For the love of your business

Ensure the Longevity of Your Family Business

Business Litigation / Business Succession / Family Business

According to the Family Business Institute, less than one-third of family-owned businesses make it past the second generation of ownership and only 1 in 10 survives through three generations.

Based on a New York Times study of family businesses, here are some tips on how you can ensure your family business survives:

Reinvention.  Businesses that continually find ways to reinvent themselves through new markets or new product lines are much more likely to make it through several generations of ownership.

Good succession planning.  While succession practices vary – some families hold an election while others rely on a current CEO to choose – the family businesses that continue to thrive are those that pay careful attention to planning for the next generation of leadership.

No guaranteed employment.  Hiring family members just because they are family is a recipe for disaster in family businesses.  Those companies that have rigorous standards for employment of family members fare better in the long run that those that do not.

Outside counsel.  Having outside advisors on the board or as part of a “kitchen cabinet” brings important new perspectives to a family business, and can be used to “shore up” areas where family managers may be lacking in expertise.

These tips for preserving a family business are good advice for any business that wants to keep going beyond the first generation of leadership.

Like this Article? Share it!
Tells us what you think! leave us a comment below...
Related Articles

The Cost of Misclassifying Employees as Independent Contractors

Read More

New Tax Savings Available Using Section 179 and Bonus Depreciation

Read More

Do I need a business license as a freelance graphic artist working from home?

Read More