Why family businesses are thriving in the 21st century

The 21st century is an exciting time for family businesses. Family firms now account for two-thirds of UK private sector businesses, with much of their success down to their unique traits.

In the last century, it seemed the bigger the company, the better the opportunities. However, in the 21st century with slower growth, lower returns and frequent economic crises, the landscape has changed.

Today it’s about surviving in a competitive world. Qualities that may have hindered family businesses in the past, are giving them the edge and the ability to adapt.

The institute for Family Business estimates that more than a quarter of UK GDP comes from family-owned businesses. From small start-ups to the likes of Associated British Foods, who had a £12.8 billion revenue in 2015.

The value of values

The 20th century was the era of the 'company man'. Employees exchanged long-term loyalty for a liveable wage and pension.

Now businesses need to go further. A study by Bain & Company revealed that we are living and working in a new era. Employees want to be inspired to work hard because they believe in the company’s values and missions.

In this values-based culture, family businesses often with deep-rooted values retain employees more. For example, there’s only nine per cent staff churn at family businesses compared to 11 per cent for non-family businesses.

Research suggests this loyalty is down to greater trust, stronger culture, better investment in training, a clearer purpose and closer relationships with employees and stakeholders. 

One family-owned company with a  billion pound turnover is thriving for this reason is construction and management firm Willmott Dixon. The company invested £2.4 million in staff development in 2014. They also have a mentoring programme dedicated to enhancing the lives of 10,000 young people, and a sector-leading diversity profile.

Group Chief Executive, Rick Willmott says: "Our aspiration always is to be a customer first choice known for our excellence, but particularly a stand-out company in respect of our cultures and our values that are demonstrated by every one of our staff across the company."

Read: All you need to know about running a business with your sibling

Keeping finances in check

Family businesses tend to be more cautious with spending than their non-family counterparts, purely because it’s the family’s money. While this may mean they miss out on some opportunities, it also protects them in good times and bad.

Interestingly, in the last economic cycle, family-run enterprises entered the recession with leaner cost structures in place, which meant they were less likely to make major redundancies.

There’s also been a shift in today’s economy from quantity to quality of investments. This better suits family businesses who tend to make less investments, but ones that are crucial to future-proofing their business.

"When times are tough, one of the first things that is quite natural for companies to do is to cut their investment in learning and development," says Rik Lee, HR Director at Willmott Dixon.

"We haven’t done that and we won’t do that. Because we believe that if you invest in people when times are tough, they will be prepared to go the extra mile for you."

Sustainability

A company’s sustainable footprint is key in the 21st century. However, for family businesses it’s not an add on, but a responsibility felt deeply by the family and staff.

Again, Willmott Dixon is a shining example. A founding member of the Supply Chain Sustainability School, they provide free education resources to suppliers to help build a brighter and more sustainable future for their industry. And they also set up the Willmot Dixon Foundation to support a strong, healthy and fair society within their community.

"Since our company was founded over 160 years ago, we’ve been passionate about doing the right thing for the communities in which we work," explains Willmott. "Every year our people carry out thousands of hours of training, work experience, mentoring, school visits, community projects and charitable fundraising."

Who knows what will happen in the centuries ahead. But for family businesses to continue to thrive in an ever-changing world, cultivating their traits, values and sense of responsibility within the next generation would seem to make good business sense.

This is a guest blog and may not represent the views of Virgin.com. Please see virgin.com/terms for more details. Thumbnail from gettyimages.

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