It’s Not Personal, It’s Business
With the holidays looming, some of us may be stressing about how to keep a happy balance among family members that may not see eye-to-eye. However on the other hand, one wonders how family owned businesses can be so successful – the facts speak for themselves: Pros/Cons: Family Owned Business
- Family owned businesses employ 63% of the workforce (FEUSA 2011 Survey)
- Average life span of a family owned business is 24 years (familybusinesscenter.com, 2010)
- About 40% of family owned businesses in the US turn into second generation businesses; 13% are typically passed down to a third generation!
- Nearly 60% of family owned businesses have women in top management team positions (Mass Mutual American Family Business Survey, 2007)
- As a comparison – of the non-family owned firms in the Fortune 1000 – only 2.5% are currently led by women (Fortune magazine, 2007)
The families that are successful in building lucrative family owned businesses are careful to separate the different roles of family versus business colleague. Discipline and communication will help family members in a joint business venture maintain the balance necessary for success.
Still not sure if you would consider operating a business with your family? Consider some of the pros and cons of owning and operating a family owned business:
Loyalty – “Blood is thicker than water.” Typically families bring strong bonds and sense of inherent loyalty to a business partnership. Most family members will demonstrate greater alignment of core values and will be more apt to make sacrifices for the sake of the ongoing growth of the company.
Flexibility – family owned businesses typically demonstrate greater understanding and flexibility when events or conflicts arise and which require that the employee focus on personal matters. Family businesses tend to also provide greater flexibility to working parents or retirees who may only be able to work a flexible or part time schedule.
Right Fit – Jim Collins, a well-known business and management consultant is famous for his idea that to build and sustain a successful company you “start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats.” One of the pitfalls of a family owned business is that family members may be promoted to positions of greater oversight and responsibility which they may not be suitable for.
Family Drama – succession can become a contentious subject in a family owned business. Family or sibling rivalries can erupt leading to conflict. Additionally, there may be instances in which the elder generation managing the business begins to retire and the younger generation is not yet skilled to fully take over management of the business.
There are many reasons why families choose to own and operate a business together, most business owners have shared that the trust, shared values, and common goals of the family make it very attractive. The Arise Vendor Network boasts many vendor partners that are owned and operated by family members. We often see spouses, parents and their adult children, and siblings that have formed successful partnerships!
Credit where credit is due: Author: Arise Virtual Solutions
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