By: Stewart Brannen

Did you know that a recent study revealed that 2 out of 3 jobs in the United States are the result of family owned businesses, and that 88% of those businesses have sales revenues over $1 million? A closer look into the numbers reveals that most of those family run businesses are actually generating revenues north of $25 million*. That’s right – family owned and operated businesses in the U.S. account for 64% of the GDP, and it is not surprising that many of these businesses much in common when it comes to their continued growth and legacy.

Should family continue to manage the business? This is a key question that oftentimes has pros and cons to it.  From the pros side, a family member that has intimate knowledge and awareness of the history and story of how the business has grown and changed over the years can be invaluable. Oftentimes they bring a depth of understanding to the needs of a customer that might far outweigh any newcomer entering  the business. Through years of experience, they know how the business works, and can readily jump in and tackle most practical situations.  In discussing the cons, the “blood is thicker than water” analogy can come into play and can actually blur the real needs of the business.  For example, a father and son may have totally different outlooks, perceptions and personalities. Unfortunately, those differences can either spell success or failure for the future of the business. The natural observation here is to try and be as realistic as possible, be honest and find the courage to make the right decision about the future success of the business and the family ties to it.

Another common theme among family owned entities is: should they expand? This depends what the focus of the family is. If the business is run well, is profitable and is achieving the goals that were set  by the original members, then the question of expansion may or may not come into question. However, given the pace of changing customer needs and expectations, business growth, may be a necessary and continual question that needs to be addressed.  Things like strategic planning, project management, time/cost
sensitive goals and prudent financial forecasting always come into play and should mesh with the successful business focus of the day. I emphasize focus, primarily because when it comes to expansion, many businesses can generate spectacular losses if they don’t “keep their eye on the ball” and drift into areas that they just are not competitive nor competent in. The key – know who your customers are and focus on keeping them happy!

Keeping home and work separate is always a challenge for family owned businesses. Let’s face it, there are certain things that make a house a home, and similarly, there are things that make a business stay competitive. Recognizing that the dynamics and interplay of family life needs to be prioritized in the home can serve as a sobering balance towards the different job responsibilities, descriptions, roles and responsibilities that are important in business. The notion here is to prioritize family values in the home and champion business ethics and professionalism in the workplace. To do this, family leadership must be intact, and respect must be honored in both environments.

I hope I’ve shed some light on common family business questions, and that your business will continue to flourish as a result. Lastly, when family members unite around a cause, the strength of their bonds can be unbreakable! Onwards!

*Statistics from: Astrachan, Joseph and Shanker, Melissa.  Ann Arbor Area Business Monthly, Volume 8, No. 5.July, 2012.