According to a recent University of Vermont article, there are almost 6 million family owned businesses in the U.S. that employ roughly 60 percent of the workforce. While family businesses have traditionally been the backbone of the economy, times are changing, and many are struggling to survive. Below explains both positive and negative changes in America’s family business scene today.
Dealing with Change
As technology changes and competition increases, family members are being asked to contribute more, and perform different job functions within a business. As a result, they must quickly adapt to change in order to financially survive. Employees have strong motivation to work hard and manage change with technology, however, many family business members are also able to outperform non-family owned business employees. This is because family business members have closer connections, are more supportive, and can communicate better. Strong bonds are a huge contributor to success with changing and adaptability within a small business.
Family stores need to think about adapting to the right technology. Improving efficiency with card machines and online marketing will improve sales, but for certain businesses, too much technology can be a hindrance as well.
Family businesses in America are adapting to economic and industrial changes in many different ways. For example, since Americans are living and working longer, older generations are more actively involved in the business and are able to put their past knowledge to use in a new environment. In addition, contentious struggles over succession are being replaced by a collective focus on continuity and what is in the best interest of the business. More and more spouses are becoming involved in the family businesses and as a result, “couplepreneurs” are the new face of many businesses in America today. The way family dynamics operate is overall becoming more professional with strong bonds being emphasized for success.
According to one Harvard Business School study, over 70 percent of family owned businesses will fail or be sold because of family feuds and the personalization of business decisions. When a family business fails, or gets a business divorce, it’s often due to unchecked high emotions and a lack of expertise. Family business should depersonalize business decisions and if necessary, use outside professional help. Even better, family members should pursue higher education in fields related to their industry. Getting a masters in engineering management can give a small repair business a lot more credibility and improve knowledge for the whole company.
While many family businesses can adapt to change and strongly support each other, they face stiff competition from big businesses. A weakening economy, lack of resources, and stricter government policies have resulted in family businesses losing their competitive edge to big businesses. Keep in mind that chain stores like Walmart or franchises like McDonalds are highly organized, efficient, and competitive. Family business that want to survive should focus on niche markets, improving efficiency, and cutting costs.
In conclusion, some family businesses are successfully dealing with change and adapting while others are failing and struggling with increased competition. It all comes down to how a business is able to adapt, change, and improve knowledge in a new market.