Family businesses that manage to survive generation after generation leave not only a family legacy, but also the potential for tremendous wealth. For example, Walmart is presently the largest business in the world in terms of revenue, earning more than $500 billion in 2018. When the founder Sam Walton passed away in 1992, he left his retail empire in the hands of seven heirs.
Presently, the Walton family business outranks the wealth of the Koch Industries energy group, the second-largest privately owned company in the country.
Others who have attained large individual wealth include business founders Jeff Bezos (Amazon), Bill Gates (Microsoft) and Warren Buffett (Berkshire Hathaway). These are just samples of the scope of wealth an entrepreneur can amass. However, most small business owners do well just to keep their heads above water. For those who would like to pass their business on to family members, there are basic business management strategies to keep in mind that can help your family business thrive.
On a day-to-day basis, successful family-owned entities generally follow some well-honed principles to keep family politics out of the business. For example, the patriarch and his four daughters who run the six-generation family-owned business D.G. Yuengling & Son Inc. have many varying opinions. To keep the business humming, they agree that it’s OK to disagree: “Diversity of opinion is what keeps family businesses strong and spurs collaboration.” It’s also a good idea to keep family and business separate. This means scheduling regular, in-office staff meetings so that family dinners can focus on just that — family. It’s important, too, that everyone has distinct roles and responsibilities. It’s difficult enough when duties overlap among workers, but in a family business this can lead to an all-out sibling brawl. When jobs and job titles are doled out to family members based on their natural strengths and interests, each employee can take ownership and be held accountable, as well as enjoy the pride and satisfaction of their individual contributions. For some families, entering the family business may take time. Even beyond a formal education, it may be important to first seek non-family job experience before “boomeranging” back to the fold. This scenario worked well for the three generations that run Cleaver Farm and Home — a building-supply distributor in Kansas. The business has managed to expand as each generation of family members took charge. For the current generation of brothers, launching their own career paths allowed them to return to their family roots and give their own children the sort of childhood they enjoyed.
Bear in mind, too, that younger generations can bring new skill sets to the family business. For example, a 17-year-old prodigy whose family has owned a metalworking company since the late Middle Ages has introduced technology to the fold. Anton Klingspor added exponential growth to his family’s business through various technological tools like LinkedIn Lead Builder and Facebook Workplace to improve team collaboration and communication. As a business grows larger and more complex, the family may need to look outside the fold for specific skills and experience. It’s important to engage knowledgeable professionals and establish formal business and family governance systems to help manage risks and enjoy a more sustainable foundation for future success. Whether you are passing your business down to keep the family legacy going, or looking to incorporate some outside talent with fresh ideas, here at Hall of Fame Financial we can help you develop an insurance strategy to help protect your business, your key executive staff, and your legacy. Please give us a call and one of our Financial Coaches can help you gain the peace of mind you need to devote yourself to running a successful company.