Why Family Businesses Perform So Well
There have been a number of studies showing that overall, family run businesses perform much better than other similar businesses that are run by people who are not related to one another. There are a number of reasons why this is the case – some of these things are listed below.
Long term commitment
The management team and employees within a family run business are completely and fully committed to the running of a business and taking care of it to ensure that it does not fail. They also pass this level of commitment on to the next generation of employees, thus ensuring the long term success of the business. This is very different to other none family run businesses, who care less about long term success and instead focus more on short term returns, such as maximising profits and / or pleasing shareholders.
Keep traditions and open to change
Even though they are good at playing on their tradition, family run businesses are also very open to accepting and adopting change, particularly when it comes to new and cutting edge technology. Whilst they do not typically tend to be the very first responders, they do act quickly in responding to change within a particular industry. This is due, in part, to the fact that the management team is strongly focused on putting things in place for the next generation. Conversations that happen around the dining table are more likely to leach into the board room.
Institutional memories kept
With employees of family run businesses generally staying in their roles for a longer period of time, they develop an in depth knowledge and understanding of the business, thus building up institutional memory. Whereas this can be easily lost in a regular, none family run business, when an employee leaves their position, this is less likely to happen in a business that is family run though.
Smartly diversify
It is a well known fact that family run businesses are quicker to diversify and are more flexible at doing it. By doing this, it reduces the amount of risk that a business is exposed to and provides them with the necessary platform to leverage any existing knowledge that it already has in order to grow. The vast majority of family run businesses expand out to other areas of businesses that are similar to what they are already working in, whether that be down or up the supply chain. Being open to change and flexibility means that family run businesses are more likely to switch their energy tariffs when business energy tariffs need switching and use comparison websites, such as Utility Bidder.
Some of the famous family run business that are currently trading and implementing some of the techniques discussed above include the Indian healthcare company Sun Pharmaceutical, the American cruiseship company Carnival Corporation, the Taiwanese information technology (IT) company Foxconn, the American energy company Kinder Morgan, the German car manufacturer Volkswagen (VW), and the social media platform Facebook.
