Although you may not know it, family owned businesses are a big part of the economic force in North America today. Not only do family businesses create jobs, impact the economy, and help communities but they aslo drive innovation, change and stewardship as well. Plus they are representatives of the American dream.
According to the U.S. Small Business Administration (sba.gov) family-owned businesses account for 80%-90% of all businesses in the U.S.
Just as every business organization has a unique set of challenges and problems, family owned businesses are no different. Many of the problems that exist in corporate environments, can be identified and magnified in a family business.
Starting a family business or yielding a business to another family member may not be an easy road, or even a good idea for some families. After all, you can choose your friends but not your family.
There are more than a few issues unique to family businesses. But overcoming these challenges, can be a rewarding experience. We recently interviewed Rob Romarino, President of Sentry Equipment, a family owned distributor of ice cream equipment located in Blackwood NJ. Sentry Equipment was recently awarded the 2016 Philadelphia Family Business Award by SmartCEO magazine. Rob shared his experiences with us and offered some advice to other family owned businesses.
One of the biggest problems facing a family owned business is having the incapacitation to separate family and business. There can be a fine line between wearing the family hat and wearing the business owner hat. Knowing this line and keeping that line separate is very important, not just for the owner but also for the employees as well. One of the toughest issues to overcome is recognizing the difference between your family relationship and your working relationship.On the weekend you're breaking bread with these people or attending a family functions so it is understandable how personal family issues can sometimes affect the relationship and atmosphere in the work place.
Having the correct culture or value system in place at a family business is crucial. The culture and value system must permeate the entire organization. Everyone must know that they are part of a larger role.
Family businesses will go through stages of growth and development over time. Much of this growth may fall onto the second generation once they enter into the business. Taking what was already created by a previous family member and scaling the business to the next level while keeping the core values will be a challenge. A 2nd generation owner may branch out with new marketing strategy, or come up with a new way of selling a product that differs from the previous generations strategy. While this may cause confrontation between generations it is necessary in order to have the business grow. In any industry business activities are always changing. It is important to stay ahead of the curve and try new age business practices to make sure your company is always adapting and growing as the industry does.
Some family owned businesses find it hard to educate or train new generations entering the business for the first time. Many find it important to start a family member from the absolute bottom. This allows them to get a chance to experience the business from all aspects and have a well rounded background, gaining the respect of other coworkers but you understand the business from their department as well. Starting from the ground up you get first hand experience and the empathy that you can put yourself in the shoes of the employee. This is also beneficial in the customers view in that "one doesn't just say it, he actually lived it".
Communication is key. You need to have the respect and working relationship of your staff and not giving special treatment to relatives over other employees is important. Respecting them as a employee and caring about them as a family member are great but they should be aware that being a family member doesn't mean anything is or should get handed to them. The fact that your a family member may get you the interview but it won't get you the job and the fact that your a family member won't help you keep that job unless your really good at it.
Though family owned businesses face a variety of challenges that they need to overcome their are many advantages within this business structure that actually benefits the company. Family owned businesses are seen as being more trustworthy than corporate firms as they interact with you on a personal and business level. They understand the meaning of helping others, and believe that the success of their customers directly correlates with their overall success.