It’s often said that small business is the backbone of US business. It might also be said that family owned businesses are the brains behind a lot of them.
The Small Business Administration says family owned companies account for 90% of all businesses in the US. This number includes huge, corporations like Mars Inc. and Wal-Mart and top earners like Berkshire-Hathaway. But most family businesses are small ones. The Census Bureau says 28% of small companies are family owned, which in turn account for 42% of all small business receipts.
Business Brokers Can Identify Family Business Opportunities
If you’re thinking about buying a business with your family, make sure it’s for a product or service everyone involved likes and supports, advises Entrepreneur. For example, if your spouse loves to cook, a restaurant or specialty food franchise could be a great match. Or if you’re thinking of using your business expertise, a B2B (business to business) shop like a print shop provides plenty of opportunity to work directly with other companies.
Starting up and running a business requires effort and planning. But you don’t have to start from scratch. Consider buying an established business in an area that interests your family and that all of you can support.
Turn to a business broker to find opportunities that fit your family. He or she can act as an agent for you, searching sales listings, offering valuation comparison services to determine the potential Return on Investment (ROI) for different options, and helping to arrange financing to buy an existing business.
Business brokers and consultants offer services that combine the skills of Realtors, mortgage financing, and real estate law into one shop. Good brokerage firms include a CBI (Certified Business Intermediary), a CPA (Certified Public Accountant), and professionals that hold real estate licenses.
Ground Rules for Family Companies
Nearly everyone who has started or purchased a business with family members advises setting some boundaries and rules similar to these tips from Inc.:
- Only include those who can make a real contribution. Don’t push someone who’s reluctant to join.
- Establish clear roles, titles, job functions, and compensation. Make sure you give useful performance reviews for family and non-family involved in the enterprise.
- Don’t abuse family relationships. Treat everyone equally.
- Communicate honestly and openly with employees. Don’t make non-family employees feel out of the loop.
- Don’t confuse family decisions with company decisions. A family council that includes owners who aren’t involved in running the business can be useful for addressing problems and developing business plans.
- Establish boundaries between work and family life.
Entrepreneur encourages family businesses to get input from everyone involved, including older children, who are naturals for advising on consumer goods like music and fashion. It’s also a great way to introduce kids to the concept of working for a living and actually experience how it’s done. Talk to a business broker to get started looking for your new business today.