Whether you’re thinking of taking over a mom-and-pop shop or a larger operation, it’s important to think long and hard about the implications of carrying on the family business.
Shortly after my husband graduated with a degree in chemical engineering, his dad decided to retire from his thriving chemical distribution company. Unexpectedly, Steve had a decision to make: Did he want to take over the family business?
It was an exciting, but daunting, prospect that led to a lot of research and deep reflection. And Steve certainly wasn’t alone. Family-owned businesses employ 60% of the U.S. work force and generate 64% of the GDP. Yet only 30% of family businesses reportedly survive the transition from first to second generational ownership. Yikes.
How do you make the decision to take the leap—or not? In this article, we’ll walk through some pros and cons of taking over the family business. Then, we’ll leave you with some tips to help you work through your own decision-making process and best practices for making the changeover.
Starting your own business is a risky proposition. First of all, initial struggles often take years to sort out. You have to build a clientele, secure suppliers and employees, and establish a foothold in the marketplace. Not to mention figuring out systems like accounting, information technology, customer relationship management and other infrastructure.
Inheriting a family business is kind of like starting to climb Mount Everest halfway up. It certainly takes hard work, diligence and some entrepreneurial spirit to keep the climb on track. But you’ve got a huge advantage on people who start from scratch.
When taking over a family business, all of the groundwork has been laid for you. As a result, you’re free to conduct “business as usual” while you explore new directions the company could take under your leadership. If you’re lucky enough to inherit experienced employees who understand the ins and outs of the business, you’ll have an easier time with your transition.
Plus, having the ear of the former CEO anytime you want is a huge bonus. This will help prevent making critical errors, which—for a business in its infancy—could come at a huge cost.
A Mid-Career Start
Most of us start our careers at the bottom and spend years working our way to a position of leadership. Taking over the family business allows you the flexibility to skip the grunt work and get right to the good stuff. While that might mean missing out on valuable learning experiences, you’ve got the aforementioned former owner on speed dial. With them handing down the hard lessons, you won’t make the same mistakes.
A Career with Meaning
Owning a business, contributing to the economy and providing jobs for your community is a fulfilling way to earn a living. And there’s an additional element of pride when you’re carrying on a tradition.
A Business with Cash Flow
Starting a business from scratch requires capital. And it can take years before an entrepreneur starts to make money. If your family’s business is already thriving, instead of worrying about cash flow, you can set your mind to growth.
And, if your plans to expand or create efficiencies require business loans, a business with a proven trackContinue reading