Some of the world’s largest corporations, such as Wal-Mart, BMW, Tyson, and Ford, are family-owned, a long cry from the “mom and pop” corner stores that many people connect with family-run enterprises.
While family enterprises are a major economic driver, only 30% of them survive to the second generation, only 12% survive to the third generation, and just 3% survive to the fourth.
What is the key to running a successful family business? We’ve compiled a list of eight suggestions to help ensure that your family business, or the one for which you work, survives the generations.
Families have their communication style, which is not always the greatest, as many family therapists will tell you. Break the mould and make open, frequent communication a priority in your family business. When you notice a problem with communication, address it right away. Are there bigger issues at hand? Engage the services of an outside consultant.
When it comes to longevity and the success that comes with it, every business, especially intergenerational family enterprises, must change with the times. A family-run business—and the people who run it, regardless of age—must evolve or risk alienating both employees and customers. Whether it is the aversion to new technology or resistance to changing cultural norms, a family-run business—and the people who run it—must evolve or risk alienating both employees and customers.
Setting limits is crucial to creating and maintaining success, as leaders of thriving family-owned businesses know. Establish and maintain a clean line between family and business. To put it another way, keep family matters out of the boardroom and work in the office.
Keep Everything Formal
Make sure that every agreement or contract is written down in some way. In a business, disagreements are unavoidable, no matter how much you love each other.
Handshake agreements should be avoided. In family enterprises, formalized contracts, share issuances, job descriptions, and operational procedures are more important, and relying just on spoken agreements can lead to disasters and disagreements.
In a family business, entrepreneurs are often hesitant to take this step since it may appear as a lack of trust. A written documented agreement for a commercial partnership, on the other hand, is simply a smart business that protects all parties involved. Makes to avoid any prospective family feuds.
Decide Who Makes Decision
Employees who do not check everything with family members who hold a stake in the company are more likely to be reprimanded. Employees may develop resentment because of this. Make it clear which major decisions can be taken jointly, as a dispute over each minor issue can suffocate the family business.
To avoid family disputes and conflicts, provide a clear and fair decision-making procedure. You can choose to make most decisions by consensus or vote and keep crucial decisions for yourself as the owner, but be clear about what types of decisions others can make and then let them have their way.