The U.S. Chamber of Commerce indicates that there are 5.5 million family businesses in the United States. They account for 57% of gross domestic product and employ 63% of the workforce.
For business owners, family and business are top priorities. Business consultants indicate that the key to successfully running a family-owned business is sound decision-making without the influence of dysfunctional interpersonal dynamics. Consider implementing tools and strategies that keep family problems from derailing the business.
Family members involved in the business should occupy roles that best suit them, understand what is expected of them, and respect the boundaries of their duties. Others can be ready to jump in when needed, but when roles are blurred, conflict develops.
An advisory board that is comprised of a majority of non-family members can help ensure that business decisions are handled professionally and independently. This improves the business’s prospects of managing and attracting both family and non-family talent along with establishing a strong governance model.
If non-family workers are held to a strict standard while family workers are not held to such standards, employees will be difficult to motivate and retain. A merit-based culture that holds everyone accountable can motivate loyalty and high achievement levels.
The percentage of family-owned businesses that successfully transition to the second generation is approximately only 30%. By the third generation, that number drops to 12%, and by the fourth generation, it is only 3%. Determining who will assume leadership and ownership of the business when the current generation steps down or passes away is crucial for the continuity of any business. The plan should be in place years prior to the actual transition, providing time to the next leadership team to learn and prepare.
Do you need help navigating the risks involved in running a family business? We can work with you to develop policies that mitigate the risks of owning and managing a family-owned business. Contact us at firstname.lastname@example.org or (248) 477-6300.