70 percent of family-owned businesses fail or are sold before the second generation gets a chance to take over, according to a 2012 Harvard Business School study.
There are several reasons why family-owned businesses fail, including a power struggle among family members, emotions getting in the way of business, or the first generation’s inability to let go.
While this statistic might discourage families from going into business together, they can reach success with the right framework and systems in place. As franchise owners of U.S. Lawns (a leading commercial landscaping management company) we have not only built a successful business, but also have accomplished the challenge of having more than one generation joining the business—as both of our sons now work with us.
But before we share our sons’ transition into the business, it’s important to take a look at why franchising is a viable option for many families who are looking to start their own business together.
One of the biggest motivating factors of buying into a “successful” franchise is that there’s no need to re-create the wheel—you’re immediately equipped with a proven business model that can help you grow your business at an exponential rate. And unlike going into business by yourself where there’s high risk of failure within the first few years, due to poor operation/economic decisions, franchises provide their franchisees with a set of processes to ensure that their businesses’ foundation is set up correctly.
Investing in external initiatives like marketing and training programs can result in severe setbacks for many business owners—particularly new business owners who aren’t fully aware of all of the costs. However, because franchises want to keep their brand’s message consistent and reputation high, they will equip your team with the marketing collateral and training your team needs, so that you can continue to focus on the operations of your business. It’s also important to point out that building brand recognition within a competitive market is another area in which many business owners spend countless time and money, so the fact that the franchise has already established this, gives you an advantage in the sales process. Franchises also have many connections to vendors who can help you purchase equipment at discounted rates.
Having access to the franchise’s knowledge bank is just another perk of joining a franchise. The franchise’s main goal is to ensure the success of their franchisees, which is why if you ever have a question or concern, they are there to provide you with an accurate answer quickly.
In addition to the franchise, you also have instant access to a large network of fellow franchisees to help you make educated business decisions. There’s a sense of camaraderie among franchisees, and because each franchisee is at a different point in their business, they have experienced many of the same challenges that you will have or most likely will face in the future. This network is extremely beneficial, as your fellow franchisees can decrease the risk of potential downfalls, and give you advice if you’re experiencing a problem.
Joining a franchise can reduce an immense amount of stress and pressure that starting a business from the ground up can put on a family, as it provides a clear path for families to build and sustain a healthy business.
Joining the Family Business
It can be difficult for many parents to work with their children. Likewise, it can also be challenging when you realize that your child doesn’t want to work for the family business. While our sons had always shown an interest in eventually joining us, they also expressed curiosity in establishing their own careers (David’s son, David. Jr. worked as a full-time police officer, while Mike’s son, Justin, worked in sales and marketing).
Since we had encouraged them to follow their own paths and never pressured them into joining the business, we believe that their passion for the business was cultivated organically. Justin stated that although he ventured away from the family business for a couple of years, he never lost interest in it, and the marketing and sales skills he acquired translated seamlessly into our business. Similarly, as a full-time police officer, David Jr. was dedicated to making a difference in his community, and now he’s still able to make a difference while also having the opportunity to help his father.
While David Jr. and Justin’s transition into the business was successful, we recognize that this might not be the case for every family. However, with the right organizational structure and mentality, it can be accomplished. Below are few simple best practices that can help other parent/child partnerships work well together.
Establish Job Roles
Competition exists in every family—particularly if personalities resemble one another. To reduce the level of competition among family members and to optimize and strengthen the company as a whole, it’s important that each person has his or her own role within the company. Depending on the nature of the business, dividing roles and responsibilities based on the person’s expertise (i.e. marketing, sales, human resources, operations, etc.) can help prevent family members from stepping on each other’s toes.
Learn From One Another
Segmenting job roles is also another way to fully embrace new skill sets, and in turn, optimizes the overall health of the business. We have both learned that keeping an open mind, practicing self-awareness, understanding that more than one person can be right, and that nobody is perfect, has helped our families embrace change and accept each other’s strengths and weaknesses.
It’s important to remember that while there are highs and lows in any business, family comes first. By looking at the bigger picture, rather than harping on each individual setback, it will help to keep the business moving forward.
Because David Jr. and Justin, weren’t forced into the business, their desire to learn about the franchise and drive to work for it never diminished. Even today, as full-time employees they’re able to go to work everyday and enjoy what they do. They’re both eager to deepen their knowledge about the operation of the franchise as a whole, and create new relationships. Being a part of something bigger than themselves, and contributing to their father’s success is a core value they both share.
While starting and running a family business may have its challenges, joining a franchise where the structure is created for you, can make the experience a long-term success for many years to come. If you can maintain a passion for what you do, be respectful of one another, and embrace change, you can be sure that your family will weather multi-generational transitions.