Did you know that 80% of the businesses in the United States are family-owned? And did you know family businesses contribute 50% of the gross domestic product to the US economy, and employ 60% of the population?
Yet only 3% of family businesses make it to the fourth generation. That means 97% do not.
What is it about the magic 3%? What are they doing that’s different?
Lansing Crane was a keynote speaker at the Private Company Governance Summit of 2015. He served his family business for over 12 years as the CEO and chairman of Crane & Co. Inc., a 213-year-old company that manufactures high quality stationery and banknote paper products.
Crane spoke about governance issues for family companies and their boards. Some of his key talking points were using the board as strategic advisors, using the board’s advice on personnel decisions, the board’s role in culture change and avoiding common mistakes.
During his speech he also took the time to outline some rules for family business failure. They included:
- Don’t share the wealth.
- Keep shareholders in the dark.
- Reward activity and seniority, not performance
- Treat family employees better than others.
- Don’t share company performance information with employees.
- Use the word “I” instead of “we”.
- Let family trump on all decisions.
- Believe no one can understand your business better than you.
- Believe that tactics are really strategy.
- Avoid candid performance decisions and communication.
- Engage low-cost advisers and don’t tell them everything.
- Take no risks.
So here is your message. Take each of his talking points and flip them to the positive – 12 rules for family business success. This is one powerful perspective on what the 3% are doing differently. And, if you are not a family business, most of these rules still apply!
Contact me to discuss these concepts in more detail and how to apply them within your company.
© 2016-2020 David Paul Carter. All rights reserved. Crane’s rules were reprinted with permission from the Private Company Director October 2015 issue.