Running a family business involves a unique set of challenges that are constantly evolving and transitioning as the business grows and later generations are included. Personality conflicts, as well as strategic, legal, and estate planning issues become even more complex when family members are involved. In my experience, having successfully run a family business, a well-defined business plan must be developed in alignment with the family’s culture, values and long-term legacy goals and because of this, the ‘cookie cutter’ solutions seldom work. There is an old joke, “If you’ve seen one family business…you’ve seen one family business!” I have found this to be true. Advising with a family business consultant will help ensure that the alignment of the family and the business are in sync. Each family has a different path and definition of success that works for them.
Research shows that although 90% of all businesses in the United States are family owned and employ over 60% of the workforce, most will not survive past the second generation of leadership. Another statistic that is quite sobering is the research from the Family Business Review showing 66% of family enterprises will not survive in-tact into the 2nd generation of leadership and of that, less than 15 % survive into the 3rd generation of leadership. The famous saying, “shirtsleeve to shirtsleeves in 3 generations” is unfortunately a reality for many families. Or as one business owner said, “The first generation starts it, the second generation runs it and the third generation tanks it.”
A family business consultant works with their clients to handle a broad spectrum of challenges that, over time, limits the success of the family-owned business. At the Gustafson Group, we steadfastly believe that “strong families make for strong businesses” and strive to maximize both family harmony and shareholder value. Studies show that business families who get along, and develop meaningful family rituals run more profitable businesses. Time spent NOT focusing on the business can be the best thing for improving the bottom line.
The Gustafson Group has the tools and support services to ensure you and your family business maintain success by:
• Developing a strategic plan that acknowledges the issues of both the family and the business
• Developing succession plans that prepare future leaders for business success
• Developing a well-integrated comprehensive exit strategy for current leaders
• Helping determine the current and desired future value of your business to maximize your investment
Recent studies indicate that 55% or more of business owners, many of these family business owners, plan to transition out of their current positions within the next 5 years and most have no formal transition plan in place. With no successors, no financial plan, and no solid options for consideration, this leaves the door wide open for failure. With effective planning, both the family and the business can thrive through the inevitable changes that will occur.
By making sure you keep the company’s vision, action plan, and alignment at the forefront of the daily operation, you are heading in the right direction. Making sure the various personalities are kept in check (not always a simple task) and having a stable family business governance plan in place will only strengthen the foundation to which your family entity has been built, ensuring success in generations to come.
As consultants to family businesses, the Gustafson Group is passionate about family and entrepreneurship. We are dedicated to working with family businesses and will help anticipate challenges – and the inevitable conflicts – that will arise where the family and business intersect.
Contact the Gustafson Group and let us help your family-owned business thrive today and successfully take a step forward into the next generation of leadership. Are you ready to re-write your business story?