Multiple generation businesses
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Think it’s easy to keep a family business alive and well?
Think again, says Dean Ira Solomon of Tulane’s A.B. Freeman School of Business. Only 40 percent of family-owned businesses in this country make it into the second generation, he says. And it gets more difficult as time goes by; just 13 percent make it into a third generation and a miniscule 3 percent are still family-owned by the fourth generation or beyond.
This year we recognize five New Orleans family businesses that have figured out how to circumvent the challenges that inevitably arise when relatives have to mesh their working styles to achieve a common goal. Whether it’s creating custom jewelry or preparing delicious meals, these folks have learned to keep home and office separate – not always the easiest thing to do when your coworker is also your father or your spouse.
Family businesses can increase the chance they will survive by keeping in mind a few key points, Solomon says. One important step is to plan for succession. Do not just assume that junior will make the best CEO when dad retires, he says; instead, get professional counseling to help decide which family members best match positions as they become available. It is also critical to seek outside expertise in matters of taxes, estate planning and other areas outside of the primary business, the dean says.
To help these businesses, the Freeman School has a Family Business Center, where companies can take advantage of educational programs and the opportunity for one-on-one consultation. “We don’t provide technical or legal advice,” Solomon says. But the center can help family members identify the problems they face and find the help they need to keep their family businesses in the fortunate few that thrive, generation after generation.