Perhaps the most quoted statistic in the world of family business is this one: 30% of family businesses make it to the second generation, 10-15% make it to the third and 3-5% make it to the fourth generation. Thousands of newspaper, magazine and journal articles have reported this statistic. The marketing materials used by the burgeoning family business consulting industry are rife with those numbers.
Many family business, throughout and Post Covid have been negatively impacted by the economy. In this world of uncertainty opportunities invariably arise, one of which is the closeness to family. Two such examples could be teaching our children how the economy works and teaching them the benefit of helping others. Parents face a challenging situation in determining whether or not to address economic issues with their children and deciding what to say to children.
Nothing wrong in starting the future family business leaders off early and no better time than in a Post Covid World of course.
Many a time the issue on whether or not to discuss the economic downturn with children has largely been determined by the children’s age. Parents of younger children tend not to say much in order to ‘protect them’ or to not add stress or worry to their lives.
While it is important not to scare younger children, one must assume that they will be getting information anyway, and likely misinformation, through friends or school. So, it is better to say something than nothing”.
Initially, the concept of a recession may be difficult for younger children to grasp. But you can explain to them that some people are losing their jobs and people are trying to spend less money. One can also explain how the downturn is affecting the family business. If there is no immediate effect, it is still a great opportunity to talk about either saving or prioritizing in terms of spending as well as giving to others who are less fortunate.
For middle school aged children, it is a wonderful opportunity to begin to explain how credit works and the problems created by buying more than you can afford.
By age 12 or so, most kids are sharp enough to walk them through a lemonade stand example and how the makers of sugar, lemons, and cups benefit from the purchase of those items, and how the stand owners benefits when they take in enough money to pay for raw materials and still have some left over, which is called profit.
This financial crisis may well be a wonderful opportunity to teach the rewards of less greed and selfishness and more humanity”.
Things to Consider When Discussing the Economy with Your Children.
- Is there an age to talk to children about this? No, very young children will understand that they cannot have the toy they want just now and why. As of the age of six or seven children are perfectly able to understand several implications of the crisis if they are explained in a way that is suitable for their age.
- Asking questions like—Why is there a crisis? What happened in the financial world that lead us to the current situation? Was it fair to act like that?—provide an opportunity to revisit family values and ethics.
- Losing money is another important aspect to address. Most, but not all, wealthy families have lost money. You can openly discuss with your children what impact it has and will have on your investments, on your way of life, on the future. There is no need to frighten the children. You can discuss this in a positive way.
- Having to lay off employees is another painful but important topic for families. Many family businesses around the world have had to lay off people in the past months or are preparing to do so. For most business owners making such decisions is agonizing. Children very quickly understand that they also need to contribute and spend less. Some also come up with ideas on how to help employees in need and their families.
( All factual and statistical information presented in this blog has been obtained from an extract of an article from Family Business Consulting Group based in Chicago) Follow us on our Facebook page and Family Business Office website at www.familybusiness.org.mt
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