Editor’s Note: In time of test, family is best
Shirtsleeves to shirtsleeves is just a myth. Well-founded and well-run family businesses thrive for many generations.
Family businesses are certainly aware of the old adage, “shirtsleeves to shirtsleeves in three generations.” The saying is used to describe the pattern of wealth creation and loss in family businesses. In Japan the expression goes, “rice paddies to rice paddies in three generations.” In India it’s “from peasant shoes to peasant shoes in three generations.” The Scottish say, “The father buys, the son builds, the grandchild sells, and his son begs.”
While the expressions are a little different around the world, their meaning is essentially the same: the first generation builds the family business, the second generation enjoys the fruits of the business, the third generation squanders the wealth, and the fourth generation is forced to start the cycle over again in shirtsleeves and peasant shoes.
Many articles and speeches often reference this “three-generation curse,” sourcing a flawed and outdated study from the 1980s. It strikes a chord with many family business owners because it plays into their biggest fear. In reality nothing could be further from the truth. The path to long-term success for family businesses is no more challenging than it is for non-family businesses. It actually comes with many advantages. Just look at the largest, longest-lasting businesses in the world. The Waltons, the Ellisons, the Cargills, the Fords … the list is dominated by families who are positioning themselves to dominate the future.
Working with family comes with a unique set of challenges (family conflict, unstructured leadership, nepotism, challenges in succession) but also can be incredibly rewarding (commitment, stability, trust, flexibility, shared purpose), resulting in a positive work environment.
In this family-friendly issue of LOCAL Biz, local business owners share their secrets and advice for overcoming challenges and setting up for generations of success. As you’ll learn, family businesses may not have it all together, but together they often have it all.