Even in an era of venture capital and publicly traded corporations, family businesses continue to be a mainstay in Colorado. This is especially true among smaller, local businesses, but it can extend even to large privately held corporations. In many cases, multiple members of a family are involved in supporting business growth and development over the years. In addition, family members may be trained and develop into roles in the company, and the business often passes from generation to generation. A successful family business can lift up the whole family, providing education funds and other key resources.
The majority of family businesses do not continue into a third generation; however, businesses that live on for two generations often remain successful. Those that do survive can become strong and powerful; nearly one-third of the S&P 500 companies are family businesses. In France and Germany, 40 percent of the 250 largest firms are family concerns. These large, prominent family businesses often do well over time. When they do go public, their success rates often exceed that of other, non-family companies.
One of the most important factors that can determine the success and longevity of a family business is social capital. While some level of social capital is often inherent in the idea of a business owned by a tight-knit family, these firms can also see conflict between professional and personal norms and interests. The family relationship may lead to less-qualified family members squeezing out highly qualified staff. As a result, these businesses can lose skill and quality over time.
One way that family businesses can work to enhance their social capital while avoiding negative outcomes is turning to outside advisers for assistance. A business law attorney can work with owners to develop policies and practices that provide a strong basis for success.