are 10 million family owned businesses in the United States
with 50% of the Gross National Product coming from them.
They make up 37% of the Fortune 500 and represent the
fastest growing sector of the economy.
Family Business Institute-Arthur Anderson-Mass Mutual
percent of businesses in the United States are family
owned. This startling number is a clear indication of
the desire for individuals to have more independence and
perhaps for families to work together. If a family is prepared for the difficulties inherent
in working with those they are emotionally linked to, the
benefits can be many. Unfortunately, most who enter
business with family involvement are naive to the affects of
business mixed with blood. Many family businesses
deteriorate into inefficient, emotionally painful and
destructive place to work.
The numbers are sobering as only 30% of family-owned
businesses survive to a second generation and 13% to a
One irony of family
business is that often the same characteristics that lead to
their success are the very ones that lead to its
demise. The characteristics that seem to have such
positive upsides, and at the same time significant downsides
are: family "trust," founder
independence and tenacity, and extensive product knowledge.
When a family is cohesive and functional, it will tend to create a business
with the same 'culture.' This unusually trusting
environment, where employees are 'part of the family,'
can lead to much higher productivity and efficiency.
Most founders are hard working,
tenacious and independent individuals, all attributes
that are a significant benefit to an organization during
the tough early years.
Most founders are well schooled in the industry, product and market in
which they operate in. The advantages of such
knowledge are obvious.
these same characteristics can contribute to problems as well.
A family business may
be so 'trusting', that structures are not put into place
to guide employee behavior....decision making 'due
diligence' may not consistently occur which can lead to
inadequate deliberation on important issues....family
members selected for leadership positions may not
have the skills or experience to fulfill such important
roles, but are slated for such roles regardless. Too
high 'trust' can lead to major blind spots.
Business decisions can be made based on family emotions,
not business rationality.
disadvantages surface when we examine how the founder's
characteristics affect the organization. Rigid independence may prevents a founder from seeking
outside assistance when a situation warrants it thus a
small problem can develop into a
who believe that industry knowledge alone can lead to
company success, will not invest in the expertise
required to run the entire operation.
Many times, marketing, financing, operations and
management are not developed fully to support a growing
a founder's dedication to the company is expected and often
required in the early stages of a business, that
same devotion over the long term can create enduring
problems in the family. When dad or mom does not
have the time to be husband, wife or parent, the affects
on children may lead to resentment that stays with the
family for the generation.
These pent up feelings can manifest in destructive ways
in the organization and can alone lead to its downfall.
family businesses survive…..
Consulting works closely with family-owned
businesses to address these many challenges.
We co-create transition plans that can lead to
family unity and company longevity. Some areas
we address include:
of Director competencies
provide comprehensive solutions to family-business
needs, Emersus Consulting is part of a strategic
alliance with some of the top estate planning
attorneys, accountants and financial planners in the
After addressing any family relationship,
business operation and communication difficulties,
our partners will assist you in addressing the
financial and legal challenges that all family
businesses face. This comprehensive approach
can provide you with confidence and optimism as you
develop and/or transition your organization.
family business member feels differently toward the
hate it, some love it; to some it is a dream come
true, to others it is a nightmare.
Insights into Working with Family.
Michel O’Malley, Jr.