The Family Businesses That Will Outlast The Googles And Apples

You've got tech companies, retailers, and banks; there are start-ups, mid-sizers, and giants; you have service, product, and back-end—a hundred ways to slice up the corporate world. But where do family businesses fit in?

It's a categorisation that defies all others. It's simple enough—companies characterised by bloodlines and multi-generational thinking—but what else defines them? We've been looking into family businesses every year since 2012 and have found some interesting secrets (though we haven't gained access to the grandparents' famous tomato sauce recipe yet).

The victorious tortoise

The tiny lettering on a beer label: Since 1597. Most people brush it off as a minor detail, or find it passingly anecdotal. But in fact, labels like this one embody the ethos of family businesses: the idea isn't radical growth or a large exit, but long-term existence.

What does this mean on a strategy level? It means that family-owned businesses aren't beholden to short-term performance numbers; that they can afford a few flat figures if it means they're simultaneously slow-burning a redefinition of themselves for the next decade or next century. "The desire of our company is to exist for another 400 years," said one respondent in our recent study. Now imagine her ancestor saying it at William Shakespeare's funeral.

But it's not all about preservation—without growth, there's no survival. Key to growth, according to our respondents, is a distinct line between business and family. And not just a line, but a hierarchy... with business on top. "If business interests are put in first place, it will then ensure the family runs smoothly, not the other way around," said one respondent. Good governance is the means by which to separate ownership from management, set up family and business rules, and define dividend policy.

Where the sidewalk ends

Commonly-cited business hurdles include poor strategy, talent shortage, unstable political environments, and lack of a successor. In talking to our respondents, we found that these items may affect family businesses differently to the main.

The war for talent was cited in the most recent European Family Business Barometer as the top issue for 37% of family businesses. A common assumption is that family businesses have a damaged image when it comes to talent retention, but our research found that it wasn't quite true: factors more important than image were location, size, and industry. It is indeed the case, however...