The Financial Journey is a unique series focused on financial education and opportunities. These stories have been created through a strategic partnership between Wells Fargo and Word In Black.

Some of the most well largest businesses in the United States started out centuries ago as an idea between family members. Family businesses born out of necessity and ingenuity have helped shape the U.S. economy for centuries. They influence major industries – even the mom and pop entities with few employees. According to the U.S. Chamber of Commerce, the economy is made up of 33.2 million small businesses. In 2021, the number of business applications reached a record 5.4 million. Bob Marshall has been guiding small business owners across sectors for more than 30 years. As the Business Growth Strategy Executive for Wells Fargo, he has seen the possibilities of what family entrepreneurship can be. In this interview, he shares his wisdom with you for how to run a successful endeavor with your loved ones:

WIB: What are some characteristics of a family business that’s just getting started?  

Marshall: First, there is a common sort of goal or a common desire to keep the family business going in that the history is truly important. It is a well known fact that the family business is critical and there are a lot of folks in the family who know that it’s going to be part of their life’s mission. The folks have been around the family business most of their childhood and probably their teen years and so they understand the business. 

WIB: You hear some people say that they would never go into business with their family. What’s a mistake that people make?

Marshall: When you spend so much time together, it can strain the relationship. Business is business and the family is family. Sometimes in times of crisis or high stress, that can strain the family relationship. 

WIB: What else?

Marshall: No deliberate succession planning. You can assume: I have two children. They’re going to take over the family business, but their life’s work may not include that family business. Because it’s family and you want them to be successful, you put them in positions that may not necessarily be their strengths. It makes them disenchanted and does not do well for the business. 

WIB: How do you balance the needs of the family and the business?

Marshall: People see the great parts about it and the longevity and the success, but I think they forget about the hard work. I’ve never worked 10, 12, 14 hours next to a family member. Transparency and ground rules are critical. What you don’t want to do is go to the family reunion and have a fight about the business! 

WIB: Let’s talk about the structure of the business.

Marshall: Regardless of the entity type, folks need to have what I describe as a kitchen cabinet – a group of advisors who you trust dearly to talk about the business to help you solve problems. Of course your accountant and your attorney – you need them both. The kitchen cabinet rounds out and compliments your skill set so that you can have rich discussions to figure out how to move the company forward; how to make major decisions. It could be succession planning. It could be acquiring another business. It could be “Do we sell the business?” They won’t make the decision for you, but they will really help you think through your decision and drive you to answer the tough questions that people who may work for you in the family business may not ask. 

WIB: What dynamics do you see when it comes to hiring employees? 

Marshall: It could be that the folks who are leading the business have to be from the family or just the managing director or the CEO is from the family. I’ve also seen where the CFO or other important jobs within the business are non-family members because the person who runs the family business knows that within that business they don’t have the skillset, so they hire outside. I’ve also seen where there are in laws – where the son or daughter gets married, and the spouse comes into the business. One of the big advantages of a family business is trust. Regardless of who you bring into the fold, that trust has to be consistent. 

WIB: How do you make sure that the business can be around for generations? 

Marshall: The succession plan. It helps you map out who can do what over a period of time – and it’s not just who’s going to run the business. It’s who will lead critical functions in the business. Folks get to the place where they want to retire or, unfortunately, something happens, and the siblings say, “You know what, that’s just not my passion. I don’t want to do that.” The succession plan helps avoid those sort of last minute ahas. 

WIB: How do you get to success before a succession plan?

Marshall: I think one of the things that you would see if you looked at businesses that [have] survived was that they did three things: They had a really good business plan and they knew what they were doing – whether it was a service business or selling a product. They understood the financials behind that business plan, and they really understood that they have a certain skill set but they needed to get a kitchen cabinet or hire certain people to help them really realize their dream. You’ve got to understand your market. You’ve got to understand trends. You’ve got to understand where your business is going. Not just where it is. 

Wells Fargo Bank, N.A. is a member of the Federal Deposit Insurance Corporation.