Legacy Business Project - Essay Example

Legacy Business Project Legacy business is one of the most common forms of business ownership around the world. In most cases, there are individuals who start organizations with an intention of continuing them as family businesses. In certain instances family members, for example brothers, come together to set up a business enterprise and run it as a family business. However, in some cases, family business often fails after the death of some important member of the family who also played critical role in the family business.

The failure often results from poor management and unconscionable share distributions demand by remaining partners. Completing legacy business project on Cliff’s hardware instilled in me clear knowledge about systems and agency or stewardship surrounding family businesses. Completing the project made me realize the family business system is comprised of three mutually dependent and overlapping groups, which include the family, business and ownership. The overlap creates numerous groups within the family business with varying opinions, interests and objectives.

Besides family owners, there are family members, family employees, family owner-employees, non-family owner employees as well as non-family employees. For example, we found out that Cliff’s hardware family business is managed by the family members including Martha Asten and Terry Asten Bennett, who has been Cliff’s Variety manager since the 1990s. There are also employees, who are not part of the Asten family. Based on the research, it was clear that the probability of a family business transitioning successfully from the first to the second generation is usually slim and grows slimmer as the business progresses to successive generations.

Like in every business, family business is not immune to the issues of stewardship of agency. The interest of the family business must be protected because the overlapping groups with varying interest and opinions try to push for their own ends. A healthy family system is usually advantageous to the family business while a broken family system will negatively impact the health of the family business. Trust is often a critical ownership tool in family businesses. Holding regular meetings is crucial for the growth and survival of legacy businesses because it creates a platform for discussions beyond the confines of boardrooms.

For example, in our project during our attempts to reach Martha, a second-generation member of the family business, we were told by Frank, an employee at Cliff’s that Martha and other family members were busy preparing for thanksgiving. Perhaps, Cliff’s used thanksgivings as a platform to preview their achievement and set clear where they want to be after a given period of time. The success of every business relies on how hard the owner or owners of the business enterprise work. Family businesses are not insulated from this.

All the family members play crucial role in ensuring that the business is a success. Every member of the business must play and active role in ensuring that the organization meets its preset objectives. The family members as well as employees who are not members of the family are agents of the business. Because of varying objectives and ideologies, agency problem usually emerges, thus the need to incur agency costs just like other forms of businesses. Despite the fact that trust is the backbone of most family businesses, there is need to employ independent auditors and ensure good remunerations to the employees, including family members working for the business.

As such, the project endowed me with vast ideas about successful running of legacy business.