 2020. Passing on the legacy: exploring the dynamics of succession in family businesses in Pakistan.  Journal of Family Business Management . Pp 56

Friar, J.H., Ippolito, J. and Clark, T., 2021. The challenges of transitioning to professional selling in family businesses. In  A Research Agenda for Sales . Edward Elgar Publishing.

Heinonen, J. and Ljunggren, E., 2020. It’s not all about the money: narratives on emotions after a sudden death in family businesses.  Journal of Small Business & Entrepreneurship , pp.1-23.

Kandade, K., Samara, G., Parada, M.J. and Dawson, A., 2020. From family successors to successful business leaders: A qualitative study of how high-quality relationships develop in family businesses  Journal of Family Business Strategy , p.100334.

Michiels, A. and Molly, V., 2017. Financing decisions in family businesses: a review and suggestions for developing the field.  Family Business Review ,  30 (4), pp.369-399.

Musso, F. and Francioni, B., 2020. The strategic decision-making process for the internationalization of family businesses.  Sinergie Italian Journal of Management ,  38 (2), pp.21-43.

Núñez-Cacho, P., Molina-Moreno, V., Corpas-Iglesias, F.A. and Cortés-García, F.J., 2018. Family businesses transitioning to a circular economy model: The case of “Mercadona”.  Sustainability ,  10 (2), p.538.

Pham, T.T., Bell, R. and Newton, D., 2019. The father’s role in supporting the son’s business knowledge development process in Vietnamese family businesses.  Journal of Entrepreneurship in Emerging Economies .

Seaman, C., McQuaid, R. and Pearson, M., 2017. Social networking in family businesses in a local economy.  Local Economy ,  32 (5), pp.451-466.

Visser, T. and van Scheers, L., 2020. HOW IMPORTANT IS ENTREPRENEURIAL ORIENTATION FOR FAMILY BUSINESSES?.  Management: Journal of Contemporary Management Issues ,  25 (2), pp.235-250.

Wang, Y. and Shi, H.X., 2020. Particularistic and system trust in family businesses: The role of family influence.  Journal of Small Business Management , pp.1-35.

Yoshida, S., Yagi, H. and Garrod, G., 2020. Determinants of farm diversification: entrepreneurship, marketing capability and family management.  Journal of Small Business & Entrepreneurship ,  32 (6), pp.607-633

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Owning & Operating a Family Business Essay

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A unique feature of family business is its inherent multiple and interdependent roles. The uniqueness of family business is that members of family are affected by an overlap of family, business, and ownership subsystems, with owners playing simultaneous roles among these three subsystems. These roles can be complementary, but they can also lead to confusion and create role conflict owing to differences in values between the family and business subsystems. Moreover, overlap between family and business can impede effective role performance and decision-making because of difficulties separating business decisions from family objectives.

In general, family business is defined as a company (business enterprise) managed and controlled by one family. For instance, in the United States, family firms are less likely to be engaged in manufacturing and business services. A larger proportion of service businesses are family companies in the United Kingdom. More recently, family businesses are more likely to be over-represented in such industries as agriculture, distribution, hotels and catering. Family’s businesses are, however, under-represented in the banking, financing, insurance and business services sectors (Irving and Sharma, 2005). Because of their numerical importance, the performance of family businesses is of critical importance to the development of an economy. The key difference is that, in the family business all stages of the process are likely to be influenced by family values, goals and relations. Moreover, the close inter-relationship between family and business often leads to a mix up of issues from the different contexts (Longenecker et al, 2006). The remarkable feature of family business is that it joins three elements: the family, the ownership and the business. “The combination of patient financial capital, social networks, and human capital provided by these members increases the probability of survival of new ventures and helps to sustain the business during poor economic times” (Irving and Sharma, 2005, p. 13).

The main advantages of family business involve common values and traditions, strong commitment and loyalty, stability and decreased costs. Family values remain extremely important in the small family business, where a working family life seems to be a condition for business creation and development. The creation and development of a family business is one of major motivators for entrepreneurs (beside the need to create and compete). In the family business, family concerns blend with entrepreneurial forces and managerial technologies. Research into family business also recognizes the tensions between family life and business life, entrepreneurship, management, and family concerns are all aspects of organized (economic) life and therefore important to every family business (Longenecker et al, 2006). Their co-existence becomes especially obvious in medium-sized firms that have experienced an inter-generational succession. The interfaces between the three systems ‘family’, ‘ownership’, and ‘management’ determine the outcome of the succession. Entrepreneurship again is left out and use of the notion of ‘system’ signals a functionalist/consensus approach with little concern for recognizing, let alone nurturing, the tensions between proposed aspects of the family business (Irving and Sharma, 2005).

The main disadvantages of family business are family conflicts and lack of business skills and strategic vision, need to be better than non-family employees, difficult to raise liquidity, “In some family companies, daily operations are hampered by conflict; in others, the challenge is a high turnover rate among nonfamily employees” (Challenges of Managing Family Businesses, n.d.). Conflicts between the family system and the business system typically are considered to be dysfunctional from the point of view of the firm. The family system weaknesses are ‘inward-looking’ and ‘minimizing change’. Stagnant micro-firms pay a high price for independence declining both entrepreneurship and management. Many family businesses, though, import needed management technology through their hired accountants and absorb ideas about renewal through peer exchange (Longenecker et al, 2006).

To succeed and remain competitive, family business should have a clear vision of its strategic developments and “a clear mission, a statement of purpose and goals” (Challenges of Managing Family Businesses, n.d.). Successful medium-sized family businesses materialize continued entrepreneurship. The organizations all turned out to simultaneously accommodate each of the three ideologies. The ability to actively exploit tensions between different strategies may be identified as the unique quality needed to energies entrepreneurial processes also under the pressure of institutionalization and a fading original entrepreneurial spirit in the multi-generation family business. Also, family members should recognize that “rights and responsibilities are different at home and at work” (Challenges of Managing Family Businesses, n.d.). A living democracy is constituted by multiple and contrasting ideologies. In this case, “the leader of the family business must not take sides with any member of the family” Challenges of Managing Family Businesses, n.d.). Owners of family businesses face challenges not only from operational business areas such as competitive markets, planning, financing, and marketing, but also from issues associated with ownership and family. Given these systems, it has been argued that family business owners require special characteristics and experiences to maintain an appropriate balance between business interests and those of the family. Family members should avoid ‘the status quo’ position which prevents business growth and profitability. In order to avoid dissatisfaction and complaints, the leader should introduce equity in distribution of resources and fair pay (benefits, salaries, fringe benefits).

In sum, family business represents a complex business enterprise influenced by strong personal values and traditions of the family. Family enterprises often involve multiple and interdependent roles, and owners in these businesses can be susceptible to greater inter-role conflict than non-family business owners.

• Challenges of Managing Family Businesses. (n.d.). U.S. Small Business Administration . Web.
• Irving, G., Sharma, P. (2005). Four Bases of Family Business Successor Commitment: Antecedents and Consequences. Entrepreneurship: Theory and Practice , 29 (1), 13.
• Longenecker, J., Moore, C., Petty, J. Palich, L. (2006) Small Business Management: An Entrepreneurial Emphasis , 13th Edition, Ohio: Thomson/South-Western.
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What You Can Learn from Family Business

• Nicolas Kachaner,
• George Stalk, Jr.,
• Alain Bloch

Focus on resilience, not short-term performance.

Reprint: R1211H

Though the term “family business” may call to mind visions of local mom-and-pop firms, family-controlled companies play a huge role on the global stage. Not only do they include sprawling corporations like Walmart and Tata Group, but they account for more than 30% of all companies with sales in excess of $1 billion. And over the long term, their financial performance exceeds that of traditional public companies, according to a new study by BCG and École Polytechnique.

Family-controlled companies surpass their peers because they focus on resilience, not short-term results. During economic booms, this approach leads them to forgo some opportunities (and hence do slightly worse than their counterparts), but it puts them in a position of strength during downturns, when they shine. The researchers identified seven specific ways in which family-run businesses build their resilience:

1. They’re frugal in good times and bad.

2. They set a high bar for capital expenditures.

3. They carry little debt.

4. They acquire fewer (and smaller) companies.

5. They’re more diversified.

6. They’re more international.

7. They retain talent better than their competitors do.

Though these practices come more naturally to executives who feel an obligation to be stewards for the next generation, executives at any corporation can adopt them. Indeed, the researchers uncovered a number of nonfamily-controlled companies that mimicked the behaviors of family firms and saw very similar patterns of performance.

