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By Robert Counts robert@countsbusinessconsulting.com and Chad Counts crcounts@countsbusinessconsulting.com
Family Business
“It was the best of times, it was the worst of times…” – Charles Dickens
T
his quote had to be about running a Family business.
The “Family Business” is at its best when
everyone is working hard, making good money, and the business thrives and grows. The family business is at its worst when everyone is overpaid for what they do while the business is underperform- ing. This can leave the company on a steady decline out of business under the crushing overhead of a growing family. First of all, let us start with a disclaimer: If you are in a family business and hop- ing to stay in business for generations to come, the odds are against you. Statistics from the Family Business Institute put the survival rates of second generation family business at 30%, third generation at 12% and only 3% last to the fourth generation or beyond.
While there are many ways to fail in business, there are a few essential ele- ments that cannot be ignored if you wish to survive and thrive. Going forward we will examine these essential survival tac- tics.
1) Always invest in the future. This is true of all businesses, but there are two particulars regarding this mantra for family businesses. First of all, there is never a period in a surviving business where the main focus is cashing out. At times, family businesses go into hiberna- tion limiting investment in inventory or facilities before transitioning to the next generation and leaving both the business and the next generation at a greater risk for failure. 2) Preparing the next generation for leadership requires a strategic plan. The next generation needs to be able to manage finances, purchasing and pricing, sales, and production. Quite fre- quently the next generations’ best func- tion is now in conflict with what their best
14 Automotive Recycling | September-October 2015
function will need to be in the future. The goal would be to develop a plan where the next generation can both sup- port the company’s profitability now and be prepared to manage it profitably later. 3) Professionalism and accountability prevents nepotism.
Before becoming an owner of a com-
pany, we believe there is great value in experiencing work life outside of the family business. Experiencing regular hours and expectations without the ben- efit of special privileges or treatment gives you a healthy appreciation for the oppor- tunities that you will have. That is not to say that you cannot succeed if you have only worked in your family business, more that you are at risk for complacen- cy and a lack of discipline that can ulti- mately be the company’s undoing. 4) Training and accountability become
more important with family members. Anytime a family member position changes, there needs to be clear lan- guage regarding what is cause for termi- nation and promotion. While this sounds harsh, if there is nothing that will lead to termination then how can accountabili- ty exist? Otherwise, we are left vulnerable
to running a family welfare program instead of a family business. 5) Every member of an organization should have clear responsibilities and expectations. This is especially true for anyone with potential to be a future owner. The expectations for future own- ers must always be higher than a regular employee. Heavy is the head that wears the crown. Family members with aspira- tions to be future owners need to devel- op strength, determination, and a vision of future growth for the company. Handing over the keys of a business to those who are unprepared and ill- equipped leaves you with the fruits of con- venience that will quickly rot. Preparing and equipping are essential for the next generation to take the keys and drive the business into a successful future.
CBCDashboard and CBC support salvage and recycling business owners to improve and grow through PRP Profit Teams, Inde-
pendent Owners' Groups, On-Site Consulting, and Online Consulting using CBCDashboard: personnel, buying, in- ventory, income, sales activity, operations, and financials. Contact Chad Counts at (512) 963-4626 and Robert Counts at (512) 653-6915. Visit www.cbcdashboard.com and www.countsbusinessconsulting.com.