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The following is an excerpt from "Start Your Own Business: The Only Startup Book You'll Ever Need," 8th Edition by Entrepreneur Press. Order your copy here today!
According to the Conway Center for Family Business, 64% of US gross domestic product comes from family businesses. In fact, 35% of Fortune 500 companies are family-run. In short, family businesses and / or family businesses have made up a significant percentage of all businesses in the United States for decades. You will find that many family members run local businesses and others whose names are listed as founders of large companies. A family business can mean that the business was founded and / or run by a husband and wife, brothers, sisters, or the whole family.
Some have been passed down for generations. In fact, family-run businesses are deeply rooted around the world. The oldest family business is a Japanese hotel called Houshi Ryokan, which has been run by the same family since 718. It can be assumed that this small inn off the west coast of Japan has been renovated several times over the last over 1,300 years.
Family businesses have several advantages. On the one hand, they can bring family members together on a common project or mission. Close family members can also put up the extra effort required to start and run a business. This is typically because they have a strong commitment and personal loyalty to one another.
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With downtime (which happens in any business), families are more likely to stick together and do whatever it takes to keep the business going. There is also a sense of stability as a company can go on from generation to generation. And if young family members are interested, they can learn the business as they age and so are more likely to be hired if they get involved at a later age.
Families may also have a more integrated work culture that is usually passed on from one generation to the next. They tend to be more forgiving and forgiving when it comes to work schedules, work-related decisions and judgments, and even mistakes. Flexible hours, childcare, and other perks that you need to negotiate with employees can be a lot easier to make. In addition, family members may be more willing than salaried employees to make sacrifices to get the business going, which can minimize costs.
The most successful family businesses in the USA include Berkshire Hathaway, Ford Motor Co., Walmart, Cargill, Dell Technologies, Oracle, Mars, Tyson Foods, ViacomCBS, Virgin Group, The Gap, The Estee Lauder Companies, Las Vegas Sands Corp., Hearst Corp. and many, many small businesses across the country. The downside of harmony in a family business is that family members can take on roles for which they lack the skills and experience. This can lead to stress and tension. Problems such as sibling rivalry and favoritism can also create family conflicts and problems for the company. Additionally, some family members may not want to be part of the company, or one day inherit it. And in some cases, the needs of the company can interfere with the needs of the family, which can prove disastrous. According to SCORE employees, family businesses employ 60% of the American workforce. In addition, family businesses can be found in all parts of the country and in numerous industries.
So what are the secrets of a successful family business? StartupNation offers the following 12 keys:
1. Set some limits.
2. Establish clear and regular communication channels.
3. Divide roles and responsibilities.
4. Treat it like a business.
5. Realize the benefits of family ownership.
6. Treat family members fairly.
7. Record business relationships in writing.
8. Don't offer “sympathy” jobs to family members.
9. Draw clear management lines.
10. Seek outside advice.
11. Develop a succession plan.
12. Require outside experience first (i.e. family members take courses to understand their role in the company; for example, who you choose as an accountant should take an accounting course)
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Family members who are in business together can connect and have great experiences. It's about communicating, pursuing the same goal and not letting the company interfere with your personal relationships. That means knowing when to not talk about the business and understanding each individual's role in the company and their commitment: some family members may have more time to get involved while others, perhaps in college, may not have the same amount of time to have. It's not always easy, but it can work out very well for everyone involved. And remember that not every family member wants to be in the family business – and that's fine too.