To many, the phrase “family business” connotes a small or midsized company with a local focus and a familiar set of problems, such as squabbles over succession. While plenty of mom-and-pop firms certainly fit that description, it doesn’t reflect the powerful role that family-controlled enterprises play in the world economy. Not only do they include sprawling corporations such as Walmart, Samsung, Tata Group, and Porsche, but they account for more than 30% of all companies with sales in excess of $1 billion, according to the Boston Consulting Group’s analysis.

• NK Nicolas Kachaner is a senior partner and managing director in the Paris office of the Boston Consulting Group.
• George Stalk, Jr. is a senior partner (retired) of the Boston Consulting Group and a BCG fellow. He is the author of Five Future Strategies You Need Right Now (Harvard Business Review Press, 2008).
• AB Alain Bloch is a professor at CNAM and HEC Paris, the academic director of HEC Entrepreneurs, and a cofounder of HEC Paris Family Business.

Partner Center

Family business research: Reviewing the past, contemplating the future

• Published: 31 October 2020
• Volume 42 , pages 70–83, ( 2021 )

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• George Haynes   ORCID: orcid.org/0000-0001-8681-2728 1 ,
• Maria Marshall 2 ,
• Yoon Lee 3 ,
• Virginia Zuiker 4 ,
• Cynthia R. Jasper 5 ,
• Sandra Sydnor 2 ,
• Corinne Valdivia 6 ,
• Diane Masuo 7 ,
• Linda Niehm 8 &
• Renee Wiatt 2  

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This paper reviews articles published in the Journal of Family and Economic Issues (JFEI) from 2010 to 2019 and considers future research opportunities. The JFEI articles utilize theories and conceptual frameworks from several social science fields, to help readers understand the importance of including both the family and business in any discussion of family businesses. The literature review addresses four family business topical areas: (1) household and business economics, (2) business continuity and succession, (3) managerial and adoption strategies, and (4) values and goals. These JFEI articles have focused on differentiating family businesses from other types of businesses; explaining the unique interface between the family and the business; and identifying the characteristics (i.e., demographics, adjustment strategies, continuity, capitals, and values and goals) for family business survival and success. In the future, family business researchers have the opportunity to better understand the impact of community resources and climate; more carefully assess the challenges of women, minorities, and immigrants; understand the role of cultural capital; and explore the impact of innovation during rapidly changing times, such as those created by the pandemic.

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Avoid common mistakes on your manuscript.

Introduction

This literature review addresses two important questions about family business research: (1) what did we learn from the Journal of Family and Economic Issues (JFEI) articles published over the past decade; and (2) where do we go from here. The JFEI articles have helped readers better understand family businesses by differentiating them from other types of businesses; explaining the unique interface between the family and the business; and identifying the characteristics (i.e., demographics, adjustment strategies, continuity, capitals, and values and goals) for family business survival and success. This JFEI family business literature review was guided by an article by Yilmazer and Schrank ( 2010 ). The reviews of published JFEI family business articles were driven by the notion that an understanding of the family and the business is critical in the understanding of the sustainability of family businesses. Looking forward, family business researchers have the opportunity to better understand the impact of community resources and climate; more carefully assess the challenges of women, minorities, and immigrants; understand the role of cultural capital; and explore the impact of innovation during rapidly changing times, such as those created by the pandemic.

The guest editor assigned 20 articles on family business published between 2010 and 2019 for this review. The scholars generating this research were from universities, government agencies and businesses throughout the US. Ten of the twenty papers were authored by members of the North Central Region’s Agricultural Experiment Station Project on family business. Those research faculty members were from land grant institutions throughout the central and western US. Nearly all of the authors were applied economists in agricultural economics, family or consumer economics, family business, or family resource management.

The 20 published JFEI articles helped readers identify the attributes of the family and the business that are important for family business survival and success. While a substantial body of the family business literature has been generated by business faculty, this literature goes beyond the traditional business approach by integrating researchers from social sciences, including: family and social scientists, sociologists, psychologists, family economists, and others into the discussion. The strength of the JFEI literature is the innovative ideas that have come from the research of scholars from several disciplines. For additional information on authors, disciplines, and affiliations see Appendix Table 1 .

The JFEI family business articles made substantial contributions to research on family businesses by utilizing high-quality secondary data, innovative primary data, and established theoretical and conceptual frameworks. The family business articles published in JFEI used eight high quality secondary datasets. They were: 1) American Family Business Survey, 2) National Family Business Survey, 3) Spatial Hazards and Losses Data for the US, 4) Survey of Consumer Finances, 5) National Minority Business Owners Survey, 6) Intergenerational Family Business Survey, and 7) Survey of Household Finances in Spain, and 8) Arthur Anderson Center for Family Business Survey. In addition, primary data on family businesses, including farms, were used in studies in the United States, United Kingdom, Norway, India, and Australia. Nationally representative samples were available to researchers using the American Family Business Survey, National Family Business Survey, Spatial Hazards and Losses Data for the US, Survey of Consumer Finances, National Minority Business Owners Survey and Survey of Household Finances in Spain.

Of the 20 articles reviewed in this paper, 15 were based on quantitative research followed by three on qualitative research, and two were literature reviews. Fourteen established theoretical and conceptual models used by the authors, include the following: 1) Sustainable Family Business Theory (Stafford et al. 1999 ), 2) Agricultural Household Model (Singh et al. 1986 ), 3) General Systems Theory (von Bertalanffy 1976 ), 4) Technology Acceptance Model (Davis et al. 1989 ), 5) Diffusion of Innovations Framework (Rogers 2003 ), 6) Strategic Management Framework (Sharma et al. 1997 ), 7) Social Exchange Theory (Emerson 1981 ), 8) Financial Satisfaction Framework (Joo and Grable 2004 ), 9) Farming Satisfaction Model (Coughenour and Swanson 1992 ), 10) Role Theory (Biddle 1986 ), 11) Fundamental Interpersonal Relations Orientations (Schutz 1958 ), 12) Dynamic Capabilities Approach (Teece et al. 1997 ), 13) Unified Systems Model (Habbershon et al. 2003 ), and 14) Family Resource Management (Deacon and Firebaugh 1988 ). These papers have addressed several important concepts, including disruptions, survival and success, and adoption strategies. For instance, the concept of disruption covers changes in farm programs to substantial weather events, such as Hurricane Katrina; success covers objective measures, such as changes in profits to subjective measures, such as asking the respondent if they believed they were successful. Adoption strategies consider responses to changes by family business owners, such as hiring additional help, an adjustment strategy, to adopting new technologies. While selected articles refer to households and others refer to families, these terms are synonymous in these studies. They refer to businesses owned or managed by family members related by birth, marriage, or adoption. For additional information on methods, theories, concepts, and frameworks see Appendix Table 2 .

The JFEI family business articles summarize issues representing four topical areas: (1) household and business economics, (2) business continuity and succession, (3) managerial and adoption strategies, and (4) values and goals. The household and business economics topic covers cash flow problems, profit growth, perceived business success, savings behavior, survival duration, and ownership profitability, satisfaction, and perceived well-being. Business continuity and succession topics include continuation commitment, daughter succession, and entrepreneurial skill succession. Topics in the managerial and adoption strategy category include adjustment strategies, capital usage, and innovative technology adoption. The values and goals section addresses value orientation, goal orientation and performance, dynamic capabilities, and considerate exchange.

Household and business economics

The household and business economics literature recognized the importance of conducting holistic analyses when considering family business. A literature review by Yilmazer and Schrank ( 2010 ) provided an important foundation for examining resource flows between the family and business. This article carefully distinguished between bootstrapping from the small business finance literature and intermingling from the household and family firm literature in small and family-owned businesses. The authors concluded that both bodies of literature, taken individually, were not sufficiently comprehensive to fully capture the financial flows between the household and business and the factors that affect their utilization. The authors suggested that these two groups of research studies intersect and their merger would enable business and household finances to be more holistically understood for family businesses.

