By Arthur D. Levy, CPA
The RoArt Group, LLC
Difficulties faced by family can sometimes lead to their demise. Stats tell us that the success rates of many entrepreneurial business is generally poor and estimates that 70-80% of all private businesses fail during the first 4-5 years with fewer lasting than 10% the last 10 years. Family businesses stats tell us that fewer than 1/3 pass on to the second generation successfully.
So if you are the head of the family business, how do you control and manage the complexities of the dynamics of the family?
The key to a successful family owned business is not to let the business and the family destroy both the family and the family owned business. As the Chairman of the Family Business Council of Greater New York, one of my members once told me “if we could run the business with our head instead of our heart, we have a thriving and successful family owned business for generations to come.”
Having worked with family owned business for many years, here are a few suggested guidelines you can follow to assure family business success.
To maintain continuity and run a successful multigenerational family business you must be proactive, not reactive at managing the family and the business.
Understand and know there will be reoccurring family business issues, most around the financial. As the family grows and matures, the issues will become more complex causing the financial issues to change as lives change. This is common in all family owned businesses.
To manage the family business issues create a procedure that includes regular meetings with family members and bring in an outside and objective facilitator.
This procedure should reinforce key values that are most important to you and the family. Family values can supersede rivalries, jealousies, and financial self interest.
Life is constantly changing. Changes in the family along with the evolution of the business creates a constant stream of the multigenerational family business issues that must be controlled and managed in order to keep the family business thriving.
If you would like more information about your family business issues, please contact Arthur@theroartgroup for a complimentary consultation.
Arthur D. Levy, CPA & Rosann Levy, The RoArt Group, LLC, Family Business Strategists, create strategies for small & midsize family owned businesses that address both family and business issues, enabling business growth, increased profits and continuity from generation to generation. www.theroartgroup.com