2 TIPS FOR FAMILY BUSINESS SURVIVAL

There really is no more dynamic, unique and fu*ked up business environment, than a family business environment. In many cases, despite their efforts, family businesses run for a long time. However, more often than not, they fail somewhere between the second and third generation. It’s why Andrew Carnegie famously quipped, “three generations from shirtsleeves to shirtsleeves.”

But family businesses literally make the world turn. In many places around the world, the family business enterprise makes up the dominant business form. This is true in India, South East and Northern Asia, Europe, Taiwan, South, Central and North America. In fact, in Taiwan, family businesses make up more than 80% of all firms. In Thailand family businesses account for 80% of GPD. In the USA that number is 50% of GDP.

You crazy bastards business people are ruling the world!

NEVER DO BUSINESS WITH FAMILY OR FRIENDS

That’s sound advice for sure. However, even though some would love to have a say in it, you can’t control what family you are born into. Sometimes children seemingly have no choice but to enter the family business, other times the allure of the business is too much for someone to ignore it.

All families and friends have issues and complications. Sadly, money, and in some cases a lot of it, really creates complications. And those complications hit the booster rocket stage when we’re dealing with the intergenerational transition of that wealth.

People go straight-up Britney-with-her-shaved-head crazy (we love you britney, that was a sh*tty time and you have our sympathy, and your conservatorship is crap — another example of family business meddling), when it comes to inheritances and business handovers.

TIP 1 TO SURVIVE THE CIRCUS

You are going to be blown away by this idea. It’s insanely revolutional. Ready? Ok, here it goes. Tip #1:

Talk.

Yup, open your yap and say what you’re thinking. i don’t think anyone who hasn’t been inside a family business dynamic understands just how much ISN’T said.

It’s actually mind-blowing when you come to realize how a business owner who is happy to give a piece of his mind or her mind to anyone who doesn’t want to listen, is unable to have a frank discussion with a family member. That’s amplified when that person is a child.

We’re not going to dive into the psycho-social reasoning for this as it pertains to certain generations. I think we all understand who and where that might apply. But it’s a massive, massive blindspot that is leading to failure.

It’s guaranteed there are issues lurking in your family situation as it relates to your business. Some might be minor and don’t matter. Some can lead to spectacular Space X heavy rocket lift-off explosions. But unlike Musk’s company, you may not be able to shake off those aborted take-offs. (not sure why the rocket shit obsession this evening… 🤷‍♂️)

Put aside the fact that your mom may not have loved you enough, and have real conversations with your family about the business. Don’t repeat the pattern. Especially as you get older and closer to either end of life or retirement (or that could mean both simultaneously).

Which leads us to tip 2

TIP 2 TO HAVE CIRCUS SURVIVE AFTER YOU

Also revolutionary, we know, but tip 2 is:

Plan this thing out, dammit.

You’ve built something amazing. You can set up your family for generations.

No, legit.

Your business is basically bullet proof if it makes it beyond the third generation. A bunch of business professors did a study and found that if a family business survives the third generation, they’ve long ago sorted out how to separate the family and business dynamics in a way that doesn’t harm the enterprise. And they will go on long after the Energizer Bunny has given up.

A good example is the Italian company Beretta. You may have heard of them. They make handguns. They’re family run. And they’ve been around for over 495 years now.

It’s a big project to plan for the future success of generations. So there’s no shame in getting help. But the more you discuss, and the more you plan how the hand-over is going to happen, the greater your chance of success.

More on how to plan coming at a later date… Stay tuned…

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