Family-owned firms face generational hurdles
By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – When I say "family-owned business," what comes to mind? Ma and Pa storefront, the kids working after school, maybe "quaint." Now take that image and broaden it to include current family-owned corporations like the New York Times and Marriott. I'm Maxine Shapiro with KERA Marketplace Middays.
This past weekend, the Family Firm Institute was in town and I had a chance to go visit the conference in Los Colinas. This Institute is an international organization dedicated to assisting family firms. Members include the usual consultants one would find helping any business - accountants, lawyers, and financial service advisors to name a few. Now top that list off with one more profession that family-owned businesses can't do without - The Therapist. I mean, think about it. It makes perfect sense. Sometimes it's hard enough for family members to get along at the dinner table. Add a lot of money and working together side by side and, next to the accountant, the therapist becomes their best friend. These therapists are very business savvy. They do much more than the therapists that you and I might be familiar with.
Only 30% of family-owned businesses make it to the second generation and only half of that make it to the third generation. Margery Engel Loeb, therapist and president of Corpus Christi-based Loeb and Associates, explained the biggest hurdle for family-owned businesses - the founding CEO doesn't want to leave. Therefore, how do you pass on the values the company was built on, not to mention the knowledge and skills that only the CEO has? Unfortunately, when these CEO's are reluctant to transfer these assets, you have uninterested children. The passion for the next generation becomes the money, and not the product or service itself. Then there's the soap opera scenario - one child feels the parent's zeal, the other wants the money. Enter the advisors to try to work things out. Dr. Mark Voeller of Dallas-based Dialogue Solutions, Inc. told me that out of that 30% that make it to the second generation, 6% don't because of unresolved emotional conflicts.
That said, according to the Institute, 80 to 90% of all business enterprises in North America - are family-owned. For KERA Marketplace Middays, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m. To contact Maxine Shapiro, please send emails to email@example.com.