Is your small business family-owned?
Family business owners are feeling optimistic about the short term, but pessimistic about the long-term outlook for their companies, says a recent survey by The Alternative Board (TAB).
The good news?
If your family business is on the wrong track, there are some simple steps you can take to right it before it’s too late.
What the Family Business Survey Found
Nearly 60 percent of family-owned businesses’ profits grew last year and 73 percent of family business owners think their companies’ profits will grow this year. But despite this sunny short-term outlook, the longer-term picture is a bit dimmer.
Almost two-thirds (62 percent) of family business owners don’t think their companies will remain family owned by the next generation.
What’s holding family businesses back from longevity?
Ironically, it’s something that’s completely within their control. Nearly one-third (29 percent) have no succession plan, and another 26 percent are unhappy with the plan they do have.
In addition, the majority of family business owners aren’t laying the groundwork for the next generation to continue running their companies. Only 45 percent of respondents in the family business survey say their children are involved in the business.
Even among those who have children involved in the business, there seems to be a lack of confidence. More than 40 percent of family business owners say non-family employees are more qualified to keep running the business than their family members are.
Prepare Your Family Business to Beat the Odds
How can your family business beat the odds and keep running (and thriving) through multiple generations?
If you don’t have a succession plan, start developing one now. Your succession plan lays the foundation for you to eventually leave the business. Even though you may not be planning to do this for decades, the plan also serves as a backup system for what will happen if you should die, become disabled or even just suffer an injury or illness that keeps you from working in the business for an extended time.
A succession plan can also motivate both family and non-family business members to improve their leadership and business skills so they’ll be ready to move into the roles that are planned for them. Conversely, it can serve as a wake-up call to family members who aren’t included in the plan that they need to get their acts together—in other words, shape up or ship out.
Get your younger children involved in your business. If you have a family business, children should be part of it at some stage of their lives. Involving children in your business from an early age exposes them to the realities of entrepreneurship. Even if they choose not to be part of the business as adults, you’ll know that they had the exposure and background to make an informed decision – rather than just reacting out of a desire to rebel.
Something as simple as having grade-school children file documents or stuff envelopes during their school vacations can instill an interest in business that lasts a lifetime. As your children get older, consider matching them with mentors in the business or having them job-shadow employees in various roles so they can learn about the different departments in your business.
If your children do choose to work in the business, provide them with professional and leadership development opportunities. Make sure they learn not just the technical skills or duties of the business, but also the leadership and management principles they’ll need to keep the business going generation after generation.
Family Photo via Shutterstock