Economic activity is significantly fueled by family-run firms. In 48 economies, according to a 2016 Global Entrepreneurship Monitor report, “75% of entrepreneurs and 81% of established business owners co-own and/or co-manage their businesses with family members.”
I am the founding executive director of Babson College’s Bertarelli Institute for Family Entrepreneurship and the former president of the small business owned by my family. I emphasize to them above all else that I’m not trying to get them ready to go into the family company. There are other options available, and for some people, that might be the best one.
Rather, I aim to equip students to provide value that transcends generations by utilizing theirthe strengths of the family, a viewpoint I refer to as family entrepreneurship. “Do things exactly how my family has been doing them” and “Leave the family business entirely” are not the only options available.
Families who encourage each member to pursue their hobbies and talents succeed in a variety of endeavors, from starting a company in a related field to renovating an established one.
First piece of advice: Don’t always take your family’s route.
At the age of 27, I took over my mother’s role as president of our family’s small steel construction company. Money was leaving our account. Our revenues declined. My mother and I endeavored to change our company from one that sold generic products into one that set itself apart by providing creative and useful customer service.
In the end, we expanded 12 times in 14 years and sold the business. This wasn’t our family’s legacy in business. It is the spirit of entrepreneurship we apply to all we do. I discovered that doing things the same way wasn’t always the greatest approach to achieve my family’s objectives.
A previous student talked about the pressure he had to live up to the heritage of his father, who co-founded a multinational family garment manufacturing company, a few years ago. The student asked his father, “How can I follow in your footsteps?” The father retorted, “I want you not to. You should locate your own shoes, please.”
A family’s source of strength, such as the innate desire to uphold a method of doing things that has worked for centuries, can turn into a liability when it rejects new directions or when an attempt to pass down a business with good intentions turns into an obligation that young people wish to avoid. The guidance of this father shows a better way.
Every family firm that wants to successfully navigate the challenging task of intergenerational continuity should adopt the mantra “Find your own shoes”. A stagnant company where family workers feel compelled to work there serves no one. When individuals are free to pursue their interests, whether they do so inside the family business or outside of it, or somewhere in between, everyone wins.
Tip 2: Leverage both individual and group strengths
Families ought to ask themselves, “How can we draw on our individual and collective strengths to create value across multiple domains?” rather than, “How do I preserve the success of my existing business?”
Having a tight relationship with the next generation, who are aware of global trends, is one of a family business’s greatest assets. My mom and I restructured our family’s steel company and increased our entrepreneurial endeavors, so I observed firsthand the potency of fusing this change-oriented intuition with the experience of the elder generation.
A case study I co-wrote followed Diunsa, a Honduran family-run department store chain. When the pandemic began and stores closed, Diunsa had no online sales infrastructure. The Faraj siblings, all in their 20s, stepped up. The older generation followed their lead, and the siblings launched a website, pick and pack operation, and customer service support within three weeks.
Outside the business, a shift to a family entrepreneurship framework recognizes that a family member’s success contributes to the family’s legacy, no matter where or how it’s achieved — and that it’s easier to attain this success when every person pursues opportunities aligned with their interests and talents.
Many forms of family entrepreneurship fall between working within the business and outside of it. Some family members may leave to work in another industry or company and return to the family business later, armed with a wealth of insights. Other family members may launch a startup in an adjacent industry.
Brothers Jack and Max Barber started a food truck business while Jack was in college and Max was in high school. Their mom came from a bakery business. Their dad was the successor to the Barber Foods stuffed-chicken breast empire founded by Grandfather Gus. Jack and Max’s company, Mainely Burgers, grew to operate several food trucks and restaurants. Research by Dr. Larissa Leitner indicates that the strength of existing family connections can help new ventures to succeed.
Tip 3: Communication and understanding should come first.
Economic growth can be fueled by family ties. They also provide difficulties in cases of dysfunctional relationships, which are common in families.
For families in particular, communication and understanding are crucial. If the younger generation believes its elders don’t understand them and the older age feels their hard-earned wisdom isn’t being heard, then it is impossible for various generations to collaborate. If you are made to feel as though you are leaving your family behind, it is hard to choose your own path.
Thus, if you are one of the numerous individuals who owns or operates a family business, begin by talking to your family. Ask “What are your desires? How can I assist you? and start to envision what the future might hold together what the future may hold.
Recall that the purpose of sharing or listening is not always to protect what already exists. A family business is not a fossil that can be carried down through the ages. Similar to families, it is intricate and dynamic.