Keys to Sustaining Your Family Business
In a recent issa.com article, family business consultant Henry Hutcheson notes that Warren Buffet indicated family businesses were a preferred acquisition target because he was always looking for “sellers who truly care about the future of their business.” Family businesses, however, have found it difficult to translate that caring into business success over successive generations. In fact, only 4% of family businesses make it to the fourth generation, says Hutcheson.
He noted a number of reasons (from addiction to the liquidity demands of inactive shareholders) why the success rate is so low, but he also expanded on the five key reasons some companies are able to sustain success:
1. The establishment of common goals
2. The interconnectivity between the owners, those who work in the business, and family members
3. The importance of governance
4. Communication is fundamental
5. Don’t force an unwilling successor into the business
6. Allow successors room to grow
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