Walmart owned Flipkart in August 2018 for US$16 billion. The reason why we mentioned this is because Walmart is a family-owned business. Like this, there are endless examples of successful family businesses, but what is it that makes a family business successful? Before we look into that I would love to share the fact that only 30 percent of family businesses make it to their second generation and only 12 percent make it to their third. So it is not like it is a piece of cake.
Here are the four reasons why family business succeed:
Unity in Family
Unified families have a much easier time adapting to change and typically put family and business interests ahead of their own self-interests. Families build unity by making communication a priority by holding regular family meetings, educating family members about the business, building conflict-resolution skills and learning about the components of good communication.
Core Values
Successful families are always committed to a set of values beyond just financial gain. These values typically manifest in the form of a mission or vision statement. Establishing a core set of values gives family members a sense of purpose and the opportunity to commit to something greater than themselves.
Vision
Without a thoughtful succession plan in place, passing the torch from one generation to the next can feel like you’ve been handed a Pandora’s box of complex decision making. Succession planning is far more complicated than simply figuring out who’ll be the next CEO. Change management, estate taxes and retirement are closely linked to succession, and to deal with these multifaceted challenges, successful families need to build an independent board to provide accountability to management, strategically plan for the business on a regular basis and align strategy with the values and vision of family ownership.
Preparing Next Generation
Investing in the next generation is a must. Unfortunately, investing in the next generation is often misconstrued as finding the next CEO. It’s a common trap for family businesses to fall into, one that usually leads to pressuring the next generation (implicitly or explicitly) to come into the family business. But it is not how one should enter the business. Successful multigenerational families invest in their next generation by helping them match skill/passion to work, preparing them to be responsible owners, holding those working for the business accountable for their performance and educating them about the challenges of leadership.
Source: entrepreneur.com
