Family Owned Business or Business Owned Family?

Does the family run the business, or does the business run the family? Baby Boomers (of which I am a part) tended to have a business run family, while Generation X have family run businesses.

Mom and Pop businesses have always been the backbone of the American economy. Large corporations seem to be consuming the smaller businesses, but statistics do not relate these facts. Recent information on business in America is very interesting:

• Family businesses account for 50% of the gross domestic product.

• Thirty-five percent Fortune 500 companies are family companies.

• Family owned companies employ 60% of the nation and pay 65% of wages.

• Small business creates 78% of new jobs.

• In the last five years, women-owned family business has increased 37%.

• Business successions to daughters have better success rates than to sons.

Family Run Business

Today's businesses are beginning to be controlled by Generation X, born between 1965 and 1979. This generation has different ideas about how to run a business than did Baby Boomers. Generation X was raised with both parents working and became known as 'latchkey kids'. They are resourceful, individualistic, self reliant, but skeptical of authority.

Not being interested in long-term careers, they have little corporate loyalty and tend to change employment and careers frequently. They focus on relationships, their rights, skills, and often have a 'what's in it for me' attitude.

With this attitude incorporated into the family run business, the business will suffer. Decisions and ideas are made for the benefit of the owners, rather than the company. More attention is given to the family than running the business. Over time, the business cannot exist with this kind of direction.

Business Run Family

The Baby Boomer generation had business run families. Born between 1946 and 1964, they have the largest population of any generation. Job status and social standings are important to Baby Boomers. They are optimistic, ambitious, loyal, and believe that employment should be for a lifetime.

With this attitude, any business decisions made were for the benefit of the business. The business run family was very aware that if the business was not nurtured there would be no income. Since status, social standings, and loyalty were uppermost in their minds, hard work and long hours went into any workweek. Family functions and family matters were postponed until the business was taken care of properly. These concepts are a main reason that Baby Boomers had, and many still have, successful family businesses.

Although the business run family does not sound as appealing as the family run business, over the long-term, advantages and benefits are greater. Following sound business management practices should correct errors made during a business start-up or succession to younger generations.

Sources:
Gaebler Family Business Statistics
Veterans, Baby Boomers, Generation X, Generation Y, Generation Z

More by this contributor:
Tips to Starting a Successful Family Business
Business Start-up: Building a Business
Employee Performance in Small Business