Family business response to cash flow problems

The foundation provided by Yilmazer and Schrank ( 2010 ) was important in the development of a research study by McDonald and Marshall ( 2018 ), which used Sustainable Family Business Theory (SFBT) and Intergeneration Family Business Survey data. McDonald and Marshall examined family business resource transfers and tensions to determine how the household and the business respond to cash flow problems. The authors found that cash flow problems increased resource tension in both the household and the business . When faced with family cash flow problems, the business did not transfer more funds to the household either because the business owner was unable or unwilling to transfer more funds to the household. When faced with business cash flow problems, family businesses responded by allocating less cash to the household. These results suggest that family businesses held on to financial resources to help the business, rather than the household.

Profit growth and perceived business success

Positive business or household cash flow depends on the generation of business profits or other financial resources. A study by Lee et al. ( 2010 ), using the SFBT and National Family Business Survey, examined gender differences in profit growth. Most importantly, this study found that female managers had higher levels of perceived business success and more profit growth than their male counterparts. For female managers, health status and business size were positively related to profit growth, while business liabilities and home-based location were negatively related to profit growth. Even though female managers had higher profit growth, they had lower levels of human and financial capital than their male manager counterparts.

Savings behavior

Family businesses depend on profit (and profit growth) and household savings to increase their net worth. The purpose of the study by Remble et al. ( 2014 ) was to examine household saving behavior and the influence on a family-owned business. This study, using the 2007 Survey on Consumer Finances and life-cycle earnings model, focused on the savings behavior of business-owning and nonbusiness-owning households. The study showed that business-owning households were more likely to save than nonbusiness-owning households. The results of this study indicate that household saving behavior was influenced by both characteristics of the respondent and the household. When considering different types of businesses, the authors found that farm and non-farm business owning households were more likely to save than other households. When considering only business-owning households, the study revealed that farm households had significantly different and more positive saving behavior than nonfarm households. In addition, they found that having more human capital (e.g., formal education) or financial capital (e.g., possessing an Individual Retirement Account, having an employer pension, or having health insurance) increased the likelihood of household savings among family-owned businesses.

Survival duration

Profit growth and savings are critically important for the long-term survival of family businesses. Stafford et al. ( 2010 ) examined the factors affecting long-term survival of family businesses in the United States. They used the SFBT to guide the long-term survival model and employed the National Family Business Survey and Spatial Hazard Events and Losses for the US databases. This study introduced important rigor into the survival analysis of family business by using a longitudinal sample of family businesses and controlling for community environment, family and business capital, management processes and disruptions external to the firm, such as a natural disaster. They found that family businesses that provided more income from their families, hired more temporary help, owned larger businesses, and had more experience had increased duration of survival. Home-based businesses, female owners, and those using customer-centric management strategies had decreased duration of survival.

Most importantly, they found that businesses in more economically vulnerable rural areas and businesses owners who considered their business a “way of life” had increased duration of survival. Both of these results planted seeds for future research as family businesses in economically vulnerable rural areas and those owners considering their business as a “way of life” were posited to have decreased, rather than increased duration of survival. This study provided further evidence that a family business does not make economic decisions in social isolation.

Ownership and relationships

Stafford et al. ( 2010 ) emphasized that many factors other than objective measures, such as money, are important to survival of family businesses. Subsequent research introduced other factors, such as relationships among owners (copreneurs), perceived financial solvency, and perceived resource well-being that were important for survival and success, especially for female owners and managers.

The interface between the family and business becomes increasingly important when two or more family members are active in the business. McDonald et al. ( 2017 ), using the SFBT and Intergenerational Family Business Survey, examined small and medium-sized rural copreneurial businesses and the relationship between their business structure, relationship satisfaction, and profitability. In this case, the important resource is labor because two business owners work in the family business. This research showed that couples who self-select into working together as copreneurial business owners do so based on how satisfied they are with their relationship. The findings suggest that to have higher profitability, the copreneurial couple should place importance on maintaining relationship satisfaction within the business and in the family.

Ownership and satisfaction

While copreneurs are often men and women owners, gender of the owner is an important consideration in family business because women often have dual responsibilities for the business and household. The purpose of the study by Archuleta et al. ( 2017 ), using role theory and primary data from Kansas farmers, was to explore factors that impacted farm women’s perceptions of farm business financial satisfaction. The most important contributions were the following: being financially solvent, a subjective measure, was positively associated with farm business financial satisfaction, and occupying a decision-making role was negatively associated with farm business financial satisfaction. Neither household income nor percentage of agriculture income, both objective measures, were significantly associated with farm business financial satisfaction.

Ownership and perceived well-being

While an economic model would suggest that more money is better than less, Archuleta et al. ( 2017 ) found that household income or percentage of farm income were not associated with financial satisfaction. In the same vein, another family business research study using the family resource management model and primary data from daycare providers, found that research on family child care providers had similar findings, namely that household income predicts little about how providers perceived their overall resource well-being (Mimura et al. 2019 ). They found that perceived resource well-being was related to more subjective measures, such as past and present economic situations, demands on time, contributions providers’ family members make to support the business functions, and quality and availability of community resources, rather than more objective measures, such as household income.

Business continuity and succession

Successful family businesses often choose to pass the family business onto the next generation. For some potential heirs, especially daughters, there are many challenges. The literature published by the JFEI is largely literature reviews or data driven, rather than based on any theory or conceptual framework; however, these articles provided important insight into the succession of family businesses.

Continuation commitment

Mahto et al. ( 2014 ), using the Arthur Anderson Center for Family Business Survey (Massachusetts Mutual Insurance) survey of top executives, examined the factors that influence continuation commitment, or the family’s commitment to continue the family business. They found that the top executive’s age and generation (founder or successor), number of family owners, number of family meetings, and social identity were positively associated with the continuation commitment, while more education was negatively associated with the continuation commitment. In addition, the top executive’s future performance expectation was positively associated with the continuation commitment.

Unless there is a continuation commitment from family it is unlikely that the business will continue in the same family. Merchant et al. ( 2018 ), examined business continuity using a sample of very small businesses in India. The aim of this study was to identify and validate factors that affected family business succession for small and medium-sized enterprises in India. The authors found that the two major drivers having the greatest positive impact on successful continuation for these Indian family businesses were willingness and excitement of the potential successor to join the business and ability of the founder and successor to manage tensions.

Daughter succession

While many family business owners are concerned about succession of the business, small business owners may be specifically concerned about their children following in their footsteps. Wang ( 2010 ) used a content analysis of previous literature to examine daughter succession in family businesses. This paper was driven by the notion that daughters are often forgotten or overlooked in family business succession. This paper presented various aspects of how gender inequality has been explained in the family business succession literature, and highlighted four areas of daughter succession in family business: exclusion of daughters, barriers to daughters’ succession in family business, daughters’ pathways to leadership and control, and the implications of the daughter option. The authors found that overlooking the potential of daughters as successors to a business would leave sub-optimal choices for successions, and also exclude daughters from involvement in the family business.

Entrepreneurial skill succession

Family involvement in a business may encourage the involvement of a daughter or son. Ferrando-Latorre et al. ( 2019 ) examined relationships within Spanish families to determine if children of entrepreneurs were more likely to become entrepreneurs. This study, using the Survey of Household Finances in Spain, found that children of entrepreneurial or self-employed parents were more likely to become entrepreneurs or self-employed than children of wage and salary employees. They found that transmitting entrepreneurial skills and values between generations was an important process in the transmission of entrepreneurship.

Managerial and adoption strategies

Family business survival and success depends on the ability of the family and business entities to respond to major shocks (for instance, natural disasters, change in farm programs, and other events beyond their control). Adjustment strategies included financial choices, such as choosing risky or less risky investments, employment of family or business labor, and or using time resources (labor) or financial capital (money). In this set of articles, family structure was an important determinant of the adjustment strategies chosen.

Adoption strategies of the family and the business impacted by the tobacco buyout in 2005 and 2006 were studied by Pushkarskaya and Marshall ( 2010 ) utilizing two theoretical frameworks, i.e., agricultural household model (AHM) and SFBT, and primary data from Kentucky tobacco producers. The results showed that family structure (single females, single males, older farm couples, younger farm couples, married older farmers living with younger family members, and married younger farmers with children) did have an impact on expenditure choices and adjustment strategies following a shock to the family business. For instance, younger, married farmers were more averse to starting a new venture compared to other household structures; couples with young children were less likely to choose the stock market for investment than an older couple living with their younger generation family; and the stock market was an investment choice for families who had experienced a family death.

