Family-run companies have advantages. But pitfalls can destroy what you built.
About 70% of family-owned businesses fail or are sold before the founder's children get to take over. Statistics for third-generation privately-held companies are even more dire, with a survival rate of 10% . (Source: Harvard Business Review, Feb 2012)
For many of our clients, their identity as a family-run company is key to how they perceive themselves internally, and — in some cases — it's key to their public brand identity.
We love working with these businesses because they tend to have the following compelling characteristics:
- Clear value sets or mission
- Rich historical raw materials
Among those four elements, our team finds an enhanced ability to supercharge our marketing efforts.
But we also see many of our family-run clients struggle with issues that interfere with healthy growth.
As marketers, our job is equal parts creativity and data. We believe in calculated risks, like testing a new market with a concrete plan that has accounted for survivable failure. Why do we care about what are essentially operations choices? Because driving leads to a business has a lot less true impact when overhead is draining margin. We love giving clients a report showing how much new desirable traffic we drove to their site, but we really love also being part of creating bigger profits.
So what hotspots have we noticed?
The key area to review is a proper hiring process and merit-based advancement system. If your dream is to have your family working together under one roof, build your company big enough that you have an actual bandwidth problem. Then seek to fill it in a way that truly serves the company. Require proper qualifications and training. Set criteria for job openings that reflect what the company actually needs. If you do hire a family member, have them report to someone you can trust to truly manage them, and make sure that person is confident you will support them in their supervisory responsibilities.
A family-run business can't avoid some whispers of nepotism, but your efforts at minimizing it will be noticed and will help everyone perform better, including non-family staff.