Fact: Family businesses generate over 50% of the GNP.
Fact: Less than one third of family businesses survive the transition from first to second generation ownership. Another half don’t survive the transition from second to third generation.
Fact: Scooters offers no less than 20 flavors of frozen custard.
From Berkshire Hathaway and Wal-Mart to Scooter’s Frozen Custard (in my Chicago neighborhood), about 90 percent of all US businesses are family-owned or family-controlled. The issue with many family businesses is that they get stuck doing things the same way they have operated for 10, 15, or 25 years, even when the business out grows that structure.
The company structure typically reflects how it was in their family growing up.
The bully brother is the same bully in the business. Whoever is seen as the head of the household wants to tell everyone else what to do. The peacemaker smoothes things over when tempers explode. The mother controls the budget at home and wants to approve how every dollar is spent.
Regardless of what’s going on underneath, my family business clients come to me because the pain is so great that they can’t stay where they are. It is not only tearing their company apart, but their personal and professional lives as well.
When this happens, the family has four choices:
• Sell out
• Stay the same
• Seek outside help
• Shut Down
They must decide:
• Do we all stay in this business together or does someone exit?
• Is it time for the senior generation to pass the company on the next?
• Do we bring in a professional manager?
• Do we merge with someone else?
• Do we sell out and split the money?
Above all, the decision to change is the first step.
