Communication and planning are key to making family businesses multigenerational

While many family-run businesses end up being swallowed by the competition or fade into obscurity, one London, Ont., family say the secret to success is communication and a lot of planning.

Lisa Ferguson and her two sisters bought Fisher & Company, a women's clothing boutique that first opened in 1983, from her mother and renamed it to Hangar9.

"We had so many crossover customers between our shops so the more we started talking about it, the more it just made sense," Ferguson said.

Despite Ferguson and her sisters having experience owning their own stores beforehand, and having talked about it for over a year, it was still a long process that took a lot of work.

The transition happened in 2018 and while it's been a good run so far, Fergunson said she's starting to think about passing it all onto her middle daughter, Emily.

"We've had conversations and then life gets in the way and it's been put on the back burner," she said.

"Once you've been through one transition, then it's much easier because you understand that you need to get help and guidance on what to do and what not to do," said Tammy Buss, a family business advisor with BlueRoots Inc., who wrote a book on how to navigate succession with family businesses.

Buss said she noticed there aren't many resources for first-generation family business owners and one of the big issues is not communicating with their family the way they would a business partner.

"Oftentimes people don't really think about having a family meeting to talk about business," Buss said. "It's about opening up communication in a separate meeting, not at Thanksgiving or Christmas dinner."

Another hurdle that first-generation business owners face when looking to secure their future, according to Ferguson, is not recognizing that they even have one.

"Most first generations are so busy making sure they have an income to keep the family lifestyle, they don't think about transitioning," Buss said.

There were 1.35-million employer businesses in Canada in June 2023, according to Statistics Canada. Nearly 98% of those businesses have fewer than 100 employees and 63 per cent of those are family owned.

According to Buss, nearly 70 per cent of all family-run businesses are either swallowed up by a competitor or just disappear.

Experts say keep your family in mind for succession

Andrew Marak and his wife Kate started ASK Laundry & Dry Cleaning Services in 2016 as a cloth diaper company.

"We were already driving around the area picking up and dropping off cloth diapers so we figured this is an interesting market for laundry and so we started getting into that," He said. "Since then, it's more or less grown organically."

Marak said their families haven't expressed interest in the business and their two children are too young to begin discussions about taking it over.

Still, he said it is an option as they get older.

While most owners might want to keep the business in the family, Buss said having the talk with employees is a viable way to make sure their hard work continues if their family is uninterested. She said another common mistake first-generation business owners make is that they often assume their children or families aren't interested in running the company.

"The family member thought the only opportunity was to be the trades person or salesperson or whatever it is that you're doing, when there's so much more they can do to continue the family business," Buss said. "You just need to talk to them."

Buss' book, Passing Down Your Success, was published on Oct. 27 by Sassy Dog Productions, Inc.