What Are the Three Types of Family Business?

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Starting a Small Family Business

To start a successful family business, follow these steps:

  1. Conduct research on the target market.
  2. Involve the next generation in planning.
  3. Assess each family member’s skills and capabilities.
  4. Establish a conflict resolution plan.
  5. Key legal steps for starting a family business: Choose a structure and create a business plan.

Types of Family Businesses

The main types of family businesses are:

  1. Sole proprietorships – owned and run by one individual.
  2. Partnerships – owned and operated by two or more family members.
  3. Corporations – a separate legal entity owned by family shareholders.

Stages of Family Business

The three main stages of a family business are:

  1. Stage 1 – The Founder/Controlling Owner Stage:

    • The founder focuses on creating a new business.

  2. Stage 2 – The Sibling Partnership Stage:

    • Organization increases, outside expertise is needed.

  3. Stage 3 – The Cousin Consortium Stage:

    • Involvement of diverse family members, new ideas are introduced.

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