Adjustment strategies

While changes in financial choices are important adoption strategies, adjusting behaviors in either the business or family system are important to accommodate the needs of the other systems when unusually heavy demands exist. The use of adjustment behaviors during high-demand times creates a resilience capacity that tends to automatically take effect when encountering a disruption. Five adjustment types occur at the family-business intersection: (1) reallocating personal time, (2) obtaining additional help, (3) adjusting family resources, (4) adjusting business resources, and (5) intertwining tasks (Fitzgerald, Winter, Miller, and Paul 2001).

Women and minority adjustment strategies

Lee et al. ( 2017 ) used the 2003 and 2005 National Minority Business Owners Surveys (NMBOS) and SFBT to compare male and female minority business owners in their overall use of adjustment strategies. They found that minority female business owners were more likely to reallocate family resources to help with business tasks and were more likely to intertwine both family and business tasks than minority male business owners when demands were particularly great for the family or the firm. Unlike in majority cultures, where male and female business owners may not differ in their use of adjustment strategies, in minority-owned small family firms, gender differences existed in adjustment strategy use. In particular, minority female business owners in this study were more likely to solicit unpaid help for their businesses and adjust family resources to meet business demands, than were minority male business owners.

Capital usage

Other adjustment strategies require changes in the use of other resources apart from time, labor, or money. Glover ( 2010 ) examined how family farm businesses use different forms of capital (economic, social, cultural, and symbolic) to respond to critical changes in the family and business using Bourdieu’s theory of capital. In this study, based on case studies of farmers in the United Kingdom, Glover found that levels of economic capital were adversely affected when there is lack of contingency planning. However, both social and symbolic capital were important in assisting family members to cope and continue the family business. This study provided qualitative evidence that in adverse situations, business and family support one another to function smoothly and sustain the operation.

Innovative technology adoption

Innovative adjustment strategies include the adoption of new technologies. Niehm et al. ( 2010 ) provided new insights regarding the benefits of integrated information technology (IT) use for small family firms. This study was based on Davis et al.’s ( 1989 ) Technology Acceptance Model (TAM) and Rogers’ ( 2003 ) Diffusion of Innovations framework, and utilized data from the National Family Business Survey. This study found that prior IT knowledge and the degree to which IT was used in the business had the strongest impact on technology adoption, followed by community size, access, and affordability of related technologies. The findings suggested that family firms were able to successfully implement and gain advantages from IT only after the business managers perceived its usefulness and developed technology capabilities.

Values and goals

While survival and success are important to family businesses, the underlying value orientation and goals and family business dynamics are important in enabling family businesses to survive and succeed.

• Value orientation

An important study by Distelberg and Blow ( 2010 ) used the American Family Survey and a dual General Systems Theory and Eco-systems perspective to explore the congruency of goals and values and how they influence perceptions of success; how the family business’s resources and goals are appraised differently based on the family business’s value orientation; and how unity in values supersedes value orientation regarding the functioning of the family business. They found that value orientations were not correlated with sales, satisfaction, or perceptions of success. However, they did find that value orientations have an effect on the value that owners assign to goals and resources. And, they found that individuals in a family business were more satisfied with their business when personal values were consistent with the values set for the business.

Goal orientation and performance

Following the lead of Distelberg and Blow ( 2010 ), Lee and Marshall ( 2013 ) investigated the relationship between goal orientation and family business performance using the strategic management framework (Sharma et al. 1997 ) and the 1997 and 2000 National Family Business Surveys. More specifically, the authors were interested in determining the effect of goals on long-term success in family businesses. They found that two goals had a positive influence on long-term business performance: a positive reputation with customers and business growth.

Dynamic capabilities

Family business growth requires that the business remain competitive. Duarte Alonso et al. ( 2018 ) addressed three areas of need in family businesses, related to what family businesses do to adapt to a rapidly changing business environment, and the specific resources leveraged to remain competitive in this context. The authors studied the dynamic capabilities in the context of the family business, using the dynamic capabilities theoretical framework with primary data from Australia. Dynamic capabilities support capacities such as sensing new opportunities, seizing these opportunities by mobilizing resources, and transforming or reconfiguring business structures and assets for renewal. This study found that family businesses adapt to a changing business environment by embracing innovation to add value and efficiencies. In addition, to remain competitive, these firms leverage specific resources, such as unique firm attributes, an open culture, signature processes and idiosyncratic knowledge.

Considerate exchange

Adapting to a changing business environment assumes that family members are able to agree that changes are needed. Successful succession of a family business requires family interactions. Gezelius ( 2017 ), using social exchange theory and a sample of 580 Norwegian farmers, clarified the concept of considerate exchange and extended the capacity of social exchange theory to explain interactions among close relatives of family-owned businesses. Considerate exchange essential states “I care for you, because you care for me.” This study found that considerate exchange enables family members to allocate scarce resources while sustaining and strengthening emotional ties that build well-being within the dynamics of the family and the business. In addition, this study suggests how considerate exchange may be useful to explain business dynamics and how exchange plays out, without damaging relationships.

Conclusions

The JFEI literature has added substantial breadth and depth to the family business literature; so what did we learn? Based on suggestions by Yilmazer and Schrank ( 2010 ), household and business economic research in the JFEI explored the importance of cash flow, profitability, and savings in supporting family business well-being, satisfaction, success, and survival. Business continuity and succession are important to many successful family businesses. The JFEI literature examined the importance of family member commitment, inclusion of daughters (and sons) in the succession plan, and technical skills in successfully transitioning a business to the next generation. A successful business transition often requires the family businesses to quickly adopt new strategies to rapidly changing conditions. The JFEI literature explored adjustment strategies employed by women and minority family business owners during hectic times; and, considered the importance of capital use and innovative technologies in managing the firm. Successful management strategies are supported by individual, family, and business values and goals. The JFEI literature assessed the importance of individual values and goals, dynamic capabilities of the business owner, and considerate exchange among family members in supporting a successful family business. Most importantly, the JFEI articles, utilizing theories and conceptual frameworks from several social science fields, have helped readers understand the importance of including both the family and business in any discussion of a family business.

Future research

The 20 JFEI articles have examined family businesses through several theoretical lenses, most notably economics, sociology, family science, and psychology. These approaches have provided a broad base for understanding family business by recognizing the importance of considering the impacts on the family and business. While an extensive body of literature has been created over the past decade, significant research opportunities remain for JFEI authors. Previous studies have profiled family businesses and examined their short- and long-term survival and success. Here are seven areas for substantive future research on family businesses:

Fitzgerald et al. ( 2001 ), Yilmazer and Schrank ( 2010 ), and McDonald and Marshall ( 2018 ) provide important foundations for examining resource flows between the family and the business. Ample room exists to further study the implications of the financial interactions between households and businesses as both systems seek to adjust to these risks.

Stafford et al. ( 2010 ) found that family businesses in more vulnerable communities had a longer duration of survival. Additional research is needed to investigate whether businesses in more vulnerable rural communities have higher attachment and continuation commitment than family businesses in less vulnerable urban communities.

Wang ( 2010 ) demonstrates how women are often overlooked in family business succession. More research is needed on women taking over family businesses and their overall role in the succession process. With a growing trend of women-owned small firms, spousal partnerships, and women in management roles, future studies could focus on how leadership style, demographics, communication, and business characteristics affect management and ownership succession.

Research has shown the benefits of considerate exchange and social exchange theory within family farms and how these interactions can cause better personal business relations (Gezelius 2017 ). Additional studies of considerate exchange in other settings, such as in the US and other parts of the world and to nonfarm family businesses, would provide insight into incorporating considerate exchange into social exchange theory.

Following the lead of Niehm et al. ( 2010 ) more research is needed to examine the specific forms of motivational, material, and skill access related to information technology to enhance the performance of family businesses. In addition, the impact of information technology resources on economic, social, symbolic, and other capital use warrants further research.

