By John Lofstock, Editor-in-Chief, Convenience Store Decisions

According to the Small Business Administration, family businesses comprise 90% of all business enterprises in North America, and 62% of the U.S. employment. Yet, only a third of these businesses make it to the second generation, 12% to the third generation, and only 3% are a fourth-generation entity.

These are surprising figures when you consider just how important family businesses are to the convenience store industry, many of which are second, third and even fourth-generation operators. While bigger corporate entities have their sights set on family-owned chains—as much for their outstanding corporate culture as for their balance sheets—family businesses will remain the backbone of the convenience store industry for many years to come.

For associations like the National Advisory Group (NAG) and the Young Executives Organization (YEO), helping family businesses grow is a key priority and I’m proud to do my share.

To help family-owned firms succeed, Baruch College professor Elisa Balabram, an expert in family business management, recently offered me five key tips for running a successful family-owned business.

1. Deal with daily pressure. It is imperative that family members of a business communicate well with each other. They should practice transparency, build trust, determine and agree on family and business values. Set up weekly business meetings, while allowing time for family issues. Create family rituals that allow for bonding, including dinners and vacations, where business discussions are not allowed. Hire a mediator to help mend relationships and reestablish trust if needed.
2. Understand and define roles. It is common for family members to occupy multiple positions without a defined job title. This can create conflict as there isn’t a clear leadership role, and no one knows who is responsible for specific tasks. At family business meetings, discuss each person’s role, skills and talents, and find the best fit for them. This structuring can help professionalize the business and improve everyone’s accountability.
3. Write a family constitution. The more family members involved the better, as it will give people a sense of ownership. Items to include are: mission and vision statements; values; employment policy; sample of pre-nuptial agreements; strategies to develop the next-generation; ownership policy; dividends and benefits policy; liquidity policy; who can be elected to the board of directors or join the advisory board; and succession planning strategies.
4. Hire employees that are not family members. Add independent directors to the board. This is an opportunity to attract talent that family members may not have. Non-family employees can share their expertise and serve as non-biased supervisors and mentors to the next generation. Having independent directors on the board brings an additional sense of professionalism, and they can assist with the company’s strategic and succession planning.
5. Empower the next generation. Set rules regarding opportunities available to family members. Give the next generation a chance to work part-time. Pay them market value, but also hold them accountable to perform their jobs well. Encourage them to pursue their education and career dreams. Allow them to work elsewhere to gain experience and new perspectives. Give them the freedom to choose their own career path, and to decide if they want to join the company full time or not. Finally, when they choose to join the business, make sure to mentor and empower them so they are ready to take the leadership role when the time comes.

Besides following the above tips, also consider hiring a consultant to help develop a family plan, a strategic plan, and a succession plan to help secure the continuity of your family business.

Given the competitive nature of the c-store industry, the worst thing you can do is fail to plan adequately. Contact me anytime for information on how NAG or YEO can help your family business.