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Family Business and Business Families
For nearly twenty years VMSW has specialized in providing professional accounting and taxation services to small and medium sized enterprises. The majority of our clients, especially in the agricultural sector, are family owned and operated. In Canada, family businesses make up 70% of the Canadian economy, with sales of over $1.3 trillion.
Family owned businesses are very unique. While they have the normal challenges inherent in operating any business, they must also conquer all of the emotional dynamics of the family unit. How does a family make the tough decisions of business and still foster the loving and nurturing environment necessary for their personal well-being? Do family businesses strengthen the family unit, or do they erode the very foundation of human society in favour of the immediacy of business?
Many family businesses were founded by rugged individuals who were internally driven to build and succeed. The skills required to forge a business are, however, not necessarily those that sustain and grow an enterprise over the long term. Control and command are replaced by teamwork and empowerment. Communication becomes the fuel of the business as the next generation seeks to put their mark on the list of family accomplishments. While history tells us that the families of business owners suffer their hereditary fates, the owners also suffer as they struggle to adapt to their changing roles in the business and the family.
There are some very startling statistics for the longevity of family businesses. 30% of family businesses make it to the second generation. 15% make it to the third generation while only 5% make it to the fourth. 78% of family businesses face a transition of ownership within the next 15 years, yet 70% have done no succession planning. Over 80% of family business failures can be attributed to the inability of business families to address family dynamics.
It has often been said that families can only survive in business by separating the family from the business. The two roles should not be played at the same time. While this may sound well and good, in reality the roles do co-exist. It is not possible to compartmentalize the emotional warehouse. Successful business families learn to deal with emotional issues so they can maintain an atmosphere of trust. Trust is the glue that holds a family together, and it is the foundation for a successful business. A low trust environment creates conflict, uncertainty and self-interest. A high trust environment creates optimism, motivation and loyalty. Business families who cultivate trust in their family and business relationships will succeed in both arenas.
I recently took part in a two day Family Business Advisor certification workshop conducted by Dr. John Fast of the Center for Family Business. Dr. Fast is a recognized expert in family business dynamics and teaches professionals in the facilitation of family business solutions. There are methods for assisting business families to create the bonds of trust. There are techniques to develop open, safe communication amongst business family members. The solution begins with a shared vision of the family and the business, and an expression of individual goals. The results can be business success and, more importantly, a strong family based on trust and open communication. What better legacy is there?
Brent VanParys
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