Are you wanting to start a family business? If so, you’re not alone. According to the United States Census Bureau, roughly 90 percent of American businesses are either family-owned or controlled. The size of these organizations runs the gamut, from two-person “mom and pop” shops all the way up to Fortune 500 behemoths.
Together with my father, we run such a business. And though you won’t find us on the Fortune 500 list, we’ve grown over the past few years to employ about 20 professionals in our area where we aim to continuously expand in the coming years.
Running a family business has been the joy of my career, and as we’ve added employees and service offerings since my father and I formally launched the organization, I’ve come to realize there are unique considerations that entrepreneurs eyeing the launch of a family business should have in mind as they map out their startup plans.
While we could likely fill a book with such recommendations, here are three big buckets I would encourage anyone toeing the “family business” waters to consider at the outset of founding their organization. It would also be helpful to revisit these suggestions periodically as your business grows.
Harness the benefits of the generational divide
Most business leaders I know who are running a family organization are either a “significant other” duo or a parent/child combination. Sometimes both with numerous generations involved. But I want to detail an opportunity that comes with running a multigenerational family business: harnessing the benefits of a multigenerational leadership team.
I put emphasis on the word benefit because so many conversations around managing multiple generations on a team are framed in the context of controversy. You know, the older folks and younger folks butting heads. But it doesn’t have to be that way. On the contrary, when a business is peopled by a workforce that spans generations, so many good things can emerge that will help deliver big wins.
At our business, the generational expanse gives us the chance to anchor our work in both seasoned experience and fresh insights. We balance our operations with modern automation and personal touch. I’m a millennial and my father is a baby boomer. What that means is that our customers and prospects have someone to speak to whom they identify with generationally, which is a massive help.
If you’re going to have two or three generations working together to grow your business, I encourage you to consider the unique ways those varying skill sets and perspectives can make the organization stronger.
Balance work and personal relationships
One of the toughest things to accomplish when running a family business is keeping the personal aspects of your relationships and the business side of them from bleeding into one another. I’ll go ahead and say it: It’s impossible to keep them completely siloed away from each other, but you’ll need to make sure boundaries are set, and maintained, for the good of your business and your family.
If there’s turbulence at home, it’s tough to keep it from seeping into the workplace, and vice versa. When starting a family business, it would benefit everyone if there was a written and verbalized agreement in place, stating that negative home matters won’t enter the work world, and that work turbulence won’t interfere with the family realm. Then, you’ll need to hold each other accountable on this.
Nothing will help you steer clear of major family/business disruptions than having a conversation about the goals and expectations for the business and how it aligns with personal goals and wishes before launch (and revisiting it annually). By doing this, your family team will be on the same page about where you’re going. Additionally, that conversation will help inform you about who needs to be working where in the business, what their work will actually look like and how it will contribute to the overall lift of the organization.
Your business is important, but it is not more important than family. Keep these priorities aligned because once one gets out of step, it will negatively impact the other.
Start thinking about succession planning
We are at the beginning of the greatest wealth transfer in world history. Over the next few years, some $68 trillion will be transferred from the baby boomer generation down to Gen X, millennials and Gen Z. Though much of this is in the form of inheritances, it also includes business handoffs from one generation to the next.
If you’re starting a family business, especially a multigenerational one, it’s never too early to start considering succession planning. In the best case scenario, there will be a planned handoff of leadership/ownership responsibilities, but on the chance there’s an emergency or an unforeseen circumstance that emerges forcing the handoff to take place sooner than expected, you’ll want to have succession steps already in place.
Since family-owned businesses directly impact the personal well-being of the families that manage them, you’ll be doing your family unit and your non-family employees a substantial favor by having your succession plan in place as early as possible, and routinely revising it as needed.
A family business is family business. Keep it healthy.
As you prepare to take the family business plunge, always remember that the health of the family and well-being of the business will forever be tightly intertwined. The most successful family business operators I know are ever-mindful of the relationship between the two sides of the coin. When you strengthen one, the other will benefit, and if one starts coming off the rails, chances are strong the other will too. To have a fulfilling life, you’ll need both to be performing as best as possible.
But you can make this endeavor a win. Just remember that family outranks business, and the business is meant to better the family.