Some of the world’s most successful businesses still have a strong family presence – including the likes of WalMart, Roche, Volkswagen, Ford, and Maersk Group.
But even if you’re not aspiring to world domination, it’s pretty clear that family-owned businesses have a strong competitive advantage.
In this article, we outline some of the 5 key strengths that give your business the edge.
In 2015, KPMG New Zealand did some research into the DNA of high-performing enterprises. We found one thing they all have in common is a strong ‘strategic anchor’. In other words, they know why the business exists – and what it’s purpose is.
Hamish McLachlan, Head of KPMG Small Business, says family-owned businesses usually have this all sorted.
“People working in the family business usually have a strong sense of purpose and reason to get out of bed every morning…whether it’s building a legacy for their family, or fulfilling a passion for the industry they’re working in.”
Just like the Dave Dobbyn song, your business will be founded on loyalty – and not just from the family owners. Often those non-family employees are more likely to feel, over time, that they are part of the family too.
“We often see this dynamic of the ‘super-loyal’ employee in family businesses,” says Hamish.
“They are prepared to go the extra mile, or give many more years of service, than they might to a corporation.”
Similarly, your relationships with suppliers and customers will often be on a personal level, and last longer, than with other types of businesses.
We sometimes hear large corporates talk about achieving a ‘family-type culture’. They see this as a mark of success; and will often invest a great deal of money in culture-change programmes to achieve it.
Family businesses get all this for free. The culture of the company has grown organically, out of a set of shared values from the business owners. They attract and retain those with similar values, and so it keeps growing.
That’s not to say the existing culture can’t be improved – you may still want to do some fine-tuning, with independent training or advice. But when it comes to providing a happy workplace, you’ve certainly got a head start.
One of KPMG’s clients, Partridge Jewellers, has remained in family ownership for six generations! Grant Partridge and his daughter Nikki are building on the legacy begun by his great-great-grandfather. (Check out their Customer Story on our website).
In a world where business entities are forever-poised to sell, merge, re-brand or roll-up…there’s something to be said for the successful slow-burn of a long-term strategy.
You have the benefit of making decisions in the long-term interests of the company, rather than quick-fix strategies in order to make the next deal. The long-term approach is often more attractive to shareholders and employees.
If one of your children (or grandchildren) is keen to step into the business, there is plenty of time to prepare them via their education and prior work experience. Having grown up around the business, they are also likely to have a good feel for the industry from day one.
While taking over the family business may be a time-honoured tradition – it requires a lot more than a handshake these days. It takes careful planning to ensure a smooth transition and a successful long-term outcome.
“It’s just as important – in fact probably more important – to set up the proper structures for succession within the family,” says Hamish.
“This includes getting the right company structure, shareholder agreements and governance frameworks in place.”
Like to know more?
Do you have a question around family succession? Send us an email on SmallBusiness@kpmg.co.nz and we’ll be happy to answer it.
Or if you want to know how KPMG Enterprise could help your business, give us a call on 0800 576 472.