Family Matters: Can Starting A Family-Owned Business Be Recession-Proof?

“However important business is, family always comes first.”

For years family-owned businesses have been the backbone of our economy. Even today, the vast majority of businesses in the U.S (and around the world) are family-owned. In fact, family-owned operations have traditionally outperformed non-family owned businesses in every sector across the globe and especially during times of recession according to Credit Suisse.

Many entrepreneurs may envision handing their own empires down to the next generation as part of their family legacy. And while this is a worthwhile goal, some business consultants would advise entrepreneurs to proceed with caution when attempting to do business with family. 

The reality is that staying in business with family members over the long term has its challenges. Only about 30% of family-owned businesses actually transition into the second generation (12% make it to the third generation and 3% into fourth generation) for various reasons according to the Family Business Alliance. But just like all other worthwhile business ventures, family businesses must persevere through clear and open communication, carefully considered policies and unwavering commitment.

Although there are risks to being in business with family members, there are many rewards. Among them, working and growing together professionally, passing on shared values from across generations, and enjoying prosperity as a collective unit. Tapping the inherent strengths of family capital can give family-owned businesses a leg up. 

The family-owned businesses that live on to see the fruits from a lineage of leadership are poised for greatness and generational wealth. Fisk Johnson, fifth-generation CEO of S.C. Johnson, maker of household brands such as Windex, Pledge, Drano and others, is an example of how the legacy of his great-great grandfather, Samuel Curtis Johnson continues through the 133-year-old company.

In a recent Forbes8 Mastermind, co-founders of skincare company Cream Blends and creative agency Distinct Life, husband and wife Rick and Yolanda Williams shared their advice for aspiring entrepreneurs interested in running a business as a family. 

After attending Oakland University and starting multiple businesses together, they’ve been able to understand and leverage one another’s strengths to create premium products and services while building a cohesive, collaborative workforce to help realize their dreams. 

“You’re working together but you’re staying in the lane you have the skill set for,” Yolanda shared. “I think sometimes when you’re working with a partner you’re looking over like, ‘Hey, I think I could do graphic design, too’, and then I try to do what he’s doing, and it’s not my skill set. So I think working with Rick, we focus on our lanes, becoming masters of our craft.” Out of pure hustle and relentless pursuit, within 6 months of starting in 2013, Yolanda and Rick placed Cream Blends in Detroit’s local Whole Foods and have grown organically since then. 

We have our hands in a lot of different pots, so I’m not worried if one pot is boiling a little slower than the others.”

The couple attributes their success to the shared values that have been adopted by a nimble team of local Michigan natives who believe in their mission. “We keep our team small. We look for people that have the right spirit, the people that can get along with everyone,” Rick explained. “They also have to be self-starters. Someone that can take initiative. Because those are the people that can then come to you with the ideas and then we (all) can build on them.”

Although pursuing a family business has its pros and cons, a business built on the shoulders of a close-knit family may be a dream worth considering. Here’s where today’s leaders can start creating their own legacies through a family-owned venture:  

• Identify and align the company’s shared values and commit never to waver from them
• Master your craft individually and leverage your family’s collective strengths toward a common goal or mission
• Put best practices, company policies and succession plans together early on to eliminate any gray areas 
• Unify a tribe of self-starters to build upon the family’s vision
• Communicate clearly and often to avoid confusion across the business functions
• Don’t be afraid to grow slowly and organically together for the long-term
• Always be sure to separate business business from family business

Deciding if a family-owned venture is worth pursuing is a decision you can make with your loved ones. The good news is that now more than ever family businesses have distinct opportunities to harness their strengths in our changing world. And as Sir Richard says, remember family should always remain first.