Family-Owned Businesses

Advisory boards can be established to advise the company's president or board of directors. These boards consist of five to nine non-family members who meet regularly to provide advice and direction to the company. They too can take the emotions out of the planning process and provide objective input. Advisory board members should have business experience and be capable of helping the business to get to the next level of growth. In most cases, the advisory board is compensated in some manner.

As the family business grows, the family business consultant may suggest different options for the family. Often professional non-family managers or an outside CEO are recruited to play a role in the future growth of the business. Some families simply retain ownership of the business and allow it to operate with few or no family members involved.

THE FUTURE OF FAMILY BUSINESSES

As Tracy Perman explains in her Business Week article entitled "Taking the Pulse of Family Business," two broad trends are visible in the realm of family business as we get comfortable in the 21st Century. First, the aging of the baby boom generation signals a coming ownership change for many family businesses within the next ten years. Second, more and more of these businesses will be taken over by women, continuing a trend that has been visible since the turn of the century. Perman goes on to highlight some statistics about women owned family businesses that makes this trend towards female ownership seem quite positive. Recent studies have shown, Perman explains, that "women-owned businesses were more likely to focus on succession planning, have a 40 percent lower rate of family-member attrition, tend to be more fiscally conservative, and carry less debt than male-owned businesses."

Some family-owned businesses are finding that it is no longer assumed that children will wish to take over a family business. If the founders of a firm wish to keep it in the family's hands, they should be sure to take proactive measures to attract future generations to the business.

• Expose family members to all aspects of the business, including employees, customers, products, and services.
• Define the business's attractive qualities in terms that will appeal to the listener.
• Recognize those factors that have the potential to dissuade family members from staying involved in the business. These factors can range from personal interests that lie in other areas to conflicts with other family members.
• Reward family members who decide to join or stay with the family business. The 'price' successors pay to join and operate a family business may include giving up career options that they find financially and personally attractive. It may seem to a new family member coming into a family business that he or she is suffering a loss of privacy. Conflicts may arise between parent and child when their management styles conflict. A business may make compromises—such as making it possible for the successor to spend more time with his or her family or hiring an interim senior manager to buffer conflicts between parent and child. But the company's 'cost' and the successor's 'price' must be affordable to both.
• Give family members outlets to explore their ideas, interests, and concerns.

The rewards of a family-owned business are many as are the challenges. Those family members who manage the family business should enjoy the business itself if they are to be successful and pass along a sense of enthusiasm for the business when the time comes for them to hand over the reins.

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