6 Ideas for Extending the Lifespan of Your Family Business

Organizational longevity is usually a pretty good measure of success in the business world.

It speaks of resilience, adaptability – and the ability to weather storms in an ever-changing economic landscape.

At Ferguson Alliance, we are committed to increasing the lifespan of family businesses.

  • 85% of the businesses here in America are family owned.
  • Almost 80% of all new jobs are created through family business.
  • Family businesses are the leading contributor to both philanthropy and innovation.

And we have a disturbing trend.

During the 1950s, the average lifespan of a family business stood at a robust 60 years.

Fast forward to today, and that figure has dropped to just 24 years.

It’s our mission to help reverse those stats.

In this article, we will share 6 ideas to help your family business live longer.

Let’s start here.

Why is family business lifespan declining? One word: change.

Back when I was running a business, I could fall off a log and make money. It was that easy.

But here in the 21st century, the pace of change has accelerated exponentially.

Geopolitical shifts, technological advancements, demographic changes, and evolving consumer behaviors have created a turbulent environment where traditional business models can struggle to survive.

So, our first tip is this:

1. Learn How to Manage and Lead Change

The number one barrier to extending the lifespan of a family business is resistance to change.

Changes are happening faster than ever before.

What matters is how we transition through that change.

If the ownership of a family business isn’t open to things like:

  • Developing a succession plan
  • Putting in structure and increasing the professionalism of their business
  • Communicating in a more transparent manner

Then the lifespan of the business will be doomed.

Embracing change is no longer optional. It’s essential for survival.

2. Maintain Healthy Financials 

Financial capital is the lifeblood of every family enterprise, just like any other business.

To guarantee the progress and longevity of your family business, it is crucial to maintain healthy financial fundamentals over the long term.

 

3. Hire for Cultural Fit

Hiring for culture fit ensures that new employees will align with the organization’s values, vision, and mission.

This ultimately contributes to the success of both the individual and the business as a whole.

Neglecting culture fit can lead to placing individuals in roles where they struggle to thrive and make a meaningful impact.

 

4. Develop Cross Functional Management Teams

All family business owners and employees want to be part of a well-oiled machine.

But achieving that harmony is challenging for most.

Developing cross functional management teams ensure that there’s a mutual awareness of how individual decisions impact others and the aggregate business health.

5. Balance Structure and Flexibility

Family business longevity requires a balance of structure and flexibility.

Structure creates a solid business foundation. Flexibility allows you to adapt and change.

Going too far in either direction creates problems.

6. Answer these 2 Questions

We have an internal belief at our firm, that family businesses can live forever, as long as people don’t get in the way of that.

So, what’s the secret to the fountain of youth for family business?

It lies in answering these two questions.

Do you want to be a family first business?

Or do you want to be a business first family?

A declining lifespan doesn’t have to apply to your business.

You can take a proactive approach to change, commit to shared goals, and focus on creating a balance of structure and flexibility.

Whether your business is in its infancy or approaching maturity, the key is to embrace change, foster innovation, and cultivate a culture of resilience and adaptability.

When leaders embrace these principles, family businesses can defy the odds and build a legacy that endures for generations to come.

If you’d like some support with that, set up a free consultation with one of our experienced family business advisors. Book a call

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