According to a recent report by Barclays Bank, there are more than 2 million family owned businesses in Britain. These companies generate revenues in excess of £540 billion. While quite a few of the companies are several generations old, even the first generation businesses are clocking an average growth of 22%. The revenues from the family owned companies are projected to grow to £661 billion by 2018.
You may be surprised to learn that some well known brands like Walmart, BMW, Ford, Samsung and food giant ABF closer to home are all examples of family owned businesses. A lot of these businesses have demonstrated their resilience and growth across generations and economic cycles. Be it the Lebanese take away around the corner, which has been around for 60 years with branches across the city, to Stemcor, the world’s largest steel trader with revenues in excess of £6 billion, both are family run businesses.
These companies constitute a full third of the British economy and are an integral part of it. What are some of the reasons behind the success of these businesses? Multiple studies on the topic point towards a number of shared traits.
Family run businesses are focused on preserving and building business value. Owners see themselves as caretakers of a legacy to be passed on to the next generation. Newer ventures are conservatively leveraged and managed in a hands-on way by the owners. The focus is always on the long term.
Better at retaining talent
Unlike their big box corporate competitors, these companies offer more than just financial incentives. There is emphasis on creating and building a culture and an empowering work environment. Family run companies are more likely to promote from within rather than hiring externally.
The M1 Group is one such family run business. A multibillion-dollar diversified investment holding company, it has interests across a wide spectrum of businesses, ranging from oil to fashion to energy and real estate. The M1 Group had its genesis with Investcom, a telecom company started in 1982 by Najib Mikati and his brother Taha in Lebanon. A two-time Prime Minister of Lebanon, Najib Mikati continued to co-run the M1 Group while in office. In 2005, the company listed on the London stock exchange for $741 million, and in 2006, MTN of South Africa acquired it for $5.5 billion. The brothers, along with Azmi Mikati from the second generation, continue to run operations at M1.
Frugal in good and bad times
Family owned businesses are careful with expenses. They won’t invest in a fancy office address, as the same money can be put to a more productive use. These companies are much less likely to let people go during periods of economic stress.
Continuity of vision
Family run businesses normally have a long standing CEO. This ensures a steady vision and consistent strategies; it also ensures continuity in relationships the company has with its multiple stakeholders. A sense of stability and continuity is engraved in the DNA of these companies.
There is a lot that family owned business have going for them. From a unique sense of value creation to a stable environment and steady growth, family run businesses chart a success path of their own.