Learning Objective: 02-01 Discuss some problems involved in organizing and operating small family-owned businesses.
38.
In family-owned businesses run by copreneurs, both partners have equal roles in all
management areas.
Learning Objective: 02-01 Discuss some problems involved in organizing and operating small family-owned businesses.
39.
The involvement of relatives in a family-owned business should always be based on their
family status.
Learning Objective: 02-01 Discuss some problems involved in organizing and operating small family–owned businesses.
40.
Daughters who are interested in leading a family business should begin by gaining
experience outside of the family business.
Learning Objective: 02-01 Discuss some problems involved in organizing and operating small family-owned businesses.
41.
Incompetent family members working in a family-owned business may be handled by
placing them in jobs that involve frequent interaction with other employees.
42.
The attitudes of incompetent relatives working in a family-owned business can be
changed by formal or informal education.
43.
Incompetent family members may be responsible for the high turnover rate of top-notch
nonfamily managers and employees.
44.
Setting up of deferred profit-sharing plans is an effective method to placate dissatisfied
family members in a family-owned business.
45.
When success leads a family-owned business into the second generation, younger
relatives begin to lose interest in job titles.
46.
Family-owned business entrepreneurs usually make good general managers and do not
specialize in any specific activity.
47.
A person’s age must determine the lines of authority in a family-owned business.
48.
Managers of family-owned businesses must agree to hire any family member who shows
an interest in joining the business.
49.
As the leader of a family-owned business grows older, he/she must guard against letting
past successes lead to trying to maintain the status quo.
50.
Employees find themselves treated less fairly in a family-owned business that is organized
into a corporation.
51.
Prenuptial agreements pose a problem when a couple running a family-owned business
gets divorced.
52.
The borrowing power of a family-owned business is limited by the amount of family
assets.
53.
In order to prepare children to take over the family-owned business, it is essential to hire
them for higher-level positions in the business.
54.
In a small family business, it is not necessary for management succession planning to
start early.
55.
Moving a family member into a family business at a higher level can be justified if he/she
has worked for another company to broaden his/her training and background.
56.
In order to learn to manage a family-owned business, a new family member interested in
joining the business should be given true responsibility.
57.
When the choice of replacements is limited in a family-owned business, the owner may
broaden a manager’s job specification in order to utilize him/her effectively.
58.
Estate planning involves preparing for the orderly transfer of the owner’s equity in a
business when death occurs.
59.
A buy-sell agreement provides for the corporation to buy back a shareholder’s stock when
he/she leaves the company.
60.
A family limited partnership resembles a will and contains instructions for managing
personal assets.
Essay Questions
61.
What causes conflicts in a family-owned business?
62.
Explain how a small family business owner must deal with incompetent family members
working in the business.
63.
How can family members working in a family-owned business be compensated?
64.
What are the limitations faced by a family-owned business?
65.
What are the advantages and disadvantages of organizing a family-owned business into a
corporation?
66.
If you were a working mother, why would you prefer to establish a home-based business
instead of looking for a corporate position?
67.
How can family business owners prepare their children to manage the business?
68.
Describe how a family-owned business may prepare for management succession in case
the owner departs suddenly.
69.
Compare the advantages of selling a family business to family members with the
advantages of selling the business to outsiders.
70.
Discuss the different ways in which estate taxes can be minimized.