30. Family businesses: the most successful, long-lasting and impactful businesses in the world

Rob and Josh are each co-founders of BanyanGlobal Family Business Advisors which advises family owners on business, finance, ownership, philanthropy, and a wide range of other issues. They are each leaders in the field of family-owned business. They recently co-authored the Harvard Business School publication: “Family Business Handbook: How to Build and Sustain a Successful, Enduring Enterprise.”

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Links

Why the 21st Century Will Belong To Family Businesses

Build a Family Business that Lasts

Order the HBR Family Business Handbook

Quotes

Family Business Myths/Facts

Myth: Family businesses don’t really matter.

Fact: “About 90% of all businesses in the United States are family owned and they account for about 50% of all employment.”

Myth: Family businesses don't last, after three generations, they're doomed to fail.

Fact: “Family businesses last longer on average than other forms of ownership. Some of the longest lasting and most successful businesses in the world are family businesses. Why don't Americans know that?”

Joe: Josh, why do you think that the myth that family businesses are less successful, that they never get beyond the third generation, why does that persist?

Josh: It's a great scare tactic, I think you keep hearing it is because people want to tell you, "You're doomed to fail and therefore you need my help to be able to overcome it."

Myth: Family businesses are rife with conflicts - family members are fighting and suing each other and just can't possibly get along

Fact: “Most family businesses struggle not from having too much conflict, but from too little conflict, because it's really hard to raise some of these issues about fairness and compensation and all the things that come in as being part of a family business.”

Rob: It's strange, but the celebrity or the business celebrities, when I went to business school, Jack Welch, and he was making a brand for himself. Now, it's Bill Gates or Mark Zuckerberg at Facebook or Elon Musk at Tesla. They seek the publicity. I would say most all of the family business that we know the owners, they shy away from publicity. They don't want to be the face of their family business. They actually know the downside that can come with that.

Josh: Most family businesses are private companies and the word "private" is there for a reason, that they don't want to be public. They see advantages in being below the radar. I was visiting a family business recently in a state out west and I drive up to the headquarters and I was like, "That can't be it. We must have the address wrong. That can't possibly be the headquarters of a billion dollar company." And of course, it was.

“One of the amazing things about family businesses is that they can break the rules in a way and practice business in a way that is fundamentally different than other companies.”

“Family business owners can, if they choose, own it for their whole lifetime and maybe set it up for their next generation. It's the difference between maybe renting an apartment or even being in an Airbnb overnight - you're day trading versus owning a home that you're hoping to bequeath to your children.”

Unlike other companies, family businesses actually talk about longevity. How often do you hear companies outside of the world of family businesses talking about how many generations do you last? Do we put like a second or third generation as if that's just a low number, but then you have to multiply it by 20 or 30 years and you realize that a third-generation family business has probably been around for a hundred years.

Josh: People say: "Oh, most family businesses don't make it for a hundred years and therefore they're doomed to fail." I'm like, "No, no, most businesses last for under a year, maybe five years."

Joe: Their success is actually used as a way of talking about their failure when it's not really a failure at all.

What we find in family businesses is that core decisions are really made at the owner level in family businesses, not like publicly-traded companies. If you don't like what's going on at GM, you sell GM and you're out and it wasn't really hard to sell. With a family business you're in. So, you're going to work really hard to make the owner decisions the right decisions.

The rights that come with that ownership are profound, the ability to influence the company in ways that are positive and ...