For this year’s National Family Business Day, we spoke with our Managing Director, Jordan Greenaway, about the uniqueness of family businesses, how they can make themselves stand out, and the biggest challenges they are currently facing.
What makes family businesses special?
Family businesses are incredibly unique in the sense that they think in the long term. Many other businesses, especially listed firms, are constantly thinking about the financial results in the next three months. You cannot blame them. They are being judged on a day-to-day basis on the financial performance of the company – that means that they often do not have the breathing space to step back and think about the 5-year or 10-year, or even 30-year plans.
Because family businesses are privately held by a small number of people, they do not have huge numbers of independent shareholders to please. This gives them the flexibility to take ambitious, long-term, and even contrarian decisions. I have found that family businesses are often more willing and able to experiment because of this independence. Of course, every family business is different – but I often think it’s overlooked how innovative family businesses can be.
What should family firms do to help them stand out?
Many of them can be relatively quiet and under the radar, which is a real shame as they don’t get enough recognition of the great work they’re doing. But actually, many family businesses are missing out on the opportunity to get the public, investor, and employee goodwill that comes from being branded and seen as a family business.
In fact, our research report ‘The Family Business Premium’ looks at how branding a private company as a family business results in a significant and powerful reputational premium for the business. Some of the headline findings included:
- 66% of people would think more positively of a family business if they were made aware of the fact that multiple generations of a family were active in its management
- When planning for succession, companies should give visibility to next-gen family members within the business as early as possible
- A quarter of people feel more negatively about a business if a next-gen family member was suddenly appointed CEO with no visible previous active involvement in the business
In my experience of advising family businesses, I have found that after they start to very lightly speak a little more about their impact and positive contribution to the economy, they find they enjoy it. They also find that it leads to some unexpected and positive outcomes, such as higher morale amongst team members, more inbound work applications, and a sense of mission and focus amongst the management of the company.
What are the biggest challenges facing family businesses?
It feels like an old trope, but it’s certainly the case that succession is still by far the biggest challenge.
On one hand, this means ensuring that the current generation gets to the point where they feel comfortable and relaxed about passing the business to the next generation and letting the younger members of the family put their own distinct stamp on the business. Younger members of the family often bring different perspectives and skills, and they need to be given the space and time to add their own personality to the business.
On the other hand, there needs to be a candid and honest discussion with members of the business about whether they actually want to take the business forward. Maybe younger members of the family feel an obligation to say that they want to lead the business into its next phase, and they may have even convinced themselves that that is the case. However, they need to be given the time and space to reflect carefully on this decision in an open, honest, and frank way. They need to be given the time to find out what they really want to do.
On top of this, family businesses are struggling to attract the talent that bigger businesses do, despite being more attractive to work for. In the UK, there is a very tight labour market at the moment, and smaller family businesses need to shout louder to be seen amongst talent.
If you’d like to find out more, whether you are an entrepreneur, executive, or investor, please get in contact with Transmission Private for an informal, no obligation chat. Contact us via firstname.lastname@example.org or +44 (0) 208 0641 829. You can also find all of our details on our contact page.