However, building and maintaining a family business-or any small business involving a partnership or other form of corporate structure between two or more individuals-is a complex and difficult task.

Indeed, according to Joseph Astrachan, Ph.D., editor of the Family Business Review, the typical life expectancy of a family-operated entity is 20 to 25 years. A mere 30% of family-owned businesses survive to be run by a second generation; 10%, to be run by a third generation and just 3%, to be taken over by a fourth generation.

Family issues, including inter-generational conflicts, relationship/emotional stress, sibling rivalry, expectations that do not jibe with reality and questions regarding transfer of ownership are partially responsible for these poor survival rates. Business issues, among them resistance to technology, tax woes and lack of a succession plan, play a significant role as well.

Yet, the fact that a business is family-owned need not mean it is destined to rank among the 97% of family-run organizations that do not enjoy long-term viability. Small non-family businesses, too, can prosper for the long term-providing operators implement a number of finely honed strategies aimed not only at survival, but at success.

While such an approach almost always proves a wise move for all sizes and types of operations, it is particularly critical for those run by families or partners because typically, almost all of the players' life savings are tied up in the venture.

Personal identity is often the "brand" of the business, and personal relationships are at stake. Family members and friends lose far more than their jobs should the business fail; they typically also sacrifice most of their own wealth.

Conversely, individuals who are involved in bigger businesses owned by others, whether public corporations or privately held companies, worry only about their jobs; should their place of employment go out of business, they simply find another job.

Think of it this way: Family and small businesses are more of a lifestyle than an occupation; entrepreneurs must be willing to do whatever it takes to preserve that lifestyle.

The success of family- and small partner-owned businesses hinges upon more than making consistent efforts to shore up the capital structure, keep processes streamlined, reduce expenses and build revenues. Ongoing, honest communication is key, with business issues remaining the focus at work and family matters discussed at home.

Roles held by everyone should be clearly specified and committed to paper, with information on everything from job descriptions to performance goals and compensation covered in detail.

INFORMATION IS KEY

A few caveats to remember with regard to communication: Business owners want their employees to be highly productive. Nonetheless, some companies fail to give their employees all of the information necessary to consistently perform at the desired level. Employees need to feel that they are trusted to make the right decisions for the business, but without the proper information, they cannot do so.

Just as significantly, most proprietors will, in an effort to minimize attrition, keep secret from staff any business difficulties they may be encountering. What they do not realize is that the "human spirit" inherent in most people sparks them to do their best to help others in need.

Employees who have been entrusted with the knowledge that a business is struggling are more apt to help find solutions, or be more willing to cooperate with cost-cutting measures, take unpaid leave or the like.

Formulating a detailed plan for the future of the venture is equally paramount; otherwise, chaos will ensue. The business plan should specify proprietors' vision for the enterprise, as well as contingencies in case of unexpected illness or death.

A mere 20% of family-owned businesses survive to be run by a second generation.

Communicating a formal plan leaves no leeway for confusion or disputes concerning who assumes the reins following an emergency.

When creating the business plan, the evolution of family members' skill sets, managerial acumen and leadership experience merit consideration. Allowances for education, garnering work experience outside the company and/or the assumption of different roles within the enterprise might be included.

For best results, all family members should "buy-in" to the plan and, accordingly, actively participate in its conception.

Here is an example of what can happen when the importance of putting together and sharing a concrete plan is overlooked, whether deliberately or inadvertently.

Not long ago, our firm was retained by a small consumer products distributor in the midst of being turned over to the proprietor's son, daughter and son-in-law. Increased retail bankruptcies over the past few years have had a negative effect on the distributor's business.

No alterations in business practices have been effected to offset changes in the business climate; the venture is essentially existing in a "time warp." The son wants to foster the company's growth with some new business initiatives, but major disagreements with his father and uncle-compounded by the absence of a written growth plan-prevent him from doing so. His hands remain tied behind his back, and the operation is close to failure as a result.

Involving key non-family members in the planning process is also wise. In fact, small business owners would do well to go one step further, appointing an outside advisory board comprising tax advisors/ accountants, legal counsel, local lenders, consultants and/or other area business persons.

Such individuals can provide an unbiased "macro" view of the industry sector and, by imparting a more objective analysis, increase the speed at which goals are attained.

BENEFITS OF A BOARD

Business visions and strategies are then easily formulated, leading to the preparation of a solid business plan that takes into account critical succession plans. Additionally, with an advisory board in place, potentially damaging emotional reactions can be eliminated from the equation.

Many years ago, I worked for a small local Coca-Cola bottling firm that was family owned and operated. Five family members had a financial stake in the business' performance, but only one individual, who had "inherited" it from his father, remained active in the venture on a day-to-day basis.

Realizing that the family would not afford him much assistance in determining the company's future direction, he wisely appointed an advisory board comprising his attorney, his local banker and two other family business owners with operations in his community.