I am the progeny of family businesses. My dad and grandfather owned a men’s clothing store. My uncle and other grandfather owned a liquor store. So I understand how great—and stressful—owning a family business can be. So how are America’s family businesses doing now? The latest PWC Family Business Survey 2012 surveyed nearly 2,000 family businesses around the world and found that while family businesses have some key advantages, they also face special challenges distinct from other small businesses.
Family business owners in the survey named many advantages to being family-owned, including a commitment to thinking long-term, creating jobs and supporting the local community; the ability to make decisions quickly and change course rapidly; and the ability to take a more personal approach to business. But along with those advantages, family-owned companies admitted some challenges. Specifically, PWC found three “tipping point” issues that can make or break a family business:
You might think of family businesses as “mom and pop shops.” Far from it. In order to keep growing in a post-recession economy, about half of U.S. family businesses sell their products internationally. What’s more, interest in global expansion is growing. The percentage of U.S. family businesses saying they expect to be involved in international sales five years from now is 54 percent, almost twice what it was in PWC’s last survey two years ago.
Takeaway: Whether you choose to expand your family business globally, nationally or even just regionally, keys to success include carefully evaluating the new markets beforehand, making sure your business is legally, financially and structurally prepared for the new challenges of expansion and getting help from all available sources, including partners, government agencies and consultants.
While competing for skilled workers is a big concern for all businesses, it’s particularly so for family businesses, where employees often come into the company just because they’re family members and not because they possess key skills. When looking outside the family, just 29 percent of U.S. family business owners say they’re finding entry-level employees in their industries with the skills and education their companies need. Even when companies do find qualified workers, those candidates may be concerned that as non-family members, their room for advancement will be limited.
Takeaway: Family businesses are stepping up to help create more skilled workers in their communities. Some 84 percent of U.S. family business owners believe they have a responsibility to create jobs in their communities. As a result, PWC predicts more family businesses will get involved in on-the-job training or partnering with local schools. Start any effort at skills training by assessing the skills your team currently has and those your business needs.
While 76 percent of U.S. family business owners want to keep their companies in the family after they retire, just 52 percent believe that younger family members are qualified to do this without outside help. Some 24 percent say they will enlist outside management to help the next generation run the business. But while family firm founders are skeptical of younger family members’ abilities, the younger members face their own challenges—specifically, “managing the managers,” or tactfully handling company founders who have theoretically retired but still keep getting involved in day-to-day decisions.
Takeaway: Planning for succession is something many family business owners are reluctant to do (13 percent of those in the survey say they “don’t know” what they want to do with their companies), but it’s essential if you want your business to live on after you retire. Don’t wear rose-colored glasses during the process, either. Plan for the conflicts that will inevitably arise during the transition process and how you will deal with them. You owe it to your family.
How is your family business planning for the future?
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