Pros And Cons Of Running A Family Business In Mexico

Family businesses in Mexico are mostly companies, which are very small or do not have the success expected, due to the large amount of competition that exists in Mexico; Mexican companies that thrive, have planning from the first generation which are referred to the grandparents in the case of these companies. These companies are intended to prosper over time.

Family businesses are institutions that as such do not have a specific description or meaning on the subject, many authors like DR. Juan Manuel San Martin Reyna and Luis Ángel Castrillo Lara define as Family Business: 'A property that is concentrated in a single person or a small number of people, linked by a blood link that intervenes in an important manner in the management of the company and the will of this organization to endure over time '

Even so, with all the definitions that are given or proposed by these authors, it should be mentioned that they are masters or directors of prestigious universities, experts in the subject of economy and proliferation of recognized companies in Mexico. It can be suggested that there is a common denominator in each of these definitions, which are: The ownership, control and direction under the control of a family.

The factors that influence the success of a family business are divided into three factors: 1) the preparation of the heirs for the management of the business, 2) the relationship that exists between the family of the business, 3) the types of planning of the company.

Like in everything developing country like Mexico, the families decide to opt for family businesses, to try to have an economic sustenance. This family business can predominate regardless of size; But in the majority this business are companies that are owned and managed by one or more families and even descendants of the founders of the company.

Mexico is the fifth country with more family businesses in the world; They generate more than 90% of GDP, and they are in all the industrial spins, trade and services.

Family businesses are the main engine of the economy, however, to thrive, they face many challenges, among which, one of the most important is their ability to attract (and retain) talent with the right profile.

The times of operations of these family businesses in Mexico, the great majority with an approximate percentage of 62% of carries an operating time of 20 years, another 33% of the companies carry an approximate of 20 to 49 year of operations, and finally with 5% takes a time of 50 years, this shows the time of operation and the generation in which the company is in charge. To which we refer to the first, second and third generation (grandparents, parents and children).

Family businesses face three main challenges internally, at the national level are the profit margins, the recruitment of qualified personnel for work or also seen in another way, the scarcity of the workforce and one of the most important and worrying are finances or availability of funds, for In the strategic area, only approximately 27% of Mexican companies have a business plan or strategic plan for the future. Mexican companies mentioned having strength before their competitors, being as a common denominator: Relations with the client and the service offered, the management of market knowledge, ability to gain loyalty, and experience or commercial reputation.

Mexican family businesses have as any company, weaknesses and advantages, based on third-generation companies we rely on to generate the advantages of running a family business, it is based on third-generation companies and these companies are the ones has more experience of operation.

The most remarkable advantages, in the part of the competence in charge of the administrative category are in the level of demand, communication and communication. In addition, as mentioned in the previous part, many of the Mexican family businesses consider as an advantage: Relationships with the client and the service offered, management of market knowledge, ability to gain loyalty, and experience or commercial reputation , as a result of greater control over the company. In addition, it is shown that these companies share values such as honesty, trust, efficiency and belonging to their workers and customers.

The disadvantages faced by family businesses in the very general part are the lack of future planning of the heirs of the companies, the level of informality, the lack of access restricted to financing and the culture of the country opposed to the change.

All things considered, we can say that running a family business is one of the most sought after ways in Mexico to generate profits and a solid economic base; Although as any business of any kind, those have advantages and disadvantages, that may be relevant to the success of the company. After having gathered information on this topic we can say that the most significant advantages are communication, both in the administrative area, that is, with owners and partners, and with the market. That is referred to the relationship with the client to whom the service is given, that generates customer loyalty, which in many cases can reach share values such as honesty, trust, efficiency and belonging to their workers and customers.

On the other hand, the disadvantages, although they are less than the advantages, depend a lot on the future planning of the business, such as the lack of a growth plan for employees for the future development of the business. that to be avoided is necessary from the beginning establish functions and goals of the business.