Lee et al. ( 2017 ) explored the use of adjustment strategies by minority owners. The opportunity exists to utilize the model developed by Lee et al. to examine public policy issues, such as the impact of the pandemic on family businesses and access to economic stimulus programs. In addition, further development of theory relating to capitals, ethnic identity and subjective wellbeing of family businesses owned by people of color and recent immigrants in adapting to change is warranted (Valdivia and Flores 2012 ).

Pushkaraskaya and Marshall (2010), Archuletta et al. (2017), and Gezelius ( 2017 ) explored issues faced by agricultural producers. Given the public policy interest in classifying other businesses, such as agricultural producers, as small business enterprises, additional research is needed to explore the heterogeneity among family-owned small businesses.

In conclusion, JFEI articles have the opportunity to bring family business research from throughout the world to the academic marketplace. While family business research may employ less familiar theoretical or conceptual constructs, interesting datasets and empirical analyses provided a glimpse into the challenges faced by family businesses. The research and information on family businesses in JFEI offers a plethora of opportunities to future researchers and continues to educate the public on important family business matters. Throughout our review of JFEI family business research, much has been discovered, and the journal will continue to make substantive contributions to the literature by addressing the vexing challenges facing family businesses.

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Haynes, G., Marshall, M., Lee, Y. et al. Family business research: Reviewing the past, contemplating the future. J Fam Econ Iss 42 (Suppl 1), 70–83 (2021). https://doi.org/10.1007/s10834-020-09732-6

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Family-owned companies help drive the U.S. economy—is your small business ready to take the wheel? Put these family business tips and insights to work so you can take control of your firm’s future. 

SCORE’s new infographic, The Family Business: Successes and Obstacles , highlights the value of family businesses as well as the challenges they face. 

A family-owned business is any company owned by two or more family members and the family holds majority control or ownership. The size of these companies runs the gamut, from mom-and-pop shops to Fortune 500 firms. 

Families definitely make their mark in the small business world. Of the 28.8 million small businesses in the U.S., 19 percent are owned by a family. Just over one million of small family-owned businesses are led by husband-wife teams.

Family-owned businesses mean business.

These companies stand at the forefront of the national economy. They employ 60 percent of the American workforce , and they’re responsible for creating 78 percent of all new jobs. In addition, they generate 64 percent of U.S. Gross Domestic Product (GDP). 

But family firms hit challenges transitioning into the next generation.

Every family has its struggles—like who gets stuck sitting next to Aunt Mimi at the next holiday get-together.  But when you combine business with family, those challenges become even more complex. 

Only 30 percent of family-owned companies successfully transition ownership from the first to second generation, while 12 percent transition from the second generation to the third. Just 13 percent of family businesses stay within the family for more than 60 years. 

One factor affecting generational transitions could be planning. Nearly half—47 percent—of family business owners expecting to retire within five years haven’t named a successor yet. Planning can play a key role in a business’s ability to transition into subsequent generations. Experts recommend creating a succession plan as many as five years—or more—in advance to reduce stress and transition peacefully .  

Which best practices lead to successful transitions?

Statistics suggest that successful family businesses don’t “wing it.”  A healthy 94 percent of family-owned companies with high annual revenue are controlled by a supervisory or advisory board . Just as importantly, only 31 percent, on average, of board membership was comprised of family, a number that suggests perspective from “outside” the family can contribute to good governance.  

And those boards are built with an eye on taking the business into the next generation. Over 40 percent of the companies included less-experienced family members on committees and boards, with the goal of nurturing the younger generation’s management and business skills. It’s a training ground that provides the valuable experience needed to move the family business successfully into the future. 

Family-owned companies have another big advantage over non-family firms: almost three-quarters (74 percent) of family businesses report stronger values and culture, which can be leveraged as strengths in areas like customer care, recruitment and employee retention.  

Set your family business on the road to success. 

SCORE mentors can’t tell you who should sit next to Aunt Mimi at dinner, but they can help you sort out other complexities with your family business tips. Whether you need to create a succession plan or navigate internal conflict, a SCORE mentor will guide you with fresh, objective perspective, so you can build a stronger business for this generation—and the next.   

Infographic: The Family Business—Successes and Obstacles From succession planning to company culture, these family business tips, based on SCORE’s latest infographic, will help you build a roadmap to success.

Taking Over Your Family’s Business? How to Transition Peacefully Don’t let the pressure of taking over your family’s business wear on you. Instead, take steps for a smooth transition.

Copyright © 2024 SCORE Association, SCORE.org

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

Family Business applicants: Tips for MBA essays and recommendations

If you are an MBA applicant with a family business, you have an ace up your sleeve that you shouldn’t be afraid to use.

Some applicants might feel sheepish about mentioning their family business ties, but it is a definite advantage, albeit one that has to be navigated carefully.

In this article we will look at:

• Why schools value family business applicants.
• What family business applicants ought to be aware of when applying.
• Some resources for family business MBA students at top programs.

MBA Application Tips for Family Business Applicants

By yaron dahan, menlo coaching, why business schools like family business applicants.

There are a few clear reasons why an applicant with a family business — especially a large family business—is attractive to a top MBA program.

Even if an applicant is considering working outside the family or has entirely different career goals, the benefits are such that there is little reason to avoid making the family business an important part of the application.  

1. Guaranteed Leadership Roles

Family business applicants often have a bright future in terms of leadership. No admissions department will question that the daughter of the current CEO will become CEO herself if she wants to.

Those guarantees are attractive to MBA programs who want to be able to show that their graduates have good jobs with attractive compensation.  

2. Donation Abilities

Applicants with family businesses are coming from and entering into stable work environments.

This means they have the ability to become reliable donors or even employers for the school on a faster timeline than many alumni.  

3. Great Stories

Family business applicants often have a great built-in story which is always a boon when it comes to MBA applications.

Whether it’s a story about seizing the initiative and bringing a brick and mortar family business into the digital age, or a story about the lessons learned growing up in a business environment, applicants often have a wealth of opportunities to give their application a narrative that will stand out.  

Challenges of Mentioning a Family Business

While the advantages of emphasizing one’s family business connections are invaluable, applicants with such connections should be aware of some of the potential problems with doing so.  

1. Credibility

The job guarantees of a family business applicant come from family members who may hire the applicant regardless of skill.

As a result, applicants should take great pains to prove that they have a vision for where their business is headed — turning their career goals essay into more of a business plan.

An MBA program is uninterested in an applicant that seems likely to squander the family business fortune or simply stay the course.  

2. Generating Excitement

Because most family-owned businesses aren’t famous, an applicant will need to prove that their family business is dynamic, exciting, capable of growth, and successful.

There is every chance an admissions’ department will be unfamiliar with the specificities of the industry or the family business’ role in it. That can be a problem if not addressed.  

3. Letters of Recommendation

Similar to the credibility issues, any letter of recommendation that comes from a family member will likely be seen as suspect by an MBA program.

This means that family business applicants should strongly consider using letters of recommendation written by external investors, advisors, or even clients instead.    

Top B-School Resources for Family Business MBA Students

A number of top business schools have programs and clubs geared towards students with family businesses. Applicants should be familiar with these. We’ll go over some standout programs below.  

Columbia Business School Family Business Program

In addition to offering courses and curriculum aimed at managing, advising, or running family-owned businesses, Columbia also offers “ Enterprising Families :” three-day intensive workshops designed by the business school for family-owned businesses of various sizes.

Additionally they host a year-round speaker series that boasts luminaries in family-owned business leadership. Read more here .  

The Wharton Global Family Alliance

The Wharton School of Business uses its GFA to provide teaching, research, and outreach to family-owned businesses. This includes collaboration between various family owned businesses, global conferences, and a bevy of research papers focused on the study of family-owned businesses and their impact on the economy. Read more here .  

Harvard Business School (HBS) Family Business Club

HBS’ Family business club offers a robust speaker series as well as an annual conference and workshop day for students and their family businesses. Read more here .  

Center for Family Enterprise at Kellogg

Northwestern’s Kellogg School of Business offers a comprehensive curriculum program aimed at family owned business applicants that cover everything from strategy to governance to succession planning. Read more here .  

