However, another less cheerful fact is that few these days are passed on to the second generation, which suggests that familial bonds are alone usually not enough to persuade sons and daughters to keep the business going when their parents retire.
Here are some of the biggest challenges a typical family enterprise must negotiate and how they can be overcome.
Exploit your family bond
With qualities such as trust and unity high on the list of desirable corporate values, most family businesses are thus gifted a head start when it comes to team building.
In family-orientated environments, relationships are often comparatively secure and the strength, weaknesses and working preferences of individuals are well understood.
Successful family businesses can forge a strong sense of unity by scheduling frequent family meetings and employing tried-and-tested methods to resolve conflicts.
So strong are familial ties that Richard Branson, founder of the Virgin Group, said that ‘a family business doesn’t have to be restricted to those that share your genes’. He believes that any business that engenders among its workforce a sense of being part of a family will encourage more collaborative teamwork and build vibrant and productive workplace environments.
Such family values, Branson suggests, can often become ‘the cornerstone of [a] brand’s culture’.
>See also: How to run a business around your family
One issue which dominates most family businesses is the need to keep home and business life separate. Each requires time and space to flourish, while blurring boundaries is rarely productive and can soon have detrimental effects at both personal and commercial levels.
Everyone is entitled to a healthy work-life balance. Just like any other team, a family that runs a business together will function best when its members understand the scope and limits of their authority, responsibilities and working hours. It must also be clear where work ends and family life begins.
And the business must allow family members to prioritise personal commitments where warranted – for example during illness, maternity leave or when someone needs time off to see their child’s school play – in the same way they would extend this privilege to the wider workforce.
Stay professional in the workplace
Working relationships can sometimes be awkward for family members. Familial feuds should be left at home and a businesslike tone should be adopted in the workplace.
Family members should be treated no differently – whether that’s more or less favourably – than the rest of the workforce, otherwise morale will suffer.
Conduct and performance should be fairly assessed according to transparent ground rules that the business has set down for all employees. This will send a message to the wider workforce that relatives will not be given preferential treatment.
Put it in writing
One bad habit characteristic of far too many family businesses is reliance on verbal agreements. While it’s understandable that close relatives trust each other unconditionally, getting things down in writing avoids the risk of having to reconcile conflicting interpretations of a verbal understanding established so long ago that neither party can truly remember what was actually agreed.
Though it may seem a harmless courtesy to dispense with such formalities, it’s better for all concerned – not just the family but other employees and the business itself – if such agreements are formalised in a written contract. There is nothing to lose by doing so.
Family businesses are most imperilled when it comes to handing the business over to a new generation. And the most common problem with succession planning in small businesses is the absence of any succession planning.
Jeremy Shulman, founder and senior partner at Leeds-based solicitors Shulmans LLP, says: ‘When you ask about succession, you’d be surprised at how many owners haven’t given it a moment’s thought. Often they’re caught up in running the business or think they don’t have to focus on it yet – while some struggle with the very idea of letting go of the reins.
‘But in family businesses it’s often easier to plan succession, because ownership stays within the family.’
Speaking to the Guardian, he offers the following tips: “Dig out any legal documentation you have that relates to ownership of your business. Try to understand its implications and consider whether it works for you as it is.
‘Even if you think it does, what about the future – could circumstances change? Consider different scenarios – is the documentation still adequate? If you have any concerns, seek professional legal advice. You can’t leave anything to chance – one day you might really regret it.’
However, sometimes it’s wise to recognise that your children are simply not well suited to running the business.
‘Wise parents who own family businesses realise when their sons or daughters don’t have what it takes,” says Shulman. “They encourage them to pursue their careers elsewhere – which can prevent an awful lot of grief later on.’
By Melanie Luff, Online Journalist for BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis. Melanie writes for all titles in the Dynamis Stable including PropertySales.com and FranchiseSales.com.