Running a family business can be challenging, but that doesn’t make it unpopular:
At least 80 percent of all businesses in the United States are family owned, according to family business experts.
Still, only about 12 percent of family businesses survive into the third generation, and just 3 percent make it to the fourth generation and beyond, according to The Family Firm Institute in Boston, Mass.
So if you’re involved in one of these businesses or contemplating launching one, it’s important to know how to resolve conflict and work together as a family to increase your company’s chance of survival.
“It’s really complicated to not only be a family member but also a family business member,” says Wayne Rivers, president of the Family Business Institute, a consulting and educational organization in Raleigh, N.C. “Being in a family is hard enough, and this adds to the complexity of their roles.”
It may be difficult to combine family and business, but success is possible if you keep a few key pointers in mind. For starters, don’t force family members into a business against their will, experts say. That would only create more stress.
On behalf of the family members, parents often make decisions as “benevolent dictators” in a business, Rivers says. “Your adult children ceased being children a long time ago, but parents never cease being parents,” he adds. “Why not go to the people who have to live with these decisions and find out what their dreams and ambitions are?”
Also, assess whether the family members you bring into the business are capable of doing the job. “You need to make it part of your mission that you’re going to fill every job with the most qualified person,” says Ira Bryck, director of the UMass Amherst Family Business Center, who once stood at the helm of his own family’s 90- year-old, fourth-generation children’s clothing store in Freeport. “It’s not possible [that] the most qualified person is always in your gene pool.”
The bottom line: Treat your business like a business and your family like a family, says Bryck, who closed the family store in 1993 when he decided it was time to move on.
If you have trouble separating family and business, he says, it pays to get an outside perspective.
Hold regular family meetings — at least every quarter — and bring in a neutral outside facilitator to help run them, Bryck suggests. It also pays to have an outside board of advisers or directors.
David Friedfeld, president of ClearVision Optical, a family-owned and managed business in Hauppauge, has come to rely on such a board.
The 59-year-old eyewear distributor, started by David’s father, Fred, has five non-relatives as advisers in addition to four family members (David, Fred and David’s mother, Mimi, and his brother Peter, who serves as ClearVision’s executive vice president). In addition, two family members and two nonfamily members belong to a business advisory group, Vistage, made up of local CEOs and senior executives. “It provides us with a lot of good feedback,” says Friedfeld, 51.
Good communication and a clear delineation of roles are essential if a family business is to survive, he says.
ClearVision has a formal organizational chart to clarify everyone’s responsibilities, and the brothers try not to step on each other’s toes.
This is valuable, notes Stewart Austin, senior vice president of information technology for family-owned Austin Travel in Melville. “You have to know your responsibilities and trust each other,” says Austin, 45, the youngest of three siblings who all hold key roles at the 53-year-old firm started by their dad, Larry.
He doesn’t tell his brother Jeff, the president, or Jamie, senior vice president of sales, how to do their jobs, and they don’t tell him how to do his.
“There has to be a line in the sand,” says Austin, who concedes that at times working with family isn’t always easy. “We definitely have fights, but we always work it out. You know they’ve got your back.”
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