MIT Sloan Family Enterprise Programs

Sloan has recently brought in John Davis , an expert on family owned businesses, to run their Family Enterprise Programs which includes informational talks on sustaining multigenerational success, smooth succession planning, and a focus on family owned businesses in China. Read more here .  

Family Business Courses at Top Schools

Both Stanford GSB and Michigan Ross offer courses focused on the ins and outs of family businesses.  

Family Business Applicant Case Study

We worked with a candidate who had joined his small family retail business, a furniture company based in Latin America. His first professional job was outside the family business at one of his country’s leading banks, but then, for personal reasons, he joined the family business.

Although the family business was relatively small (under 50 workers), he brought it online, created its ecommerce division, and used his operations knowledge from banking to streamline operational processes.

In the application materials, we talked about the emotional story of the business, and the pride he felt in taking responsibility for a “business that cares,” with a mission to do more than just make money.

He learned about management, and took great care of his workers, even when this was financially difficult — like providing them with health insurance during a financial crisis.

Some of the employees had joined when his grandfather opened the first store, and he worked alongside them in the stores to get “in the trenches” experience.

He not only told a thoughtful, moving human story, but one with professional impact, in which he built his family business into first a country-wide, and then continent-wide success.

Ultimately he was accepted into several top 10 programs, largely to the emotional strength of his application, and the deep motivation he had to grow and develop the family business.

Want to hear stories from other successful Menlo Coaching clients, including two other family business applicants? Sophie worked for a B2B software company owned by her family, and Vicky plans to join her family’s China-based manufacturing company after her MBA.

See more at Menlo Coaching Video Case Studies & Testimonials .   About the author: Yaron Dahan is an Expert Consultant & Director (BD) at Menlo Coaching . In his 12-year long stint as an admissions consultant, he has helped hundreds of applicants get into the toughest business schools like Harvard, Stanford, Wharton and many more. He is also a filmmaker and writer.   This article is part of CrystalConnect, an outreach initiative by MBA Crystal Ball.

Also read: – Menlo Coaching – Review – MBA in Family Business Management – MBA after CA with experience in family business

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The Advantages and Disadvantages of a Family Business

Family-owned companies are good not only for the families involved, but also for both the local and global economies. However, many find it hard to survive. Around a third of the 100,000 family businesses that are passed to the next generation each year subsequently fail, while many small business owners struggle to ensure that they are financially independent from their businesses when they retire.

There are advantages and disadvantages to running any business, from a small business to a larger, publicly traded company. However, family firms come with their own unique advantages and challenges. Here we delve into the pros and cons of running a family business, along with tips to capitalise on the positives, and overcome the negatives.

What are the advantages of a family-run business?

There are many advantages to running a family business, such as:

The leadership of a family business is normally determined by the position of each individual in the family. As a result, there is generally longevity in leadership, which ensures overall stability within a family-run business. In many family-owned companies, the business leader will stay in the position for many years, with life events - such as illness, retirement or death - being the trigger for change at the top.

Family firms tend to have a greater sense of commitment and accountability at their heart than non-family firms, as it is not just the needs of the business at stake, but the needs of the family too. This desire for both the family and business to stay strong fosters additional benefits, including a greater understanding of the industry, the organisation and the job; stronger customer relationships; and more effective sales and marketing.

One of the oldest surviving family businesses in the world is Hoshi Ryokan : a Japanese inn-style hotel which was founded in 718 and which has been in the same family for 46 generations. This longevity has led to an incredible understanding of the business and its history, which anyone outside of or relatively new to the business would simply be unable to replicate.

Elsewhere, the Ford Motor Company managed to stay afloat during incredibly tough economic times, when other large businesses like Chrysler and GM were desperate for bailouts. It is likely that there are several reasons for their success, but with the Ford family’s name, reputation and financial standing on the line, it is likely that this encouraged their fighting spirit.

Flexibility

Working in a family-run firm requires a lot of flexibility. While non-family businesses tend to have very clearly delineated responsibilities for every role, family members will sometimes be required to wear several different hats, taking on tasks outside of their formal remit where needed.

In a now-famous quote, Estée Lauder, who formed the famous cosmetic firm with her husband in 1948, once said of her company’s success, “I have never worked a day in my life without selling. If I believe in something I sell it, and I sell it hard”. The only woman on Time magazine’s list of the century’s business geniuses in 1998, Lauder was involved in every element of her business: preparing pots of face cream, giving free product demonstrations, designing product packaging, training saleswomen and more.

Long-term outlook

Non-family firms draw up their goals for the next quarter. Family firms, however, think years - or even decades - ahead. A longer-term perspective is a good way to foster a culture of clear strategy and decision-making throughout the business.

Second-generation CEO of German multi-billion dollar retailer, Otto Group, has used this long-term outlook for serious success. He took over the business - founded by his father in 1949 - in 1981, and almost immediately began to investigate the possibilities that computer technology could offer. As a result, the brand moved into ecommerce in 1995, becoming profitable in its online sales activities by 1998. The company has never been publicly traded, and still remains a family affair.

Decreased cost

Economic downturns and other challenging times can be a struggle for many businesses, where the board of directors needs to work out how to keep the business afloat while still paying staff. In family firms, however, it will often be the case that family members are willing to contribute financially to keeping the business afloat during times like these. It may be that this involves taking a temporary pay cut, contributing some of their own finances, or pausing the payment of dividends while the company gets back on its feet. For the family behind the business, long-term business success is crucial to their financial survival, which gives more flexibility where finances are concerned.

What are the disadvantages of family-run businesses?

While it is clear that there are plenty of benefits to family-owned companies, they also have their downsides:

A lack of family interest

In a family business, there can be a great deal of pressure on future generations to keep the business going, even if they have no real interest in doing so. This can result in a workforce - or worse, a management - consisting of family members who are apathetic, unenthusiastic and disengaged. In any other business, it is likely that such an approach would see employees having their contracts terminated. In a family business, this is more of a challenge.

Conflict between family members

The dynamic between different family members, family (and business) history and a blurred boundary between family life and work life can all cause conflict within any family-run business. And the family connections can often make such issues difficult to resolve. When Dhirubhai Ambani, founder of Indian petrochemical manufacturing company Reliance Industries, died in 2002 , he left no will. His older son, Mukesh, was made chairman and managing director, while younger son Anil became vice-chairman. The feud between the two brothers became public and, in 2005, their mother demerged the company, leaving Mukesh in charge of the petrochemical business, and Anil responsible for Reliance Energy, Reliance Communications and Reliance Capital.

A lack of structure

Family businesses rely firmly on trust - but trust alone may not be the best way. It is still vital to take rules seriously - both internal rules, and external corporate law.

In 2008, Samsung Group chairman Lee Kun-Hee was forced to hand in his resignation after being convicted of tax evasion, in addition to being investigated for selling stock to his son at unfairly low prices - demonstrating how good structure and management can make an enormous difference.

Some family businesses can fall into the trap of promoting family members to senior management roles, even when it may be clear that the individuals within these roles do not have enough education, experience or skills to fully embrace their responsibilities. In these situations, it would be far more sensible to place more qualified non-family members in these positions - but is this possible without causing friction within the family? While it can be a challenge to balance family relationships and expectations with finding the right person for the job, a lack of competence at a senior level can have a huge impact on a company’s success, as well as on talent retention.

Succession planning

Research reveals that 62% of employees say they would be “significantly more engaged” with their role if they knew their employer had a clearly defined succession plan in place. However, many family business owners fail to create succession plans, be this whether they feel that it is not needed until further down the line, or because they refuse to admit that the time will come when someone else will need to take the reins. The reality is that illness, death or even scandal can require a family business to appoint a successor in a very short space of time. Without the right plans in place, it can be very hard for a business to move forward in such an event. While family-owned companies clearly have plenty of advantages, their very nature can also make sustaining them in the long-term a challenge. The goal for any family business owner should, then, to be clear about what the strengths and weaknesses of a family business can be, in order to determine how to ensure future success.

Key Considerations:

• Build a long-term vision for the family business that is compelling and gives purpose to why you are doing this.
• Consider the type of family business structure you want to build and test out whether it can last three generations.
• Understand what family conflicts are brewing that need to be resolved with some professional mediation and coaching. In a future article, I’ll introduce you to the DNA Model. I’ll show you how to ensure you have all the strands necessary to develop a successful business and how to weave those strands together to ensure your business is strong, enduring, and successful.

