The Biggest Mistakes Family-Owned Companies & Small Businesses Make

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One of the things that I’ve noticed in working with various companies on a freelance basis is how businesses distribute finances and allocate for expenses.

Unfortunately, the biggest thing that I’ve noticed is the show of favoritism especially with small businesses that are family owned. Because, there are several individuals who might be a family friend or someone who’s worked with the company for a long time (10-20 plus years.) Unfortunately, this means that these individuals end up getting overpaid hundreds, if not, thousands of dollars more to do what anyone can do. And let’s not forget, others can probably execute and deliver the product or project at a fraction of the cost. It’s like companies play favorites with long time family friends, which wind up causing further complications in the end.


Complications with Family Favorites & Small Companies:

sunflowerFamily favorites end up costing the company a lot more money in the end. They can go freelance, contract and be allowed to come and go as they please.

These contracted employees get paid sometimes a lot more than full-time employees and because they are a long time “pal” of the company; they can get away with charging a ton for their services.

sunflowerThe company can often save money by hiring full time employees to do the work that the “family favorite” can do, only they opt not to. They assume that they are saving in cost by hiring their “friends” on a freelance basis. They think that they are saving on cost when it comes to insurance and etc. But, usually they wind up paying family friends much more regardless of a contract or freelance basis.

sunflowerCompany money is used on family favorites or to cushion the pockets of the CEO; meanwhile, everyone who’s been beyond dedicated to the company rarely see a pay raise.

Dedicated employees that end up working well above 40 hours a week, end up getting over looked.

sunflowerOverlooked full-time employees are promised raises, percentage increase for salary and dedication. Yet, there is very little follow through and these dedicated full-timers end up suffering in the end.


The Bottom Line:

ku-xlargeDedicated and long-time employees that have been promised a raise of some kind or a percentage, usually get’s pushed aside and ignored. Meanwhile, the CEO and executives or “family friends” get their pockets lined with cash. It isn’t right or fair. But, it happens quite frequently especially with smaller businesses where family-owned tends to be more important than who is actually more qualified to run the company.

Usually, you have someone who’s worked for the company for at least 10 years or more that is overlooked, underpaid, and constantly promised a raise that they never see. This individual is likely to do a better job at being the CEO then the CEO him/herself. But, since it’s a family operation it’s extremely difficult to get anything done especially if the under-estimated employee actually knows more than the CEO.

It’s really unfortunate, when, family decides to put family in charge. Especially, when family members are not always the best qualified. There ought to be a rule in place to never ever put family members in charge of a business and instead, actually hire reputable employees that have been there and know the company or have the experience. On rare cases maybe a family member being handed the keys of the company, knows what they are doing. However, this is very rare and usually the company can better profit and grow with someone in charge that is a visionary and a big picture type of person. Big picture thinkers tend to have a knack for growing small companies into mid-sized or even a larger company.

But, nepotism exists and it is all to prominent in the small business world.


Word Of Advice:

2009-12-30-NepotismIt’s better to save your money to promote employees that have been devoted to the company instead of lining your own pockets only to expand your own home. Hey, some devoted employees actually would like to one day own there own home. Rather, than see you take most of the company’s profits to expand yours.

It’s also wise to ditch the “family friend” that’s been around 15-20 plus years and actually hire someone that can promote your business via social media and viral marketing. This is the new way to market content and brand anyone these days. It’s best to save your money to hire a professional digital producer that can actually do this for you and launch your small company into a larger pond.

Small companies underestimate the power of social media when used for branding companies and viral marketing content. Hey, I am just being honest; this is just my observation after working for numerous small companies. Hopefully, some of you will actually take the advice.


Anthony Hopkins

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