First, some facts about family owned businesses. According to Loyola University, family-owned businesses generate 50 percent of the gross and pay out approximately one-half of the nation's total wages. Less than one-third of family-owned businesses survive into the second generation and less than 15 percent make it to the third.
Most of the finishing job shops in the U.S. are family-owned. And most are second or third generation. However, no business is perfect. Bernard Liebowitz, Ph.D., is a consultant to family-owned businesses. His web site offers a list of myths and prejudices.
His top myth is "The best way to train your son or daughter to enter the family business is to have them work elsewhere first." The only way Mr. Liebowitz has seen that work successfully is when the children are given a task to return in x number of years with new ideas.
Another myth is "failure to prepare succession plans because the owner fears mortality." Fear of death is not what keeps people from planning for their succession. It is fear of family conflict.
The third myth is "The primary goal of the business is to keep the family together." This statement is both a slogan and rationale. Some heirs may not work in the business and those that do may resent their siblings' inheritance. Or an owner may hand the business over to an unqualified heir simply to preserve family harmony. To keep the family business alive, you have to do what is best for the business.
One final myth is that of better times ahead. "When I take over, everything will be different," and "The business failed because the son just did not have what the father had." In both situations, the successor has to deal with leftovers: the partner (e.g., uncle); the fact that capital investment in new equipment has not been made; employees' memories of the "Old Man" who has become an icon.
Mr. Liebowitz has found that business failures during the second generation resulted from a failure of the generations to discuss direction, strategy, goals and their vision for the company's future.
Finishing companies debunk many of these myths. However, you do not want to become so complacent that your company becomes a rags-to-riches-to-rags fairy tale.