JamisonMoneyFarmer works with many family businesses, and some cases, second and third generation family businesses.  In fact, JMF is a third generation firm, as one of our shareholders Carl Jamison, is the grandson of our founder, late Carl C. Farmer.

The importance of family owned businesses cannot be overstated.  Family owned businesses contribute $8.3 trillion or 57% of the U.S. GDP, employ 63% of the workforce, and are responsible for 78% of all new job creation. More than one-third of Fortune 500 companies are family-controlled.

Recently in an al.com article, Paul Johnson, the managing partner of Next Step Executive Search in Mountain Brook, Alabama, was quoted as one of the best ways to drive job growth is to “nurture an entrepreneurial eco-system”.

Family business CEO, Jack Mitchell, recently wrote a great article in Fortune about his own experiences of taking over the family business with his brother from his parents as well as integrating the next generation into the business.  Mitchell identifies many ideas for making the transition run smoothly. Seven ideas, in fact.  My favorite two are 1) a Family Council, and 2) a 5 year rule.

Family Council

 Faithfully, we have scheduled weekly Tuesday morning family meetings. We discuss in a confidential way, in a safe haven of sorts, any issues that are on the active working family members’ minds.  We have had a Family Council since the mid 1990s, which consists of all members of the Mitchell family descended from Ed and Norma, our parents, who are 14 years old and above, including spouses.

 5 year rule

Our sons had to work five years elsewhere after finishing college. This rule was not popular with our father, who was still very much with us. He worried that we were sending his grandsons “out to pasture” and that we might lose some of the great talent and passion for the business that his grandsons had already demonstrated.

They needed to know what it meant to be hired, transferred to a different city, promoted, pushed, and pulled by someone other than their father or uncle. If they decided on becoming an astronaut or a podiatrist instead, we would support it wholeheartedly.

The five-year rule not only gives the next generation work experience, it also gives them wisdom they can bring into the family business. When our sons join the business, they made positive recommendations, and my brother and I respected them even more because they had these outside experiences.

 

These rules may or may not be perfect for your family business but it is certainly worth the discussion.

Success is any business is no easy task.  Success in a family business is certainly no easier.  Smart and thoughtful planning through those successions is vital to family business success.