The Successful Formula of a Family Business
When Julie Smolyansky was a baby, her parents Michael and Ludmila immigrated to Chicago from the former Soviet Union. It was the perfect place for the entrepreneurial couple, as they believed wholeheartedly in the American dream. “My father was passionate about the idea that a little guy with a novel idea and the ability to problem-solve could support a family and create economic prosperity for others,” Smolyansky says.
Family and Business Values Align
In 1986, Michael Smolyansky created Lifeway Foods, a consumer health food company that specializes in cultured probiotic beverages similar to yogurt. The company grew quickly, as the elder Smolyansky was able to connect with people of all social and economic backgrounds, whether in the factory or on Wall Street. He treated all of his employees like family and was known for his pride and generosity. According to Julie Smolyansky at Lifeway Foods personal and professional achievement was always celebrated, including milestones "ranging from a new sales record to someone’s 40th birthday.”
The alignment of personal and professional values is a hallmark of thriving family businesses. “Successful family businesses tend to have the family's values and culture deeply embedded into their business strategies, policies and practices,” says Don Schwertzler, co-founder of the Atlanta-based Family Business Institute. Schwertzler suggests that these values must be clearly defined, communicated and reinforced with family-business employees understanding the critical importance of standards and leaders possessing the ability to confront behaviors that violate the standards.
Working Family Style
Family businesses are often more nimble and innovative than their non-family counterparts, since employees wear multiple hats and engage with each other openly. Schwertzler comments that strong family businesses usually promote an easy exchange of ideas without fear of reprisal and have an open-door policy for leaders. Employee feedback is encouraged and recognized.
This definitely seems to be the case at Lifeway, where Smolyansky says business is personal, boundaries are blurred, and roles are more ambiguous. “We all just want to get the job done,” she says. “For example, we don't have a defined role for customer service. We answer the phone when it rings and it is expected that anyone should be able to respond to a customer nine times out of 10.”
Family business culture, says Smolyansky, thrives in this era of social media and instant transparency. “Companies can no longer hide behind communication agency messages that have been vetted and massaged over months. Today’s economy favors the passionate and authentic communication that the family business is known for.”
Most agree that this lack of formality is positive and refreshing, but there is a downside. Family businesses that completely lack structure may suffer from impaired decision making, diminished objectivity and resistance to change—three factors that spell trouble for any small business.
Julie Smolyansky and her brother took over Lifeway when their father unexpectedly passed away in 2002. Fortunately, they were ready. “My father raised me to be strong and capable and I also had an entrepreneurial mother as a role model,” she says. “Now, I am passing on the values my father held dear, such as hard work, out-of-the box thinking and workforce diversity, to my children.”
In many family businesses, successors grow up learning how to govern, and the current generation strives to improve the company for the sake of the next one. Employees internalize this vision and work to move the business to a level that’s not just sustainable for the next quarter, but for the foreseeable future. This emphasis on responsible stewardship is one from which both large and small businesses can learn.
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Alexandra Levit is a former nationally-syndicated business and workplace columnist for The Wall Street Journal and the author of Blind Spots: The 10 Business Myths You Can’t Afford to Believe on Your New Path to Success. Money magazine’s Online Career Expert of the Year, she regularly speaks at organizations and conferences on issues facing modern employees.