What Makes The Current Times So Great For Family Businesses ?


wealthymattersA 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

Ownership, Inheritance, Succession And Control In Family Businesses


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.

Its only a little later that a whole lot of other challenges crop up.People who bear risk ,put their own life and priorities on hold or put in substantial efforts into a business expect that their contributions will be rewarded,not just perhaps in the form of a one-time or limited pay-out but in terms of a share of future profits and control over the business,so that they can guarantee and determine the quantum and timing of payouts.Perhaps even these challenges could be managed by having open discussions with all concerned ,ensuring full buy-in and clearly recording what is owed to who and why. Read more of this post

The Pros And Cons Of Requiring Children To First Work Outside The Family Business


wealthymattersGenerally,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.

Under the circumstances,business schools,family-business consultants and the media today,feel the need to recommend that people work for at least 5 and sometimes 10+years outside the family business.In fact the education system feels the need to socialize children to seek success in fields far removed from their parents own occupation.Besides business families themselves feel it good PR today to talk of how their children won their spurs outside the family business and so are not mere inheritors.

Here are the pros of first requiring family members to work elsewhere before entering the family business : Read more of this post

Questions To Ask Before Joining The Family Business


wealthymattersEven 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.

A way to avoid unnecessary pain,is simply to reflect deeply before adding a business angle to family relationships and having the necessary conversations in an open manner instead of avoiding them,only to find oneself in the midst of bigger problems. Read more of this post

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