“All good businesses are personal. The best businesses are very personal.”
– Mark Cuban

Last month’s article on the darker sides of managing a family business generated a lot of response. Numerous owners of family businesses gave me feedback about the accuracy of my experiences. Given that 80-90% of businesses in the United States are family owned, I’m not surprised that many of you are interested in the challenges and opportunities these companies offer. So it seems only fair to focus this month on the many positives of managing and working for a family business. Here are just a few:

Shared values: Family businesses are typically built around a belief that there’s a better way to do something. Family members who start the business and guide it through the early years share a commitment to a dream. They also instill their family values into the business through everything they say and do. The mission, culture and values in a family business can inspire tremendous employee loyalty and a culture of excellence.

Employee Focus: Family owned businesses tend to be loyal to their employees. They recognize the contributions of those non-family members who have helped them grow and reward them by showing concern for their personal and family issues in ways that larger corporations usually do not. They are also less quick to downsize their workforce in economically challenging times.

Community Focus: Because most family owned businesses (FOB’s) are based where the owners and their employees live and raise their families, they are usually community and employee minded. They provide stable jobs, are often active in the community, and usually keep the profits in the local economy.

Entrepreneurial spirit: Family businesses tend to be more loosely structured and informal. As the needs of the business change, employees are encouraged to stretch and grow into new areas of responsibility. Creativity and new ideas are welcome. Without multiple layers of management, decisions can be made quickly, so employees get immediate feedback and a sense of ownership of their ideas. Rigid policies and procedures often found in large corporations are rare in small, closely held companies, so employees have more flexibility to get the job done the way they see fit. A family business can be a very exciting place to work.

A commitment to the long haul: The short-term orientation of mega-corporations often results in decisions that make the bottom line look good this quarter, but restrict growth potential over the long term. In contrast, family businesses tend to put more importance on long-term consequences. The founders want to build a business that will fund their retirement and become a legacy to pass down to future generations, so they are often willing to sacrifice short-term profits for long-term stability.

Financial: Family businesses are often very profitable. Because they are agile, close to employees and customers, and flexible in the amount of money the family withdraws from the business, they tend to be financially strong. This strength, when managed well, allows for a good lifestyle, flexibility for retirement and the ability to invest in family and community.

An excellent training ground: It’s not unusual for the founder’s children to start working in the family business at a young age. Even very young children will occasionally accompany Mom and Dad to the office, where they start to absorb the culture. When they’re old enough to work, the kids start to learn the business from the mail room up. By the time they’re out of college, they have received an excellent on-the-job business education. While Mom and Dad may hope the next generation will join the business full-time after graduation, the kids benefit from the experience wherever they decide to work.

So yes, it’s true that family businesses can be very challenging to manage. However, a well run family business offers tremendous benefits for both family and non-family employees.

It is a shame that, with so many positives, most Family Owned Business only last about twenty-five years. This is mostly due to the complexity of succession and exit planning, which are largely ignored by most of these businesses. However, when families develop the sophistication to balance family and business issues effectively, family businesses can be passed on successfully from generation to generation and have unlimited growth potential.