[Published in the March 2010 issue of the Evansville Business Journal]

Ernesto J. Poza, an internationally recognized consultant to family-owned businesses and a Professor of Family Business at Thunderbird's Garvin School of International Management, cited the following statistics in his book Family Business, related to family business:

• Family-owned and family-controlled firms account for approximately 90 percent of all incorporated businesses in the United States.
• Approximately 17 million family firms operate in the United States.
• One-third of all Fortune 500 companies are family-controlled.
• Sixty percent of all publicly-traded firms remain under family influence.
• In the United States, family firms account for 64 percent of the gross domestic product or approximately $6 trillion.
• Family firms account for 85 percent of private-sector employment, and 86 percent of all jobs created from 1996 through 2006.
• Family firms outperform non-family firms.

Yes, you read that correctly.  Family firms in the 2006 study outperformed management-controlled firms by 6.65 percent in return on assets.  The study noted that 35 percent of the S & P 500 firms are family-controlled and these family firms were responsible for creating an additional ten percent in market value between 1992 and 1999 as compared with the 65 percent of the S & P 500 firms that are management-controlled.

So you ask, why are family firms so successful?  What is the recipe for success?  This article does not allow the space for the seven-course response to that question.

Let me attempt to give you the "quick, I am in a hurry and need an appetizer to bring to the party" recipe for family business success.

10-Step Recipe for Success

1.   Require some "skin" in the game.  Commitment by shareholders is heightened when hard dollars and signed guarantees are involved.

2.   Lead by example.  Being a family member does not entitle you to work less or cut corners. 

3.   Develop a culture for continued education of shareholders and continually creating efficiencies within the business.

4.   Hire world-class non-family managers where they are needed.

5.   Take the time to engage the spouses of the shareholders and educate them on the vision and core values of the family business.

6.   Conflict can be healthy if addressed and acted on in an open and honest manner.  Create and provide for orderly governance and resolution of problems within the family.

7.  Speak with one voice and treat each other with respect.

8.  Plan for the future and prepare the next generation for an effective ownership transition.

9.   Think long-term when considering compensation and financial support so as not to cripple the business out of personal need or greed.

10. Family unity is the ultimate goal!  Be willing to sacrifice personally for the good of the family.

Learning is a continuous process.  Do not be afraid to admit you do not have all the answers and seek counsel from those who can provide wisdom and answers during difficult times.

If you follow the 10 Steps to Success outlined above, you will be better positioned to be a long-lasting successful family business.

Randy Schulz is a client service vice president at Harding, Shymanski & Company, P.S.C.  He serves on the National MCREN construction and real estate board for RSM McGladrey and is active with Youth First as a board adviser.