Family businesses are, more often than not, where family fortunes are made. The rewards, however, can come from much more than wealth.
"There's already a special degree of intimacy among family members, and working in a family business brings that to another level, in a way that can be very positive," says Dan Prebish, First Vice President, Estate Planning Services, Wells Fargo Advisors.
He points out that family members working in a business often share the same goals and priorities. "Even as the business has passed through multiple generations and the number of family members working in the business has diminished, some of the families have a strong sense of ownership, the feeling that it brings them all together and they have to work together to succeed," Prebish says.
Susan Rounds, Senior Director of Planning for Wells Fargo’s Business Advisory Services in Atlanta, agrees. "When a family business is thriving, there's absolutely nothing like it, because your family and business are working together, and any success in the business will directly benefit the family," she says.
The benefits of running a family-owned business can affect both the present and future prosperity of the families involved and their communities.
Benefit No. 1: The time to build a family legacy
Family harmony can indeed be tough to maintain, especially when some family members work in the business and others do not. But when business owners plan, consider potential pitfalls, and work together to avoid them, the rewards can be great. A thriving family business means your family and business are working together, bringing success to both.
"[There] is accountability, and the opportunity to teach family members, because you see a very direct relationship between actions and the bottom line," says Prebish. "If you don't have a sense of ownership, you don't get that."
And the financial skills and work habits necessary for business success — budgeting, liability management, cash flow awareness, and long-term planning — "would also translate to the personal lives of the family members who work there," he points out.
"The family legacy is closely tied to the family business," adds Rounds. "And if you've got mutual goals, you've got a mission for your family over time, and it will tie family members together and create a stronger bond among them."
Benefit No. 2: The opportunity to develop skills
Another benefit is molding future generations. A business owner who brings a child into the business, then watches as he or she grows into a position and brings new skills and energy to the company, can delight in the results.
"On a number of occasions, I've heard a parent say with a lot of pride that their son or daughter developed a skill that turned out to be tremendously important to the business that they didn't have or would never have developed on their own," Prebish says. "It's neat to see that parents don't always say 'It's my way or the highway.' They're pleased to see the younger generation adding skills to the business that they're reliant on, or that they took the business in another direction."
The younger generation, Rounds says, is typically more tapped in to new technologies and trends than their senior-generation parents. "They look at things so differently because they were born when things were already on fast-forward," she notes.
Also, employing children who stand to benefit greatly from the business' success can increase productivity. Prebish says, "I have often talked to business owners who are surprised and frustrated, asking 'why does everyone leave at 5 o'clock?' And I say, 'Well, they look at it differently than you. They don't own the place, and they don't have the same financial and emotional investment in the place. It's just where they work.' A son or daughter is a little bit more attuned to the same work ethic their mom or dad brings to the business."
Benefit No. 3: An opportunity to build a better community
Many family-owned businesses also have a greater interest in the people they employ and the communities they serve.
For example, Rounds counseled a business in a rural, low-income area. The family had a strong interest in education, as was already evident in the business's corporate policies. They extended that interest to the community by bringing in education experts and college representatives from around the country for a career day. Children who may not have considered higher education learned what the rewards could be and how a college degree could change their lives.
"I've seen so many business owners who tell me something like 'my business feeds 457 people,'" says Prebish. "It's really neat that they added it up, counted the spouses and kids at the company picnic, and have a strong sense that 'my business affects this many people in my community.' In many big organizations, we're further away from the end result, and not as conscious of that."
Prebish also notes that he has a number of clients interested in selling their businesses, but not to any buyer who would take the jobs out of the community. "If the buyer wanted to come in, they would have to stay there," he says.
All in all, he says, "In my experience, there are an awful lot of engaged and committed families who have made this work together," he says. "It may not have been easy, but they're certainly much stronger because of it."