Family Owned Enterprises (FEO) account for approximately 80% of all businesses in Canada. Many of the largest and most successful Canadian businesses are family owned.
In addition family owned enterprises::
- Employ more than 6 million people in Canada
- Are responsible for over 70% of Canada’s GDP per year
- Account for two-thirds of businesses around the world (Interview with John Davis, Harvard Business School)
- Create over 70% of all new jobs in North America
- Are responsible for over 55% of all charitable donations
These family businesses do not only benefit the family members involved – they benefit both the local and global economies. However, only 30% last into the second generation and less than 10% into the third
So in order to capitalize on the family business’s potential for growth their needs require customized strategies. They come with their own unique advantages and challenges.
Commitment: There can be a greater sense of accountability and commitment to the business because the family livelihood is at stake
Stability: Leaders usually stay in the position for many years which results in the overall stability of the enterprise.
Flexibility: Family members are more willing to wear different hats and take on roles that are outside their job to ensure the long term success of the business.
Long Term Planning: Family firms tend to think more about the years and decades ahead and less about hitting the quarterly goals. This perspective allows for good strategies and decision making geared to the long term forecast.
Cost Reduction: Typically family members are more likely to contribute their own finances or reduce their takings to ensure the long term success of the business.
Family Disharmony: A history of unresolved conflict and deep seated resentments can affect every single member of the firm and draw divisive lines. Disputes arise in every firm but family conflict can be more difficult to resolve.
Lack of Succession Planning: Whether it’s the leader’s inability to admit that one day they may have to step down or that family doesn’t want to face the fact – many families lack cohesive plans for the inevitable.
Nepotism: The reluctance of the family to let qualified people into the top tier can mean family members are given jobs that they lack the skills, education, and experience in.
Unstructured Authority: The high level of trust in family firms can be detrimental when it comes to governance issues such as internal hierarchy and rules.
The key is to recognize and understand both the advantages and disadvantages of family businesses. In order to ensure their long term success we utilize the three-circle model when working with family enterprise decisions.
In reality, the things that make family owned enterprises work so well are the family’s personal relationships, the loyalty and commitment, and the flexible structure. Conversely, they can also make them challenging to sustain in the long term.
Conflicts are a normal experience in most family businesses. These may be a bit harder to resolve as they generally have 3 levels of interests to navigate through – family issues, business issues and ownership issues. The key is to manage the conflict at the level it was created so that it does not cascade into the other levels.
If you are a part of a family owned enterprise that has a greater capacity to perform at a higher level, we can help you reach your potential. At About Being Connected we work to capitalize on the advantages of being a family owned business. We have worked with dozens of families delivering exceptional results at all levels of family owned businesses.
At ABC we understand, both intuitively and reflexively family business characteristics. Our team is uniquely capable of steering your family onto the path of better rapport, clearer communication, resilient relationships and strong structures for decision making.
We help family owned enterprises hold onto their core values, their roots so that their growth won’t come at the expense of those values. We understand the diverse dynamics that impact ownership, management, and family decisions
About Being Connected will work to empower and engage family members who are both active and inactive in the business.