Family-owned businesses face same challenges as other firms
Family businesses that are owned and managed by multiple generations can create continuity in those firms. But keeping the business in the family may be more complicated than it first appears.
Fewer than 30 percent of family businesses survive to the second generation, and just 10 percent hold on to the third. Children often do not have the same enthusiasm their parent had to start and grow the family firm. Some have no interest in continuing the family legacy.
Ralph Smothers of Ralph’s Joy of Living in Tiffin did not initially plan to work in the family business.
“After I graduated from Findlay College with a BA in marketing, working in my family business was not in my plans” Smothers said. “My parents were shocked when I decided to come back but, of course, very happy.”
Bill Reineke of Reineke Family Dealerships and Ty Cooper of Jeffrey Jewelry had similar experiences, starting down other career paths before deciding to return to the family business.
“After working in some other places, I realized being a business owner with my family and furthering the legacy was what I wanted to do,” Reineke said.
Family businesses need to have succession plans. Assuming family members, even those who work in the business, want to take over is dangerous. Often family businesses lack a business plan and mission that the next generation can use to guide the future of the company.
Cooper said his father Charles’ failing health helped the family plan for the eventual transfer.
There also is the matter of which of the children will take over the business and other siblings who may want to be in the business working for that sibling.
Job descriptions for family members need to be established, as with any other employees. Sometime family businesses do not formalize duties for family members to avoid offending those they love. Not doing so can cause problems in assigning accountability.
Many family-owned entities make the mistake of mixing business and family funds.
Reineke said, with all issues, it is important to step back and take a look at the big picture.
“For us, it takes working together, good communication and sharing the common goal of considering the customers first,” he said.
Perry Haan is professor of marketing at Tiffin University.