Approximately 64% of the US gross national product stems from family businesses. It’s also a fact that 35% of all Fortune 500 companies are family-owned and operated. Just looking at these two figures indicates that family-owned or controlled businesses make up a large percentage of the companies in the US. It’s been this way for decades. You may have noticed family members running shops in your local area or some with their names listed among the founders of some of our major enterprises and corporations. The term “family business” might indicate the company was founded or at least run by members of a whole family, a husband-and-wife team, siblings, or by some combination of immediate family members.
The Oldest Family Business
Many family businesses are passed down over many generations. This is typical around the globe. The oldest known family-run business is in Japan. Houshi Ryokan is a hotel. It has been run by one family since 718. Of course, over the 1,300 years plus the small in has had plenty of renovations.
Advantages of Family-Owned Businesses
One of the biggest benefits of a family business is that the family is more likely to stay together during downtimes, which are common in any business. Since the business continues from one generation to the next, it has a sense of stability. Another benefit is for the younger family members. If they are interested, they can grow up learning the business so they can become more involved in its workings as they age. Families who work together have a stronger work culture. This is usually passed from generation to generation. Family tends to be more lenient and cooperative when it comes to work-related decisions, schedules, and mistakes. It’s much easier to work out childcare and schedules are more flexible. Additionally, family members are more willing to make sacrifices for the business than hired employees.
Most Successful Family Businesses in the US
There are some notable examples of successful US family businesses. Here are just a few examples – you are probably familiar with most of their names or brands:
- Ford Motor Company
- Berkshire Hathaway
- Dell Technologies
- Tyson Foods
- The Gap
- Las Vegas Sands Corporation
- Hearst Corporation
- The Estee Lauder Companies
Of course, there are many other small businesses across the nation.
Disadvantages of a Family Run Business
There are a few possible disadvantages families who run businesses may experience. One problem is that family members try to take on roles in areas where they lack experience and skills. This can lead to a lot of stress and tension. Sibling rivalries may cause family conflict which might spell trouble for the business. Some family members may have zero interest in helping the business. They may have no interest in inheriting it someday.
12 Keys to Running a Successful Family Business
Experts suggest that family businesses employ about 60% of the US workforce. It’s essential that they are successful with that range of influence on our economy. Here are 12 keys that can help you run a successful family business.
- Of course, you are family, but always set boundaries.
- Establish regular and clear means of communication.
- Divide up everyone’s roles and responsibilities.
- Recognize the importance and advantage of a family-owned business.
- Treat the business – like a business.
- Put all business relationships, roles, and responsibilities in writing.
- Treat all family members fairly.
- Don’t give family members “sympathy” jobs.
- Keep the lines of management clear.
- Get outside advice.
- Develop a plan for succession.
- Require family members to get outside training and experience.
Working in a business together can help family members form an even stronger bond with one another. It can also be instrumental in creating some great experiences. Success comes down to clear communication, sharing the same goals, and keeping the business out of personal relationships.