Family Businesses: The Power Of Resilience
Every year we get an inside look at companies driving our economy. I particularly love hearing about — and sharing with you — how family businesses (which made up about 25% of our 2013 Entrepreneur Of The Yearfinalists) are finding great success in their markets.
Family businesses are part of a small group of high-impact entrepreneurs: those who launch and grow companies that have an above-average impact on job and wealth creation. Just 5% to 7% of all businesses are high impact, yet these businesses create most of the new jobs in the US — on average, 30 more jobs than comparable companies.
To understand the true impact of family businesses, we took a look at our 2013 EOY finalists, all of whom reaffirm three key traits that set family businesses apart.
They take a longer-term view
Longevity is something that family business owners take quite seriously and personally. Typically private companies, the family business structure allows long-term planning that spans not just years, but often, generations. Unlike their public company counterparts, they are free of the short-term pressures of the public markets. Further, they’re what we like to call “battle tested,” and they know that no circumstance, good or bad, will last forever.
Embracing such a long-range view affects all of their decision-making, including spending and plans for growth. For example, our analysis found that 61% of Family Business category finalists use bank loans to finance their growth, while venture capital (VC) funding is used by just 2% and private equity (PE) by 12%. This preference can be attributed to their resistance to diluting ownership.
They march to their own beat
Family businesses are different than other entrepreneurial ventures. Yes, at their core, they share many traits, such as vision, dedication and drive. But by combining self-reliance with middle-of-the-road growth strategies, they’re able to survive nearly any crisis, economic or otherwise. Stability and continuity are further differentiators of family-owned companies. And these traits are important to more than just the family. Those family roots often anchor the communities in which these businesses operate, encouraging their employees to be engaged and claim a stake in the company’s success.
They embrace change
It’s vital for family businesses to add new executive talent (sometimes from outside the family) to the leadership team as needed. In fact, 36% cited human capital investments as the area where they’re most likely to make investments going forward. This proves that they’re keeping pace with their public, private and VC- and PE-backed counterparts. They’re also willing to expand into new products, services and markets to propel market leadership and innovation; 25% of our finalists are making investments to improve their IT systems and controls, as well as research and development.
Family businesses are amazing — they’re the lifeblood of the US economy. That’s why when I look back at these differentiators, there’s really only one word I can find to sum them up: resilient. I can’t wait to see what great things the next generation of family business leaders will accomplish!
Tell me: As a family business leader, what do you believe sets you apart? What plans are you making to keep pace with your peers?
Retrieved from : www.forbes.com