Driving Your Business Into the Future
This article appeared in the Summer 2016 issue of CLDA Magazine.
Eighty-eight percent of current family business owners believe their family will control their business in five years. But statistics undermine this belief: less than a third of family owned businesses survive the transition from first generation to second, and just 10 percent continue to the third generation.
In the courier industry, some 60 percent of business owners are looking to leave the industry in the next five years. For many, selling the business to another company may be a very likely scenario.
During a recent conversation on future plans for New Orleans courier company QCS Logistics, CEO Ronnie Burns and son Jason Burns shared their perspectives on the challenges and difficulties of bringing on the second generation, and the mutual respect and compromise that have eased the transition as Jason takes on more day-to-day decision-making.
AVOIDING COMMON TRAPS FOR FAMILY OWNED BUSINESSES
Ronnie Burns was a bank executive when he founded QCS Logistics 32 years ago. Starting out as Quick Courier Services, Inc. in 1984, the company had one car and three employees, and tracked deliveries with index cards on a board. One of the largest courier companies in Louisiana and an Inc. 5000 “Fastest Growing Private Company,” today QCS has more than 75 vehicles and completes more than 1,000 deliveries a day.
From day one Ronnie Burns wanted his sons to be part of the company’s future. “When we started this company 30-plus years ago, obviously I wanted my sons to be in the business. I wanted this business to be their business,” he says.
The failure of family owned businesses is often due to several common traps, according to an article in the Harvard Business Review. Some proprietors of family owned firms make their children feel obligated to join the company, which can backfire by creating a crop of managers who aren’t interested in being there. On the flip side, subsequent generations may feel a sense of entitlement and see the business as a fallback option where there will always be a place for them regardless of skill set, experience or commitment to the business.
Another trap facing family owned businesses is that working and living in a family business can insulate family members from outside feedback creating silos where they are not challenged or inspired by outside voices. In contrast to publicly owned firms, in which the average CEO tenure is six years, many family businesses have the same leaders for 20 or 25 years, and these extended tenures can increase the difficulties of coping with shifts in technology, business models, and consumer behavior. Today family firms face new threats from growth in automation, globalization and a myriad of other changes in the way we make, order and receive goods.
“Succession should not be viewed as simply an exit strategy for when the founder retires but as the integration of the next generation of leaders into the company,” says Rosalind Butler, assistant director of the Tulane Family Business Center at Tulane University.
Click link to read the full article.
This article appeared in the Summer 2016 Issue of CLDA Magazine, the publication of the Customized Logistics & Delivery Assocation.