Traits of Successful Family-Owned Businesses
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The idyllic family-owned business is a dream for many entrepreneurs. But the reality is that getting a business to survive to the next generation is difficult. The Family Business Institute finds only 30% of family-owned businesses survive after the first generation. The New York Times reported on common traits shared by family-owned businesses that have enjoyed longevity.
Ongoing Reinvention – Businesses require products and services that are relevant to the current market. Part of this means an ongoing reinvention of the company’s offerings, be it in expanding into new markets or updating products and services to meet changing consumer demands. Family members leading a company should be ready to adapt and improve on what their predecessors built.
No Employment Entitlement – Hiring the right employees can mean the difference between business success and failure. Lasting family-owned businesses do not award jobs to family members simply because they are relatives. Rather, hiring decisions are based on merit and experience, and all employees are held to the same standards for hiring and performance.
Detailed Succession Plans – In passing the company torch to the next generation, leaders of successful family-owned businesses develop clear plans for who will take the helm in their predecessor’s absence. Whether establishing a way for the next generation to jointly lead the business or picking a leader based on proven abilities and plans, effective preparation for when the company changes hands will help the business survive beyond the initial generation.
Seeking Advice – Business decisions need to be made from a business perspective. Yet, families often make emotional decisions, which is why outside, objective advisors can offer important insight to family-owned companies. Examples of trusted advisors include lawyers, accountants, bankers, and others with knowledge of the family business who are not beholden to familial relationships.
Read more about the common traits shared by successful family-owned businesses in the New York Times.