If you know me, you already know that my answer is going to be yes. But your next question should be, “why?” Well, I’m going to share some reasons why I believe family businesses unequivocally have an edge today.
An Employee-Focused Mentality
Despite technology’s ability to speed up or even take over labor-intensive tasks, in today’s competitive environment, employees can ultimately make or break your company. Employees today want clarity on their roles and want to clearly understand their value to the organization. In my work with family businesses, I see time and time again decisions that are made to put the employees first, caring about them, their development and their job satisfaction.
Furthermore, employees wants to be inspired to work hard because they believe in the company’s values and mission. A study by Bain & Company revealed that family businesses, often with deep-rooted values, retain employees at a higher rate (a nine percent churn at family business versus 11 percent at non-family business). We all know that turnover can be costly, so taking a lesson about internalizing a values system for your company can pay dividends.
A Conservative Spending Plan
When a family business plans to invest in any element of the company, the decision makers are typically keenly aware that this is family money. This money belongs to perhaps generations of family members, some of whom are likely seen at the office every day. For privately held companies, this is not a nameless, faceless investor’s money, this is grandpa’s hard-earned money. Therefore, family businesses tend to be more cautious with spending. Sometimes this means slower growth or missed opportunities, but in the long run this protects the company during challenging times.
But don’t just take my word for it. Harvard Business Review found this to be true, “During good economic times, family-run companies don’t earn as much money as companies with a more dispersed ownership structure. But when the economy sumps, family firms far outshine their peers.” Furthermore, the review found that from 1997 to 2009, the average long-term financial performance was higher for family business than for non-family business.
Stay tuned to my next blog for two more reasons why family businesses have an edge and why today, more than ever, we should support them with our business.
–Jane Olvera Quebe, President