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— SIOUX FALLS, S.D. – What makes a family business successful through generations and decades? It all boils down to communication. Those who talk about and plan for the future of their family business tend to be more likely to make a successful transition from one generation to the next.
It’s not easy. But, if families set aside time to talk through the challenges and opportunities of being a family in business together, their chances of success will increase.
I’m not talking about time spent over the dinner table or at family Thanksgiving. Rather, I’m talking about time that families set aside regularly to map out who they are and how they’re going to get where they want to go.
According to Harvard Business School, family businesses comprise at least half of all companies in the United States. Regionally, that number may be even higher. Think about businesses in our region such as H.A. Thompson & Sons, a business that is more than 100 years old and in its fourth generation of ownership and management. The Thompson Family has set aside time to have family meetings, and they use their family business as a competitive advantage, both internally and externally.
A well-planned succession can take five to 10 years to plan and implement. For the sake of the business and the family, these years of planning create and maintain a healthy family and business.
It’s never too early to begin having regular communication about the future of the business and the family.
For those who are in a family business, do you have family meetings? If so, great job! You are on the right track. You are likely talking through the good, the bad and everything in between. Keep up the communication. Your business, your family, your employees, your customers and the communities where you do business will thank you for it.
If you don’t have family meetings to talk about topics such as ownership, future leadership, voting shares, non-voting shares, the buy-sell agreement and other topics, consider holding a family meeting. If you don’t know where to start, ask one of your business advisors to facilitate the family meeting.
Or, discover who your family CFO is – your Chief Family Organizer. One family member holding the rest of the family accountable can enhance the chances of keeping communication regular and following through on action plans.
Tharawat magazine has published data on the economic impact of family businesses. In the United States, more than 63 percent of the gross domestic product is contributed by family businesses.
If you are not involved in a family business, as you make your own business and personal buying decisions, consider supporting one. Think about what family businesses do for the economy in terms of employing local residents, supporting local organizations and making the community a vibrant one.
Recently, area family businesses came together at a family business forum in Bismarck, N.D., to learn from professionals and one another. Prairie Family Business Association, an outreach center of the Beacom School of Business at the University of South Dakota, hosted the daylong event.
Many of these families have started transition discussions, and some are well on their way to implementing the transition plan. Others in attendance are just beginning to discuss and plan for succession.
Wherever Prairie Business readers may be in their family business lifecycle, I urge them to consider surrounding themselves with others who understand the unique challenges and opportunities of being in business with family members.
When a family business succeeds, many others experience success along with the family owners of the business. Put in the hard work, time and communication to make the family business a success. Future generations of your family and your community will thank you.
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