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Family businesses drive considerable economic activity. A recent Global Entrepreneurship Monitor report found that in 48 economies, “75% of entrepreneurs and 81% of established business owners co-own and/or co-manage their businesses with family members.” I did.
I am the former president of my family's small business and founding executive director of the Bertarelli Institute for Family Entrepreneurship at Babson College. The thing I stress most to my students is that I'm not trying to prepare them to join the family business. While it may be the right option for some people, it is not the only option.
Instead, I seek to prepare students to create value across generations by leveraging their families' strengths. I call this family entrepreneurship. The choice is not a binary choice between “doing what my family did the same way'' or “leaving the family business completely.''
From launching a startup in an adjacent industry to revamping an existing business, families thrive when each member brings their own interests and talents to the table.
Related: 7 Best Practices for Running a Healthy Family Business
Tip 1: You don't necessarily have to follow in your family's footsteps.
When I was 27 years old, I followed in my mother's footsteps as president of my family's small business manufacturing steel building products. we were losing money. Our sales have decreased. My mom and I set out to transform a consumer products business into one that could sell those products but differentiate itself with innovative and valuable customer service.
In the end, we grew 12x in 14 years and eventually sold the company. Our family legacy was not in this business. It's an entrepreneurial spirit that we bring to everything we do. I learned that the best way to achieve family goals is not necessarily to keep doing the same thing.
A former student whose father co-founded a global family apparel manufacturing company several years ago said he felt pressured to live up to that legacy. “How can I follow in your footsteps?” the student asked his father. The father replied, “I don't want that. I want you to find your own shoes.”
Sources of family strength, such as the instinct to maintain the way things have worked for generations, can be overcome when they go too far and reject new paths, or when well-intentioned efforts to pass on the business become impositions. This can be a disadvantage because young people want to run away. This father's advice shows you a better path.
“Find your shoes” should be the motto of every family business navigating the delicate task of intergenerational continuity. No one benefits from an outdated business where family employees feel obligated to work there. Everyone benefits when people are able to explore their interests, whether within the confines of an existing family business, outside of it, or somewhere in between.
Tip 2: Leverage individual and collective strengths
Families should stop asking, “How can we maintain the success of our existing business?” Instead, ask yourself, “How can we leverage our individual and collective strengths to create value across multiple areas?”
One of the greatest assets a family business has is its close connection to the next generation, who know exactly where the world is headed. Combining this intuition about change with the existing knowledge of older generations can have a powerful effect. This is something I saw firsthand when my mother and I transformed a traditional steel business and fostered entrepreneurial activity in our family.
The case study I co-authored featured Diunsa, a family-owned department store chain in Honduras. When the pandemic began and stores closed, Diunsa had no online sales infrastructure. The Farage brothers, all in their 20s, showed their strength. The older generation followed suit, and the brothers launched a website, a pick-and-pack operation, and customer service support within his three weeks.
Outside of business, the move to a family entrepreneurship framework recognizes that a family member's success, regardless of where or how it is achieved, contributes to the family legacy, and each person is encouraged to contribute to their own Recognize that this success is easier to achieve when you pursue opportunities that align with your interests and talents. .
Many forms of family entrepreneurship fall somewhere between working within and outside of a company. Some family members may leave to work in another industry or company and later return to the family business with a wealth of insight. Other family members may launch startups in adjacent industries.
Brothers Jack and Max Barber started their food truck business while Jack was in college and Max was in high school. Their mother came from a bakery background. Their father was the heir to the Barber Foods chicken breast stuffing empire founded by Grandpa Gus. Jack and Max's company Mainely Burgers has grown to include several food trucks and restaurants. Dr. Larissa Leitner's research shows that the strength of existing family ties helps new businesses succeed.
Related: How to maintain a family business across generations
Tip 3: Start with understanding and communication
Family ties can be a driving force for economic growth. Challenges also arise when relationships are dysfunctional, which often occurs within families.
Understanding and communication are especially important for families. It is impossible for different generations to work together if older generations feel that their hard-earned wisdom is not being heard and younger generations feel that their elders do not understand them. It's hard to forge your own path when you're made to feel like you're abandoning your family.
So if you're a family business owner or part of a family business, start by talking to your family. Ask, “What do you want? What can I help you with?” And together we begin to imagine what the future will be like.
No matter what you share or listen to, remember that your goal is not necessarily to preserve what exists. Family businesses are not fossils frozen in time to be passed down. It is complex and ever-changing, just like the family itself.
Amid this changing complexity, it's helpful to keep in mind two main tenets of family entrepreneurship. First, find your shoes. The second is to create value together.
Related: This family-owned business innovates to grow across generations
