Page 175 - Introduction to Business

CHAPTER 4 Small Business and Entrepreneurship 149

that are sensitive to community social needs (poverty, homelessness, health care,
human rights, etc.) and environmental concerns (pollution, forests, animal rights,
recycling, wasteful resource use, etc.). Firms that do not demonstrate social and
environmental responsibility to their customers can suffer lost sales.

Running a Family Business
Most small business firms are family owned and operated. By intertwining family
and business, there are costs and benefits that should be considered. Some of the
costs are
• Conflicts between family members
• Management succession disagreements
• Arguments over money
• Differences in the vision and strategic planning for the firm
• Management control of family employees
Of these costs, management succession is the main reason why small firms go
out of business. Accumulated wealth in a family business must at some point be
transferred to the next generation. Siblings can end up in bitter battles for control
of the firm and its management. Parents as founders must communicate to their
children their wishes concerning who will own and manage the firm in the future.
Sometimes it is necessary to select someone outside the family to assume the man-
agement reins. Obviously, management succession is an emotionally-charged
issue. Founders can increase the chances of a smooth succession by being fair,
open, and respectful of all family members’ views in this regard.
The benefits of a family business are
• The ability to spend more time with family members
• Helping family members succeed in their work
• Sharing common family values that are incorporated in the business
• Strengthening family bonds
• Trust and mutual cooperation
Family members who do not work in a family enterprise will often end up living
and working in different locations, having different types of jobs, and having lim-
ited time on vacations and holidays to be with other family members. By contrast,
family businesses tend to bring family members closer to one another. Family busi-
nesses have fewer employee problems in hiring, promotion, and reward compen-
sation. Also, family members are likely more loyal and stable workers than other
employees with no personal attachment to the business.
There are many good examples of family businesses. The Duncan Coffee Com-
pany was established in 1918 by Herschel Mills Duncan in Houston, Texas. The
company gained a reputation for special blends that were served in fine restau-
rants and hotels. After Duncan died in 1957, the company was sold to Coca-Cola.
However, in 1997, great grandson H. Mills Duncan IV, 38 and a successful entre-
preneur in commercial real estate, decided to reestablish the Duncan Coffee
Company. Like his grandfather before him, he began marketing high-quality,
fresh-roasted coffee beans to the best restaurant and hotel establishments in the
Houston region. Because coffee beans lose their freshness after roasting, batches
of beans were custom-roasted to order and promptly delivered to customers. The
local success of the business has attracted some offers to buy and expand the
company, but Duncan has resisted these offers because he feels that the quality of
the coffee would suffer. Also, he would prefer that the small business stay in the
family this time.

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