Empressofbiz, Biz tips: Family owned businesses...beating the odds

   Growing the Family Business…
Beating the odds!

JoAnn R. Forrester

Did you know that over 70% of family owned business want their busienss to  continue to the next generation  Yet, according to the Small Business Administration only 30% percent of family owned business make it to the next generation.   

 Why? What  happened? And what can be done to change the outcome? It is frustrating to watch a good business go down.   All the time, effort  and resources it took to build…and then its gone. 

Some Family Owned businesses close voluntarily because the next generations do not want to take them over…they were the parents dream and not theirs.     

Others close because due to the lack of  proper financial and business planning to pay taxes and cover the business during the transition.

A  Family owned business may limp along with disinterested owners and eventually has to be sold at a value significantly lower than its prosperous days.   

Fourth:   One issue that is hard to face and yet is the key to a successful transition is the “ talent pool.”  Do your heirs  have what it  takes to be the boss?  They may be willing, but lack the capability and personality  to be the CEO.  Or, if other family members  are involved, he or she lacks the ability to work as a team. We all know FOB’S that have failed due to the inability of the family members not willing to separate the personal issues  from the business.

If the FOB wants to continue a succession plan, both financial and personal development  must be in place EARLY.  Training of family members can begin young.  Being in business should be seen as fun…not a drudgery.  

I know one FOB who takes her daughter to the “shop” once a week and her job is to greet customers and make sure they are comfortable in the waiting room.  She gets paid to work that day…and at 10 years of age she is already coming up with suggestions on how to treat the customers.  And her ideas are considered and a few have been implemented.

The two E’s are important.  Education and experience elsewhere is essential.   It allows them to see how businesses operate elsewhere and then they can bring in fresh ideas to the business.  

Long range planning is essential  for a family owned busienss to succeed to the next generation.  More on this on upcoming  columns.