If a parent retires completely and turns the firm over to a son or daughter, the firm remains a family business.

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Prepare for the AAMI Small Business Management Test with flashcards and multiple choice questions; each question comes with hints and explanations. Get exam ready!

Multiple Choice

If a parent retires completely and turns the firm over to a son or daughter, the firm remains a family business.

Explanation:
Family involvement in ownership and governance defines a family business, so when a parent retires completely and passes ownership and leadership to a son or daughter, the family still controls the firm and it remains a family business. The key is who owns and who makes major decisions; as long as the family retains that control, the enterprise stays within the family. If control shifts to non-family owners or to external managers without family influence, it might no longer be categorized as a family business.

Family involvement in ownership and governance defines a family business, so when a parent retires completely and passes ownership and leadership to a son or daughter, the family still controls the firm and it remains a family business. The key is who owns and who makes major decisions; as long as the family retains that control, the enterprise stays within the family. If control shifts to non-family owners or to external managers without family influence, it might no longer be categorized as a family business.

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