These three considerations are an extract from a book by global family business advisor, Reg Athwal - Unleash Your Family Business DNA: considerations for family businesses that will help to ensure their survival. But what do they actually mean? Inspired by Reg, here are our thoughts.

How can I build a long-term vision for a family business?

Some businesses may be fortunate enough to have the next generation raring to go and with the skills and attitude needed to take the business forward. Others may have family members who are keen but who they do not feel are right to take on the business going forward, while others may have a next generation who simply has no desire to continue in their family’s footsteps. The key to developing the next generation of talent is to start early. Each year, approximately 100,000 family businesses are handed down to the next generation - and around a third of these businesses will subsequently fail. Part of the problem is a failure to plan early: by deciding on your successor early and briefing them on their hypothetical role, you will ensure that they are ready for the switch and know what to do, whether they take the reins next week or several years down the line. It could be that you create a “family council” - separate from business leadership meetings - where you discuss the business, its objectives, its issues and more with the entire family, so that everyone is aware of its current and likely future position. It could be that children are brought into the business in their secondary school years to shadow existing team members. Not only will this ensure that the whole family has a better understanding of how the business works, it will also help you to establish which of the next generation will be a good fit for the company. Whatever you do, it is also important to document your succession plan, your company goals and more so that when the time comes, the takeover is as smooth as it can possibly be.

Which structure is right for my family-run business?

A successful family business will need to be built upon an appropriate structure - and this structure may shift as it moves from generation to generation, or as the market evolves. Generally, there are five different business structures that a family business will choose from:

• Owner-operator. A business with a single owner, who runs the day-to-day operations of that business. In family businesses, the challenge here can be in deciding fairly who will take over this role when the current owner-operator retires. 
• Partnership . An approach where two or more partners have ownership of the business, and these owners are the people who benefit from any profits. While it works well for some family businesses, determining who will succeed current partners can be problematic.
• Distributed . A popular model for many family businesses, the distributed model avoids the tasks of having to choose new partners as successors. Instead, business ownership is passed down to the family’s descendants - whether or not they actually work within the business. However, the family may define a compensation policy that ensures that those who do contribute to the success of the business are better rewarded. However, the very existence of such a compensation policy can cause arguments between those who are involved in the business, and those who aren’t.
• Nested. “Nested” refers to the fact that in this type of business model, certain assets are owned by individual branches of the family, with other assets owned by the family as a whole. The core business is run as a profit-making enterprise, with dividends paid to the family branches so they can create their own profit-making ventures. While it can be a good approach to reduce tensions between family members, some may find that it can be a challenge to balance the needs of the core business with the dividends being paid to the smaller operations.
• Public. This model may mean that some or all of the shares in the business are traded publicly. However, it may also mean that the business simply behaves like a public company, with business owners playing a minimal role, and professional managers brought in to run the business. This approach can work well when the business is looking for a large amount of external funding, or when its owners simply don’t have the time, resources or inclination to be involved on a day-to-day basis. However, it may not work so well if the owners want to maintain significant control over how the business is run. 
• Want to build a family legacy that will last for generations? Buy Reg Athwal’s book for some fantastic advice!

How can I best resolve conflicts within a family-run small business?

Conflict is likely in any business setting. However, in family businesses - where personal histories, family relationships and potential quarrels between family and non-family staff can be involved - conflict can often be far more difficult to manage, and far more detrimental. Without handling disputes and conflict within a family business carefully, they have the potential to become far more serious problems, impacting on both the business itself and family relationships. While the ideal solution would be for these conflicts simply not to occur, this is unrealistic - which is why it makes sense to have formal processes in place to deal with disagreements as and when they arise. 

• Regular communication. By fostering an environment where all employees are encouraged to communicate about issues they face, speedy resolution is more possible. In some businesses, however, it may be that certain team members would prefer a more formal way of communicating their concerns, which brings us on to…
• Family councils. Family council meetings offer a formally structured means of expressing concerns, issues or anything else that family members want to discuss with the wider business. It may be that these councils include management, it may be that they are designed as a space where people can discuss issues without management’s involvement: different solutions will work for different businesses. The important thing is to ensure that your family members within the business know that they can safely air any concerns, and that they will be listened to with no judgment.
• Separating work life and family life. In a family business, keeping work at the workplace can be a challenge. However, keeping work life and home life as separate as possible can help to reduce the likelihood of serious family conflict. Some businesses choose to make certain times of the day “no-business zones”, or set ground rules that say that business issues can only be discussed in the workplace and not at home.
• External mediation. If a conflict has reached the stage where it seems unresolvable, then bringing in a trained mediator can make a big difference. An external mediator will help a family to discuss issues without emotion clouding judgments, focusing on the key issues that need to be addressed for the conflict to be resolved. 

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Start » strategy, 7 helpful resources for family-owned businesses.

These seven resources help family-owned businesses with conflict resolution, succession planning, and financial management.

Family-owned businesses account for two-thirds of all businesses and some of the world’s most successful businesses, like Wal-Mart and Berkshire Hathaway. However, family-owned companies face unique challenges. Here are seven resources that can help.

[Read more: What to Know About Taxes When You're Running a Family Business ]

Family Business Alliance

The Family Business Alliance is a nonprofit providing resources for family businesses. When you join the organization, you'll have access to over 450 other family-owned businesses you can learn from.

Depending on your membership level, you can access a peer group of like-minded business professionals. Peer groups are a great place to discuss challenges, learn leadership skills, and develop new business strategies.

The Family Business Alliance also puts on programs and events to help further your learning. For example, there's a program on succession planning and events scheduled throughout the year.

Family Firm Institute

The Family Firm Institute provides events, research, and resources for family-owned businesses. The organization hosts an annual global conference where you can meet other professionals, attend breakout sessions, and learn from speakers.

Members can access a searchable directory of other members and professional organizations. You’ll also receive access to the latest research on family enterprises.

[Read more: The 3 Keys to Success (and Failure) in Family Businesses ]

The Family Business Alliance is a nonprofit providing resources for family businesses. When you join the organization, you’ll have access to over 450 other family-owned businesses you can learn from.

Family Business Consulting Group

The Family Business Consulting Group (FBCG) is a consulting firm offering services specifically for family-owned businesses. There are more than 100 educational programs available addressing the complex problems facing family enterprises.

Workshops are available on conflict resolution and improving communication in family businesses. FBCG can also assist with succession planning, ownership changes, and training future owners on their responsibilities.

You'll learn how to create and implement policies that align the family and provide clear guidance when making important business decisions. You can also check out the many free resources, including webinars, books, podcasts, and videos.

Oracle NetSuite

Oracle NetSuite offers business management software for family-owned businesses. The integrated solution lets you manage your company's finances, sales, customers, and supply chain in one location.

You’ll have access to a live dashboard and analytics, so you'll always know what’s happening with your business. Oracle NetSuite is a scalable solution that can grow alongside your business.

Institute for Family-Owned Businesses

The Institute for Family-Owned Businesses is a nonprofit dedicated to helping family-owned companies in Maine. The organization provides outreach programs, networking opportunities, and resources to help you run your business more effectively.

Over 50 programs are available that can help you in every area of your business. For example, you can learn about intergenerational issues, leadership development, and strategic planning. There are also events scheduled throughout the year that you can take advantage of.

Family Business Performance Center

The Family Business Performance Center is an online coaching business run by Pete Walsh, who spent 16 years working in his own family business. As a client, you can access online videos, written exercises, and workshops.

There are also workshops available to help families learn better communication skills and address challenges as they arise. You can attend a live workshop in Phoenix, Arizona, or have Pete and his team come to your town and deliver the workshop at your business. Once you've attended a workshop, you're invited to participate in individual or group coaching.

U.S. Small Business Administration

The U.S. Small Business Administration (SBA) provides many useful resources for family businesses. These include free educational resources on conducting market research, writing a business plan, and choosing a business structure.

The SBA is also an excellent resource if you're looking for funding opportunities since it offers a variety of SBA loans with low rates and flexible repayment terms. You can also check out the SBA's partner resources, such as SCORE, Women’s Business Centers, and Small Business Development Centers.

