Being part of a family-run business, especially one that has succeeded for generations, comes with a sense of major pride and responsibility. As the next generation takes up the charge, they must ask themselves if they’re truly ready, willing and able to keep the business going.
Family businesses make up 64 percent of the U.S. gross domestic product, and 60 percent place women in top management roles. By the second generation, just 30 percent of family-run businesses remain in the originating family. That number goes down to 12 percent in the third generation and 3 percent in the fourth generation.
Deciding whether to join the family business can be tough. Take time to consider these seven things first.
- One CEO to Run the Family BizLike there is “one ring to rule them all” in The Lord of the Rings, there can only be one CEO to run the family biz. As you move through the generations, you may get lucky and find out your siblings don’t want to touch that role with a billion-kilometer-long pole.
However, sibling wars don’t get gentler with age when it comes to the family business. How badly do you want the role of CEO, and is it worth risking relationships with your relatives? What family politics are involved? What talents and qualifications do each of you have?
If you are running a restaurant with your brother, you could split the duties down the middle — one of you takes the day shift and the other takes the night shift, alternating as appropriate.
- What If You Want to Do or Be Something Else?
There’s no shame in changing up the generational work game. The family may or may not approve, and if they disapprove, you may feel a burden of guilt you shouldn’t have to carry. Their expectations are not the ones you hold for yourself any longer.
You make your way in this world. You are responsible for your own happiness and wellness. If you’re an artist, be an artist. If you’re a plumber, be a plumber. If you want to climb mountains, or at least cross another state line, get out there and do it. Ask yourself: What would I regret the most if I didn’t do it? At least, give yourself a little time in the outside world to think it over and say you tried to pursue your deeper dreams.
- Have You Worked in the Outside World?
Do you have any real-world work experience, aside from your time in the family business? Outside perspectives and experience lend value to the operations and development of the family business. In the last decade, many family business experts recommended at least three years of outside work experience, but now suggest at least five years.
You should never feel intimidated about getting out and exploring what the world has to offer — especially if you’re young.
- Are You Prepared to Succeed?
Remember, after the second generation of family business succession, chances of business survival drastically decrease with every generation. One of the keys to continued longevity is succession planning, where a business leader consults with an attorney and other advisers to pinpoint the optimal time for succession and its transfer. The attorney will help with selling business interest, regulatory compliance, business tax planning, retirement planning and shareholder agreements, among other items.
Is there a plan for succession in place? Ask the current head of the company, and if there isn’t a plan, suggest making one at least a decade ahead of when they plan to retire. At least you’ll know what’s coming and what the position entails, should you decide to accept.
- Have You Considered the Downsides?
Are family drama and family business politics all that different? Can your family typically separate personal and professional lives, or do your family members lack the ability to compartmentalize? Families can destroy themselves in trying to deal with issues of title, power, position and money.
Good communication and governance are key to avoiding these downsides. Develop professional growth without ageism, and commit to a solid succession plan. Start observing how your family deals with these issues now, and dare to realistically consider “What happens if…?”
- Have You Considered the Upsides?
One top consideration among the upsides to joining a family-run business is stability: One UK survey found family businesses are steadier due to a diverse board and more frugal spending habits. They take a more cohesive, dedicated and stringent eye to risk and what that means for the whole business and its longevity.
What are other upsides unique to your family’s business? Do you know how to play hard and work hard together? It’s often difficult to find a work culture that offers family-like support. Weigh the pros with the cons.
- Is Everyone Mostly on the Same Page?
Have you decided to go for it and join the family business? Make sure you’re mostly on the same page when it comes to following critical business practices and accomplishing goals. It’s important you all work together and not undermine one another, or the business will tank.
On the other hand, differences don’t mean the business will fail. If you can argue effectively with one another toward real solutions, you can innovate and advocate for the future of the business.
If you’re leaning away from the business, be prepared for a series of questions from your family. Stand your ground with compassion and determination. The level of support you receive may surprise you.
Who knows — you may be better off starting your own business and working as a consultant with the family business. The possibilities are endless.
Get out into the world and aim for your dreams. From stability to politics, there are upsides and downsides to joining the family business. Choose the route you feel is best for you. Know it’s OK to take your time and come back to the decision a few years from now. Keep your family in the loop, and cultivate a career you’ll look back on with pride many years from now.
About the Author
Sarah Landrum is the founder of Punched Clocks, a career and happiness blog. As a freelance writer, Sarah enjoys writing about a variety of topics from career and business to healthy living. Catch her on Twitter @SarahLandrum for more great advice.
