Small businesses are often said to be the backbone of American business. It could also be said that family businesses are the brains behind many of them.
The Small Business Administration says that family businesses make up 90% of all businesses in the US. This number includes large corporations like Mars Inc. and Wal-Mart and top earners like Berkshire-Hathaway. But most family businesses are small. The Census Bureau says that 28% of small businesses are owned by families, which in turn account for 42% of all small business revenue.
Business Brokers Can Identify Family Business Opportunities
If you’re thinking of buying a business with your family, make sure it’s for a product or service that everyone involved likes and supports, advises Entrepreneur. For example, if your spouse loves to cook, a restaurant or specialty food franchise might be a great option. Or if you’re thinking of using your business expertise, a B2B (business-to-business) store like a print shop offers plenty of opportunities to work directly with other businesses.
Starting and operating a business takes effort and planning. But you don’t have to start from scratch. Consider buying an established business in an area your family cares about and everyone can support.
Go to a business broker to find opportunities that fit your family. He or she can act as an agent for you, searching for sales listings, offering valuation comparison services to determine the potential return on investment (ROI) for different options, and helping to arrange financing to purchase an existing business.
Business brokers and consultants offer services that combine the skills of real estate agents, mortgage financing, and real estate law in one shop. Good brokerage firms include a CBI (Certified Business Intermediary), a CPA (Certified Public Accountant), and professionals who have real estate licenses.
Basic rules for family businesses
Almost everyone who has started or bought a business with family members advises setting some limits and rules similar to these tips from Inc.:
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It only includes those who can make a real contribution. Don’t pressure someone who is reluctant to join.
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Establish clear roles, titles, job functions, and compensation. Be sure to provide helpful performance reviews for family members and non-family members involved in the business.
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Do not abuse family relationships. Treat everyone the same.
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Communicate honestly and openly with employees. Don’t make non-family employees feel out of place.
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Don’t confuse family decisions with company decisions. A family council that includes owners who are not involved in running the business can be helpful in addressing issues and developing business plans.
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Set boundaries between work and family life.
Entrepreneur encourages family businesses to get input from everyone involved, including older kids, who are born to advise on consumer goods like music and fashion. It’s also a great way to introduce kids to the concept of working for a living and to experience how it’s done. Talk to a business broker to start looking for your new business today.