What Makes The Current Times So Great For Family Businesses ?
August 7, 2019 Leave a comment
A commonly cited statistic is that only 30% of family businesses make it through the second generation, 10-15% through the third, and 3-5% through the fourth.
Now for some perspective : How many businesses of any kind are still around after the equivalent of three or four generations? A study of 25,000 publicly traded companies from 1950 to 2009 found that, on average, they lasted around 15 years, or not even through one generation! In this context, family businesses look pretty enduring,don’t they?
In the hyper competition of the Fourth Industrial Age, family businesses have innate strengths over others forms of ownership, especially public companies. In the Second and Third Industrial Age, businesses had access to vast opportunities, which meant that winning strategies revolved primarily around size. Public companies had a clear advantage while raising massive capital. But firms today are no longer looking at endless opportunities. Instead, they have to struggle for their very survival in an intensely competitive world of slower growth and more frequent economic crises. Read more of this post
Starting-up and getting a business to stabilize and start paying off, is one sort of challenge.At the time,an entrepreneur might even be glad to have family and relatives pitch in and give them a helping hand.
Generally,the term ‘family business‘ evokes plenty of envy,fueled by images of no-account inheritors living it up,even as other meritorious souls in society don’t get a chance to take the easy road to the good life…….of concentration of wealth in the hands of the few,to the detriment of all others.
Even as there are plenty of people who effortlessly slide into satisfying roles in the family business and go onto growing it and successfully passing it down yet another generation,there are plenty of people who have regrets.Regrets about joining the family business or regrets about inducting a family member into the family business. In the worst case scenario,family businesses have to be split,forsaking the synergies that were taken for granted when the consequent parts were one whole or worse yet,families themselves have acrimonious splinters and end up losing everything they had.
Strong disagreements are inevitable in all human relationships, but families that own businesses are more at risk for serious conflict than ordinary families because the power, status, and money at stake are greater.
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