Prolong Opportunities for Family-Owned Stores

The sentiment transcends languages and cultures. Consider the English-language versions of these maxims:

• “Father merchant, son gentleman, grandson beggar” (Mexico) 
• “Rich father, noble son, poor grandson” (Brazil) 
• “From the stables to the stars and back to the stables” (Italy) 
• “Wealth never survives three generations” (China) 
• “Shirtsleeves to shirtsleeves in three generations” (U.S.) 

     Those were collected by investigators at Boston Consulting Group and Cambridge Advisors to Family Enterprise to flesh out the fact that only about one out of every ten privately-held businesses makes it through to the third generation.
     To persevere as a retail business owned and operated by one family generation after another requires a convergence of the right ingredients. Being in a community too small to interest a large retailer or a chain does help. Owning your own building helps.
     From a psychological perspective, there are additional ingredients. Here is what the research and retailers’ experiences indicate as ways to provide the opportunity for business longevity if you own a family store:

• Cultivate a life outside retailing. If the children grow up seeing their parents’ imprisoned by the business, unable to do what they love doing and not being with family often enough, there’s a very good possibility the children will not want any part of it. 
• Encourage the offspring to explore other careers and to work in other settings. If they return, it’s more likely they’ll bring skills from the outside and they’ll yearn to be working in the family business. 
• But maybe not. They might have returned because they can’t succeed at other work. Some years ago, I asked the adult son of a successful retailer what were the advantages of working in a family business. His answer: “Job security.” The BCG/CAFE investigators suggest you avoid the trap by requiring of family members who do return that they apply for open positions in competition with nonfamily applicants. To implement this, you’ll want to have the hiring process administered by a nonfamily manager. Otherwise, family members not making the cut could cause some clumsy Thanksgiving dinner gatherings for years to come. 
• Expect the family members to adhere to strict financial control systems. In one instance I’m acquainted with, a daughter of the owner had, over a two-year span, embezzled money out of the business to the tune of $750,000. A hit to the bottom line of three-quarter of a million dollars! Her excuse? She was taking her inheritance early. 

For your profitability: Sell Well: What Really Moves Your Shoppers

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