The U.S. Small Business Administration reports that 75 percent of businesses are nowhere to be found in five years. This sounds bleak, but Ann Dugan, senior managing director of consulting at the Family Office Exchange, believes you need to dig deeper. Was it a failure because it was sold, merged with another company or morphed into something else along the way?
In Europe and Asia, families take a long-term view and start planning earlier, a trend the U.S. has moved toward over the past 10-15 years, she says. European and Asian family companies typically remain under family ownership, even if upcoming generations decide not to go into management. They are still going to be owners, so they educate the upcoming generation in that aspect at an early age.
“We’ve always had this fear that if I tell them too much too early, they’ll become entitled — they won’t be hard workers — so I’m not going to tell them anything,” Dugan says.
She remembers when S.C. Johnson came out with its slogan — a family company — people were shocked. Nobody wanted to admit to not being a publicly traded company. Family businesses weren’t celebrated by American culture like they’ve started to be today. Everyone doesn’t view cashing out from the family business with an IPO or selling to private equity as the best path anymore.
“Families are now saying, in order for us to do this and do it right and be in here for the long term, what we really need to do is start to pay attention to not only how we grow employees to be here for the long term, but how we grow family to be owners and in some cases managers for the long term,” Dugan says.
Not only does Dugan provide more insight in our special family business section, six business leaders shared their stories and perspectives. It was enlightening to see the similarities and differences.
Also, don’t miss the Uniquely on Thrival Innovation + Music Festival — always a can’t-miss event in September — and a companion piece on Ascender that provides a look into Pittsburgh’s entrepreneurs.