Family-run businesses remain an important part of our industry
A family-run businesses are for generations to come.
At some point, we’ve all had interactions with family-run businesses
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The local taxidermist who sold me squares of animal fur as a kid in exchange for whatever spare change I had is an example of a family-run business, much like the other businesses in my hometown whose names matched the last names of some of my classmates.
But in this day and age of a teeter-totter economy, the reappearance of consolidation, legislative changes and the emergence of Internet-based commerce, just how strong is the family-run business?
I’d say very strong.
This issue of Supply House Times is loaded with examples of thriving family-run businesses. Spirit Group, our 2013 Manufacturers Representative of the Year, is celebrating its 20th year serving Florida customers and has positioned itself for future prosperity with a balanced roster of industry veterans and talented young executives (several are second generation). For more on Spirit Group read here.
Meridian, Miss.-based Southern Pipe & Supply is celebrating its 75th birthday this year. Started by Louis Davidson and his two sons in 1938, Southern now boasts 96 locations in seven states. On a smaller scale, suburban Detroit-based Delwood Supply, which has eight employees and two branches, is in its 50th year of operation under the Fisher family stewardship.
Charlotte Pipe Chairman Frank Dowd IV, a fourth-generation executive at the 112-year-old industry mainstay, talked about the peaks and valleys of family business at the recent WIT Distributor & Vendor Conference in Dallas (see my Supply House Times Profile on Dowd).
Dowd provided a treasure trove of useful information for navigating the current family business landscape. Many of the nuggets included in his slide presentation hit on the pros and cons of private family business, as well as assessing the preparedness of family businesses in planning for their futures.
Part of his slideshow references Gerald Le Van’s book “The Survival Guide for Business Families” and Le Van’s 39 critical questions a family-run business should take stock in.
A sampling of those questions includes: “Are we committed to the future of our family business?”, “How do we select the next leader of the company?” and “How do we provide meaningful careers for other family members not chosen to lead?”
Dowd lists three common causes of failures within family businesses: limited financing options (cash drain), an attitude of the business “will fail without me” and succession failures.
On the flipside, having a well-formulated strategic plan, a succession continuity plan and strong participation by outside advisers are three of Dowd’s six characteristics of successful family businesses.
What also caught my attention from Dowd’s presentation was the statement that conflict in family businesses occurs when we expect family from other generations to behave like we do. That follows along the lines of our recent articles about the importance of understanding different generations and how that relates to business success.
Dowd says his best piece of advice to a family-run business is to become politically involved and have dialogue with your local politicians on issues that affect your business.
Two years ago, I accompanied a group of plumbing contractors to meet with politicians on Capitol Hill. The process was fascinating to watch and both parties were able to have meaningful discussions on several important topics.
The American Supply Association will conduct a similar event at NetworkASA 2013 in Washington, D.C. in October. If you are attending NetworkASA and have never participated in one of these legislative sessions, I strongly encourage you to do so. Your voice will help politicians better understand the issues that weigh on the minds of family-run businesses.
The family-run business is an important part of this industry. Making sure you have a comprehensive plan of action in place will go a long way in helping your family business succeed for years to come.
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