Funding alternatives and business planning in family businesses

Abstract

Family businesses form the backbone of the SME sector in every country. Those founding a new business entity usually need support from their family members, let it be their knowledge, money, assets, time, or simply understanding and personal care. Thus, it is vital to enhance not only the survival, but also the success rate of these firms. This paper reviews issues that entrepreneurs will face as a top-manager in a family business context. We assess alternatives to common financial accounting and performance measurement practices and compare adequate financing sources and strategies for family businesses to practices used by other types of firms. The paper discusses the different forms of funds that are available to the owners of these enterprises. We will start with a brief characterization of the ownership structure of family businesses. Then review the literature on funding resources to family businesses. These different resources are discussed from a family relevant practical point of view. Finally, some conclusions are presented.