With the proliferation of powerhouse regional players, I’m often asked if there will be a place for the small family company in the next century. I just returned from our annual Future Owner’s event and my answer is a strong “YES!”
My answer, however, is not solely based on a room full of super bright, super driven next gens that inspired me. It is based on my experience as a bank VP before even founding Meridian back in 1991.
You see, banking was going through the same consolidation pattern we are now seeing in petroleum. My regional bank was being gobbled up by a national bank and everyone was predicting the gloom and doom of any smaller size bank. And for a short while, it looked like they were right. The big guys were gobbling up the little guys.
Then, something changed. There was a ground swell of dissatisfaction with big banks and guess what? Yes, you guessed it! All of a sudden the remaining small banks began to get a second wind in their sails and started gaining customers like crazy. And new banks began popping up and filling needs that the national players either couldn’t or wouldn’t.
If you like statistics, a 2010 SmartMoney.com article reported the 3-year failure rate for new banks is less than one in 1,000! That compares to a 60% failure rate for new restaurants. And Alan Greenspan was quoted as saying if he was 50 years younger he would start a bank!
So community banks are thriving in America after most people predicted their demise in the 90’s. So what does this have to do with family businesses? Everything.
The same desire for service and a warm smiling face that knows each customer by name is fueling America’s small family businesses. And what my Next Gen participants knew in their guts was that automation drives efficiency that allows the personalization and face-to-face human interaction that promotes customer loyalty and new customer acquisition.
If you agree with me that we humans have a God-designed desire for relationship with other humans, then the family business will always survive as long as coupled with smart procurement and efficient delivery of goods and services. In simple language – knowing and interacting with the customer intimately enough to provide exactly what they want is paramount to business success.
What I saw in these Next Gens was:
- Massive desire to do things differently and better
- Enormous pride in being part of the “family” structure
- Wanting to carry on the good family name in business
- A strong respect and admiration for their predecessors
- A laser sharp customer focus
In a generation that has been labeled as the “me” generation, these men and women cared about long-term employees (who often had known them since diaper days), were willing to put in tremendously hard work into the family biz but also care about their growing families and don’t want to sacrifice them for work success, plus care deeply about their parents well-being and retirement. In fact, pleasing their parents is still paramount to how they view themselves.
If this group is representative of the next generation of family business, I am highly encouraged!
So as a person likely in the generation currently running your business, what can you do to ensure they will be successful? Try these seven steps:
- Require outside work – While your Next Gen can be successful without working outside the family firm, it was clear those who had worked elsewhere had both an appreciation and an edge when they came back into the family biz. If your Next Gen is already working in the family biz without benefit of a prior job, allow them to visit other similar businesses. (I can help match them up if needed – reach me at betsi@askmeridian.com).
- Optimize strengths – Not everyone is like you (thank goodness!) so be sure to accurately assess what your next gens talents are and match them to their assignments. If you are a numbers person, and they are a creative genius, their leadership role will look very different from yours and mutual respect for God-given talents must prevail for success.
- Provide training – Learning in-house systems, processes and people is a given, but outside education like Meridian and other industry events for different perspectives will enhance and catapult their skill sets. Most of the participants expressed strong desire for knowing the training path their parents wanted and the ones already working with me in monthly one-on-one coaching/mentoring time in our coaching program clearly had an edge.
- Listen – Set aside 30 minutes weekly just to touch base with them and listen to their ideas and frustrations.
- Separate employment from ownership – Many who had jobs and salaries in the business had no clear idea of how to progress in the company and if and when there would be an ownership transition, and how funding would work. They tend to comingle the two in their minds when they should be separate issues.
- Separate your communication – Parent, boss, and co-owner are different roles. Don’t carry on biz talk at family recreational gatherings. In other words, save your boss lectures for in the office and save your parenting discussions for outside the office. Be clear which role you are speaking from by identifying it for your child before you proceed.
- Express faith and constantly encourage – Just because your parent threw you in and you made it, doesn’t make it the right way. Your next gens need some kind words, hearing you have faith in them and encouragement. These kids talked about needing at a minimum 4 positives to one negative to keep their enthusiasm. If all you do is criticize, they won’t want to stay.
I’m excited about what the next generation will bring to family businesses and where I see it being most powerful is in the customer experience and technology realms. They are smart. They are driven. They crave success. They see the family business surviving multiple future generations. They see diversification. They see hope. And so do I.
I can’t wait to see how the nation’s family businesses progress as they gradually step into leadership. The family business will be alive and well thanks to the amazing enthusiasm, dedication and creativity already springing forth from the Next Generation.
