Are you in a family business? It seems like the answer to this question is obvious, but some people actually might not know. What exactly constitutes a family business?
Family Businesses Defined
The dictionary definition of a family business is any business where two or more family members are involved and the family has majority ownership or control of the business. The classic “Smith and Son,” where a father brings his eldest son into the fold, is probably one of the earliest types of family business. On the other side of the spectrum, you have companies like Wal-Mart, Porsche and even sports organizations like the Los Angeles Lakers or Dallas Cowboys, that may control millions or even billions of dollars in revenue with husbands, wives, sons, daughters, cousins, aunts and uncles all playing a role. So what are the different types of family businesses and what are some characteristics of them?
Mom and Pop Shops
The most basic family business unit is two. A husband starts a business with his wife. A mother creates a successful startup and brings in her son. These are family businesses, but they may be fragile ones. A couple may start a business, but if one partner is more enthusiastic than the other, the second partner may be that in name only, or may want to break free of the business entirely and start his or her own business. Parents may assume that their son or daughter will work in the business and they may do so as kids, but they may strike out on their own as soon as they’re old enough. These types of businesses can be tough to sustain.
Next Generation Family Businesses
These businesses may feel more like family businesses. This is one where the kids of the founders decided to stick with it, and may have brought in their spouses or have kids of their own who are excited by the idea of a secure business and future. These businesses are a bit more stable as family businesses because of their history, but as Millennials and Gen-Y/Gen-Z members of the workforce learn different ways of contributing to society and implementing work styles, these businesses may be in danger of dying off as well.
These are giant, old behemoths that have been around for years, where the family name is synonymous with the company, names like DuPont and Wal-Mart. These companies have had so many generations to intertwine their business with the family, that we can expect them to continue on for a long time. The prospect of having ownership of something that has become so big and powerful is too great for most people to ignore. However, the danger is that these companies will become stagnant, failing to innovate with the times, and while they may survive, they may also become irrelevant.
Wherever your family business falls on the spectrum, it’s important to work hard to keep the newer generations engaged in the business. Expecting family members to stay on because “this is what we do,” is an antiquated way of thinking, from a time where there were no online universities or search engines and the best way to learn a trade was from your father. Find ways to evolve and engage the next generation and your family business could become tomorrow’s legacy.