Most family businesses don’t look like ‘Succession.’ Here’s what America’s enterprising families bring to the table
Picture a family-owned business. Today, your first thought might be Waystar RoyCo, the company at the center of HBO’s Succession. Its founder, Logan Roy, is a self-made but brutal and egotistical patriarch whose children fight for future control of the company. It’s riveting television, and while it’s true that some family companies have drama that ends in bitter family feuds, for the approximately 32.4 million family-owned businesses in America, the story is usually very different.
Instead of focusing on the family drama of a fictional company, you should reflect on the companies that are part of your everyday life, from your local diner staffed by three generations of one family to the global brands you recognize that are controlled by multi-generational families, such as Fidelity Investments, Mars, or Chick-fil-A. All of these family businesses are the heartbeat of our economy and contribute meaningfully to our lives.
Eighty-seven percent of American businesses are family-owned or controlled. They represent 54% of U.S. GDP and 59% of employment, meaning family-owned businesses directly affect more than half of U.S. workers. They are also expanding; PWC found that 86% of such businesses expect to see growth in the next year as they take on new clients and introduce new products.
These statistics substantiate the central but often overlooked role families play in the capital, business, and societal infrastructure of our country and the global economy. Their role and reach go well beyond economic output and employment. In rural areas, it is family companies that provide local incomes, generate local wealth, and connect communities to the larger economy. What’s more, family-based businesses understand the importance of giving back. In addition to their philanthropy, they often play a critical leadership role in community projects and civic associations.
The entrepreneurial economy is driven by families. The vast majority of companies are started in the home, by people following their dreams of self-employment and seeking control of their own destinies. Family businesses are often drivers of the American Dream: An MIT study that found immigrant families are more likely to start a business than native-born Americans and employ more workers than companies started by those born here. Creating a private business turns those entering the country into job creators, setting in motion a sustainable future for their families and communities.
While the caricatures that Succession perpetuates about family businesses aren’t exactly accurate, it can indeed be difficult to sustain and grow multi-generational companies.
Succession presents challenges that are unique to every family, chief among which is navigating family relationships. If families dream of having their company and wealth creation continue across generations, the first generation must begin laying that foundation early in the life of a business, and if they have not, the current generation must start the work as soon as possible. Succession planning is not an end-of-life endeavor, but rather, a business-building endeavor. Generational success requires investing in both the business and the family relationships to ensure that a new set of family members are prepared to continue growth–and are unified on strategy.
I like to call these growth-minded families who want to create generational wealth “enterprising families.” An enterprising family doesn’t just focus on the continuity of a particular business to sustain their lifestyle (though that is a great outcome). They look for strategies and partnerships to accelerate the growth of their businesses and of their wealth creation, which in turn, will hopefully strengthen bonds within the family unit.
When you think of a family-owned business, don’t stop at Waystar RoyCo. Picture the impact all family businesses, large and small, have on both the economy and our communities. Picture the success each of these companies brings to those around it.
By ensuring family-owned businesses can continue to thrive today, we guarantee that even more can see the light tomorrow.
Andy Unanue is the founder and managing partner of AUA Private Equity Partners.
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