Entrepreneurship

1. FAMILY BUSINESS
Entrepreneurship – Lesson 11

2. Topics to be
Discussed…………..
 Introduction
 Advantages of Family Involvement in the
Business
 Challenges of Family Business
 Managing Risk Of Small Business
 Providing Security for Small Business
 Maintaining Good Government Relations

3. Introduction
 A family business is a business in which one
or more members of the same family have a
significant ownership interest and significant
commitments toward the business’ overall
well-being.

4. Advantages of Family Involvement
in the Business
 One primary benefit comes from the strength of
family relationships.
 Family members may also sacrifice income
needed in the business.
 Some family businesses use the family theme in
advertising to distinguish themselves from their
competitors.
 Presenting the humanity of the workplace.
 Focusing on the long run.
 Emphasizing quality

5. Challenges of Family Business
 The failure to recognize that running a business
requires different practice than that of running a
family.
 Inability of the parents to accept and treat their
children as adults.
 Founders usually possess dominating
personalities (Father knows the best)
 Ignoring problems to avoid major family conflicts.
 Children often enter business and occupy
management roles before gaining experience.
 Dealing with incompetent family members.

6. Challenges of Family Business
 Problem of Management Succession
planning
 Management succession planning is the
process of preparing an organization for a
transition in leadership/ ownership.
 Management succession involves planning,
selection and preparation of the younger
generation and defining their role in the
business responsibilities and ownership.

7. Managing Risk of Small
Business
 Risk Management is the process of
conserving earning power and assets
by minimizing the shock from losses.
 Types of Risk
 Ways of Coping with Risk

8. Managing Risk of Small
Business
 Types of Risk
 Pure Risk is the uncertainty of the occurrence
of an unpredictable event, which can result in
loss. Loss is the only possible outcome of a
pure risk. So, a person can not consciously
take on a pure risk.
 Speculative Risk is the uncertainty as to
whether a voluntarily undertaken risk, will
result in a gain or loss. Almost all investment
activities involve speculative risks since an
investor has no idea whether an investment
will be a success or a failure.

9. Managing Risk of Small
Business
 Ways of Coping with Risk
 Risk avoidance is refusing to undertake, or
abandoning, an activity in which the risk seems too
costly.
 Risk Prevention or Loss Control consists of using
various methods to reduce the possibility of a loss
occurring.
 Risk Transfer is shifting a risk to someone outside
your company. The best form of risk transfer is
insurance. Insurance if provided by another
company that agrees, for a fee, to reimburse your
company for part of a loss.
 Risk assumption usually takes the form of self-

10. Providing Security for Small
Business
 Security – The state or feeling of being safe
and protected
 Criminal Act
 Techniques for Preventing Theft

11. Providing Security for Small
Business
 Criminal Act
 Armed Robbery
 Theft
 2.1. Shoplifting
 2.2. Employees’ Theft
 White-Collar Crimes

12. Providing Security for Small
Business
 Techniques for Preventing Theft
 Wide-angle and one-way mirrors to observe
employee or customer behavior.
 TV cameras, tied to monitors, to observe a
large area of the store.
 Electronic noise activators, some visible to
customers, some not, to warn of unprocessed
merchandize leaving the store.
 Paper-and-pencil tests of a potential
employee’s honesty.
 Continued………………….

13. Providing Security for Small
Business
 Techniques for Preventing Theft
 Security Audits, such as: unannounced spot checks of
critical areas visible security surveillance of work
activities weekly, monthly or quarterly physical
inventory checks.
 Scheduling operations and purchasing materials for
just-in-time delivery.
 Scheduling lower inventory levels on weekends.
 Fencing and lighting storage yards and clearing the
area adjacent to the fence.
 Using locking systems that are difficult to jimmy.
 Unannounced rotation of the person responsible for
receiving materials.

14. Maintaining Good Government
Relations
 Coping with Government Regulations
 Establishing Social Responsibility
 Complying with Business Ethics

15. Maintaining Good Government
Relations
 Coping with Government Regulations
 Learn as much as you can about the law
particularly laws that help you
 Challenge detrimental or harmful laws by
joining organizations.
 Become involved in the legal-political system
to elect officials of your choice who will help
change the laws.
 Find better legal environment, if possible,
even moving to a different place.
 Learn to live the laws and regulations.

16. Maintaining Good Government
Relations
 Establishing Social Responsibility:
 Social responsibility is a business’s obligation
to set policies, make decisions and follow
actions that are desirable in terms of the
values and objectives of the society.
 A business has social responsibility towards
its customers, employees, suppliers,
investors, government and the society.

17. Maintaining Good Government
Relations
 Complying with Business Ethics:
 Business ethics refers to the set of principles
or moral standards used to judge the
rightness or wrongness of business decisions.

18. Reviewed…………..
 Introduction
 Advantages of Family Involvement in the
Business
 Challenges of Family Business
 Managing Risk Of Small Business
 Providing Security for Small Business
 Maintaining Good Government Relations