[Read more: Small Business Development Centers: What They Are and How to Find One ]

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Essential Resources for Family-Owned Businesses

Resources like the Family Business Alliance, Family Firm Institute and the U.S. Small Business Administration offer networking, educational programs and financial guidance to help these enterprises thrive.

Click here to read the Chamber of Commerce’s full article on resources for family-owned businesses.

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Times of change and opportunity are coming for Spain’s family-owned firms

* This article originally appeared in the newspaper “Expansión” on May 4, 2024 under the title “Llegan tiempos de mudanza y oportunidad para la empresa familiar.”

Family firms require solid corporate governance in order to maintain their relevance as engines of growth and employment.

Spain’s corporate world has garnered global media attention in recent weeks with two very different news stories: first, the €3 billion IPO launched by fashion and fragrance company Puig –the largest in years–and second, Grifols’ appointment of a new CEO amid unproven allegations of its financial reporting.

As different as the developments are for the two Barcelona-based groups, they both underscore the evolution of Spain’s family-owned businesses with the integration of new governance, management and ownership practices that may forever shape their identities.

Essential for sustained competitive advantage, these changes also present companies with the opportunity–and challenges–of forging a new identity that remains tied to the family while still maintaining its independence.

For Puig, the seismic shift is becoming a publicly listed company. “We believe the balance of being a family-owned company that is also subject to market accountability will allow us to better compete in the international beauty market during our next phase of development,” announced Chairman and Chief Executive Marc Puig in a statement on the share sale.

Founded in 1914 as a cosmetics and fragrance company–famous for producing Spain’s first homegrown lipstick, for instance–the Puig group has expanded to acquire a broad portfolio of global brands from Carolina Herrera to Charlotte Tilbury.

For Grifols, meanwhile, the newly appointed CEO marks a move to separate management from ownership. As announced by the firm, “Grifols, which has pioneered so many innovations over the decades, now also sets a new corporate governance standard for family businesses listed on the Spanish Stock Exchange.”

Founded in 1909, Grifols has evolved into a global healthcare leader with operations in more than 110 countries. In separating management and ownership, members of the Grifols family have stepped aside. The new CEO is a non-family member with 25 years of international management experience in publicly traded companies.

Spain is a country of family-owned businesses, and not only the many numerous mom-and-pop shops that we all know. Family businesses come in all types and sizes. Think of any sector. Fashion? Inditex. Supermarkets? Mercadona. Construction? Ferrovial. Family-owned all, they are some of Spain’s best-known companies.

According to Spain’s Instituto de la Empresa Familiar (Family Business Institute), 89% of Spanish firms are family-owned, accounting for the country’s main source of job creation. Their importance is difficult to overstate.

But Spain today is a very different place than when many of these companies were founded. Among other changes, they face competition from all sides, from big chains and franchises to online businesses. Large, global companies need to show transparency. Managers must be up to the task.

Doing right by stakeholders

Given their importance in Spain’s economy, family businesses wield an outsize impact on their stakeholders, including their customers, employees and suppliers. In the case of family-owned businesses, there is an additional stakeholder–the family–whose fortunes and name are often intertwined with those of the company.

Many people assume that family-owned businesses are automatically better than other types of companies in their treatment of employees, suppliers and community. Without a doubt, examples abound of family-owned companies that treat their employees like family, regardless, regardless of actual blood lines.

That said, the same can’t be said of other family-controlled companies. While it might come as a surprise, the research is mixed on whether family-owned business is actually better for stakeholders.

Far from being a problem, this is an opportunity going forward. Family businesses can make a difference, especially at a time when the wisdom of stakeholder capitalism and responsible, sustainability-minded companies is gaining traction, especially among younger generations. Guided by a long-term vision, family-owned businesses can think big even when they’re small.

In collaboration with Caser, we recently produced a white paper on how companies can make sure they do right by stakeholders .

It all starts with employees. Family-owned businesses have the chance to build strong employee relationships even in times of growth. Communication is key: employees must be aware of the benefits of a family-owned business and the connection between family values and business goals.

The commitment to maintaining employment in good and bad times is also a plus. This is particularly relevant in attracting new talent, which may not be as familiar with the company’s history as previous generations. At the same time, communicating fairness in career opportunities for non-family members will also enhance the firm’s attractiveness to top professionals.

Communication is also critical in maintaining existing clients and attracting new ones. The unique family history may serve as an initial selling point, but having and communicating environmental, social and governance (ESG) strategies will help retain them. ESG strategies should include training employees in climate-related innovation, even in the case of small companies, and diversifying the board of directors in the case of large firms.

It may require forming alliances, including companies that are sometimes competitors. When speed is crucial, organic growth may be too slow; strategic alliances can offer companies faster access to new markets, cutting-edge technology and specialized knowledge.

When trust is an issue, some companies prefer to forge alliances with other family-owned firms, reinforcing their shared long-term vision. Strengthening bonds and relationships among family business can bolster competitive opportunities.

Sometimes, growth requires major changes in a company’s management or ownership, as evidenced by Grifols’ decision to bring in outside management or Puig’s recent IPO. But equally important are new ways of thinking to ensure family-owned businesses continue to serve as engines of Spain’s growth and employment.

Homepage image: Max Prokop on Unsplash

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Carnival is taking on Royal Caribbean with its own $600 million private resort — see Celebration Key's planned features

• Carnival Cruise Line is set to launch its new private destination, Celebration Key , in 2025.
• The $600 million project has amenities similar to Royal Caribbean's private island.
• Carnival is "clearly following Royal Caribbean's footsteps," one analyst told Business Insider.

Step aside, CocoCay. Royal Caribbean's private island could soon face some serious competition.

About 140 miles east of Miami, Royal Caribbean's Perfect Day at CocoCay receives thousands of eager families virtually every day of the year, drawn to the private Caribbean island's irresistible waterpark, beach clubs, and family-friendly amenities.

The tropical destination has become a massive hit with the cruise line's guests. And it seems Carnival, which also targets cruising families, wants a slice of its competitor's winning pie.

Carnival already operates its own private island, Half Moon Cay.

But what's better than one exclusive port? Two of them.

The cruise giant is now building another destination just for its guests: Celebration Key, a mile-long resort-like getaway on Grand Bahama Island .

The $600 million project, Carnival Corp's largest, is set to open in 2025 — a sign that the company is "clearly following Royal Caribbean's footsteps," Patrick Scholes, lodging and leisure research analyst at Truist Securities, told Business Insider in March.

Carnival’s promises for its private destination might sound familiar.

Royal Caribbean's private island has a waterpark with 14 slides and children's play areas.

Similarly, according to Carnival's recent announcement, Celebration Key will have a large, family-friendly freshwater lagoon with two 350-foot-long waterslides and a children's water playground.

It's a scaled-back version of CocoCay's popular feature — for now. Looking ahead, Carnival said it plans to build a waterpark and zipline course, too.

Celebration Key would also offer amenities like ping-pong, basketball, and volleyball.

As you might've guessed, these activities are also available on Royal Caribbean's island as well.

Looking to escape the sound of screaming children? Carnival says Celebration Key will have a separate adult-only section, again with frills reminiscent of CocoCay's recently opened pool club (as in, a swim-up pool bar, a DJ, and no kids in sight).

It wouldn’t be a cruise-owned private island without up-charged amenities.

Travelers at Perfect Day at CocoCay can splurge on private beach clubs, cabanas, shopping, food, and alcohol.

The same goes for Celebration Key. In fact, "You'd be surprised at how much people are willing to pay to rent cabanas for the day," Josh Weinstein, president and CEO of Carnival Corp, told investors in late March.

Like CocoCay, Carnival expects its private destination to be a big money maker with increased ticket revenue and "incremental in-port spending," Weinstein said. Plus, it'll be near Florida's major cruise ports, allowing Carnival to save money on fuel — another major benefit to owning private Caribbean properties.

Celebration Key is already included in over 500 of Carnival’s itineraries across 18 ships.

We're still a year from its debut, but that's not stopping the company from planning the expansion of its upcoming property.

Carnival said it'll spend $100 million extending Celebration Key's pier, which, when completed in 2026, will allow it to accommodate four of Carnival's largest cruise ships.

By 2028, the cruise line says the destination will be able to accommodate 4 million travelers annually.

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