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Recognizing the Advantages in Your Family Business

Today’s media focuses too often on negative stories of family business: the feuds, the rivalries, the breakdowns, and the drama. This is the side of family business that, more often than not, is fed to society. There’s no denying that family businesses have their challenges. They do. But family businesses also come with a number of strengths and benefits. What special advantages do family businesses have that non-family businesses lack? Here are a few very important ones:

Long-Term Perspective
In our world of instant gratification, public companies often measure success on a quarterly basis. They look at ROI in the short-term rather than the long-term. On the other hand, families are more long-term thinkers, measuring their success from one generation to the next. I recently spoke with a CEO of a large family-controlled, yet publicly-traded company. One of his main frustrations was the inability to make long-term investments that would pay out in 10 to 20 years. Why? Because of market pressures for high quarterly earnings. In other words: short-term objectives get in the way of long-term goals. But in a family business, there’s a willingness to invest in things that will take 10 to 20 years to pay off. There’s an understanding that A) long-term investments are directly related to the success of future generations, and B) future generations are directly related to the success of the business.

It’s About More than Money
Research shows that families who invest in their employees through training and development are slower to lay off in down turns. Research also shows that employees tend to stick around for a long time when a business treats them well. Family businesses often see non-family employees as an extended part of their own family, and in turn, treat them well and provide them with generous benefits. The value of investing in people is a trademark of any successful family business. Remember: money can’t be the only thing that matters. How a family business makes money is just as important as how much money the business makes.

Legacy of Learning
In a successful family business the older generation takes responsibility for teaching the younger generation. There’s the day-to-day experience of the business, where children might come to work with mom or dad, see the kind of work-life their parents lead, and experience how the business operates and functions. This is one part of their learning. On a deeper level, the older generation is responsible for modeling a set of intangible characteristics: leadership, ethics, and values. This is referred to as a legacy of learning–the passing of knowledge and skills from one generation to the next. It is one of the greatest advantages a family business has over a non-family business because of its unique ability to unify the family across time.

Innovation and Ingenuity
When the time comes for NxG family members to assume leadership roles within the business, they’re likely to bring a few (or more than a few) new ideas to the table. Fresh perspectives and innovation are typical of young professionals, which begs the question: how is a young person working in a family business any different than a young person hired to work in a non-family business? One can easily argue that any company, whether they’re a family or non-family business, can hire bright, young talent to keep ahead of the competition. Here’s the difference: NxG family members not only bring innovation, but they’ve been raised in their family business’s culture. Family history, values, and knowledge are deeply rooted within them–this type of human capital can’t be imitated or replicated. It’s a guaranteed advantage. NxG innovators who carry inside them the skills and values passed down by older generations, give family businesses an impressive edge over non-family business competition.

Maximize Your Advantages: Focus on Building Family Unity
Conflicts will arise in a family business. Family members will argue, and sometimes the conflicts may be extremely difficult to overcome. However, research on centuries-old family businesses shows that family unity is a critical factor in long-term success. Business success alone is not sufficient to make a family business thrive from one generation to the next. In order for families to survive and leverage the advantages discussed earlier, families must focus on building strong relationships with each other, including their ability to resolve conflicts. They must also create a common sense of pride, purpose, and direction for what they do together. To leverage the advantages of being a family-owned business, each member of the family must commit to a common vision of success.

NGLI is a program that will help foster family unity and maintain a culture of strong leadership, longevity, and a legacy of learning by preparing family business members for their unique leadership roles through a powerful network of learning and support.

 

Has your family business thrived in unexpected ways that have benefited multiple facets of your family?

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