Ranging from small corner shops to much larger global corporates, family businesses make up 90 per cent of the world’s companies. But what have families learnt about running businesses and what should all entrepreneurs learn from them?
1. Plan for succession
Every entrepreneur should be planning for the future – what will happen to the business once they’re no longer there?
In a family business this need is perhaps heightened. Not only do you need to find someone to take on the business, but ideally you want that person to be your family. John V Evans Jr, former CEO of DL Evans Bank (founded by his great-grandfather in 1904) said you should start training your children early.
He warned that family businesses should be careful as to how children advance in the company, though. His own sons were involved in the bank from a young age, initially sweeping the parking lot and pulling weeds, before they were promoted to bank tellers during their high school years. He said that his children had to prove themselves and work twice as hard as other employees.
In the same way, entrepreneurs should train their staff early. Investing in staff means that there’s more chance that they’ll stick around and you’ll have the best people for your business.
2. Culture is important
Family businesses often best understand the importance of looking after their staff. As Richard Branson often says, “Look after your people and they’ll look after your business.”
At Virgin this is done in a number of ways – flexible working policies, unlimited leave, a fun working environment – and the results are clear in how the business is thriving.
But Virgin is by no means the only family business that prioritises culture. CEO of IKEA (another family business), Mikael Ohlsson, had this to say about their culture: “If we share the same values and the same vision we can put more trust in people working in the organisation; we can have a very flat and unbureaucratic organisation. We always recruit through values and we spend an enormous effort in strengthening the values: togetherness, down-to-earth and hardworking.”
In a Harvard Business Review study, a Chinese family business chairwoman confirmed their business operated similarly. “We have the same values, the same vision. We trust each other,” she said.
Family businesses are rarely about making money fast. Generally, they’re in this for the long haul and work hard to make the business last. “The majority of owners run them to secure a livelihood for their children so this gives them a strong vested interest in the continued success of their company,” Journyx chief exective, Curt Finch told Small Business Trends.
Unlike non-family businesses, where the idea of failing fast and moving on to the next one has become popular in recent years, the desire to pass a company on to the next generation means that family businesses are likely to work out ways to make the company a success, even when other businesses might have moved on.
Jean-Charles Decaux, founder of the outdoor advertising company of the same name, has said that family ownership enabled “patient innovation”, which has helped his company to come up with unique ideas such as free street furniture in exchange for the right to lease advertising space on it and as a result, the company has thrived.