Family businesses represent the heart of America’s economic success.
They generate 62 percent of the country’s total employment and 78 percent of all new job creation.
There are more than 5.5 million family businesses in America.
Family businesses account for 80 to 90 percent of all business enterprises in North America.
On average, you can expect a family business to have a life cycle of around 24 years, compared to 15 average years across the S&P 500.
Women-owned family businesses have increased by 37 percent over the last five years.
We think it’s safe to say that family businesses are a powerful engine driving the economy and innovation across the country.
And that’s not all. Family businesses often serve as philanthropic leaders, contributing generously to the good of their communities. Family business matter.
Why are you in business? What does prosperity mean to you?
In our years of working with family business clients, we’ve found that there are just as many reasons for having a family business as there are types of family business.
But one desire our clients share is for their business to be prosperous.
We typically ask our clients what prosperity means to them – and answers vary from financial security and increasing company value to being a generous and philanthropic community leader or building a positive culture based on trust, respect, and the opportunity for employees to thrive.
Barriers to Family Business Prosperity
Here are some of the most common barriers to a family business achieving prosperity.
Lack of shared vision
When family is involved in business, it’s never just business.
Each member of the family will bring their own vision and dreams for how the business should evolve.
As a result, they bring to the business varying levels of expectation, commitment, and interest in the business’ success.
When this is the case, it’s easy for the business to get lost and off-track.
Sometimes family relationships are complicated.
They come with shared histories, old hurts, competition, and big feelings.
Even when families have otherwise good relationships, it’s easy to develop communication issues while working together in a family business.
Sometimes family members in the business feel pressure to stay in the business – even if they want to leave.
When this happens, communication issues can fester for years, erupt spontaneously, and cause a lot of harm along the way.
Family disagreements often emerge, and many times, they dominate the business culture.
It’s common for family members involved with the business to experience wealth disparity, including lack of liquidity options.
It’s also common for family business salaries to be based on factors other than a fair market rate for the position.
This serves only to complicate both business and family relationships.
Largely because of these and similar barriers, a mere 40 percent of family-owned businesses survive to the second generation, 12 percent make it to the third, and 3 percent to the fourth.
But it doesn’t have to be that way. It’s our mission to change those statistics!
A family business can be profoundly rewarding – both emotionally and financially. But that doesn’t mean it’s easy. And neither is driving that business toward prosperity.
That’s where we come in.
How Ferguson Alliance Can Help Family Businesses Thrive
When it’s time to engage a family business advisor or consultant, you’ll want to work with a partner that understands both families and business.
A family business has a lot in common with any other type of business: it needs to make a profit, manage and grow its team, increase value for shareholders and stay relevant within a fast-paced business landscape.
But – a family business must also face the added layer of managing relationships among family members.
Those relationships run the gamut from love, trust and respect to jealousy, rivalry, and resentment.
All these complex relationships must be factored into business planning for your family business to thrive.
At Ferguson Alliance, we specialize in helping family businesses.
We understand how to combine practical business strategies with tactful, respectful communication and facilitation to help your family business thrive.
We’re passionate about family businesses because we come from family businesses.
We have decades of experience working in, leading, and advising family businesses.
Our advisors have been family members in a family business, non-family members in a family business, shareholders, board members and executives.
If you’d to find out more about how we can achieve your version of prosperity, reach out and schedule a consultation with one of our strategic advisors today. We’d love to help.