Nearly 90% of all American businesses are family-owned operations. That works out to be more than 34 million businesses in total. It includes everything from small mom-and-pop stores to large fast-food franchises like Chick-fil-A. It almost goes without saying that the U.S. economy would take a turn for the worst if family-owned businesses suddenly disappeared since they make up such a huge part of it.
So many family-owned businesses are able to stay afloat in this country because of the approaches they take to running their companies. In this article, we’ll break down some of the key reasons why family businesses are able to outperform their competition regularly. Check them out below.
Establish a Clear Purpose From the Start
If you ask just about any business owner what the purpose of their company is, they’ll tell you that it’s to make money. All companies, whether they’re family-owned or not, are in the business of trying to become as profitable as they can be. But for family-owned businesses, profits are not the only thing that matter. They’ll also typically come up with an even bigger purpose when they’re first getting off the ground.
A family-owned laundromat, for example, will strive to turn a consistent profit every quarter throughout each year. However, beyond doing just that, a laundromat like this will also usually aim to make sure that those in its community are able to get access to affordable and reliable laundry services when they need them. The owners of this type of family-owned business will recognize a need among those in their community, and they’ll do what they can to provide people with the products and/or services that will be necessary.
When a family-owned business has a clear and obvious purpose, it’ll allow its owners to get a leg-up on the competition. These owners will give people within their community the impression that they’re trying to help them rather than just trying to use them to line their pockets.
Take a Conservative Stance on Finances
Even though family-owned businesses might have a bigger purpose than just raking in profits, they will need to make as much money as they can to keep their doors open. At the same time, they won’t have to worry about answering to shareholders when they do business, so they won’t need to do whatever it takes to break financial records every time a quarter closes. As long as they’re generating enough profits to remain in business, family-owned businesses won’t have to take too many financial risks in the name of trying to maximize profits every year.
More often than not, family-owned businesses tend to take more conservative stances on their finances than their competitors and develop good sensible money habits. This can sometimes put them in a “low risk, low reward” situation and impact their ability to break financial records like their competitors might. But it can also prevent them from falling apart due to being overly aggressive when making financial-related decisions.
Keep One Eye on the Future at All Times
Once upon a time, the average age of the companies listed on the Standard & Poor’s 500 was over 60 years old. But according to a recent report, the average age of the companies listed on the S&P 500 has now dropped all the way down to just 18 years old. Why? Well, it has a lot to do with the fact that many companies in this country are so focused on trying to make the most of their profits today that they fail to look into the future and plan for it accordingly. It leads to at least some of them closing down long before they should.
This is yet another area in which family-owned businesses are able to differentiate themselves from their competition. These businesses don’t want to just get rich now and worry about the future another day. They want to set their companies up for long-term success so that future generations of their families can continue to run their companies. To make this happen, they have no choice but to consider the future every time they make a decision. It’s the only way for them to enjoy the long-lasting runs that they want to achieve within the business world.
Sell the Highest-Quality Products and/or Services
When companies only care about their profits, it often shows when it comes to the quality put into their products and/or services. It isn’t uncommon for companies to cut corners in an attempt to produce products and offer services that will earn them the greatest returns. The problem, of course, is that this will inevitably lead to consumers being less happy with their products and services than they would be otherwise.
Some family-owned businesses might not always make quality their highest priority. But the vast majority of them have owners that wouldn’t be able to look their customers in the eyes if they didn’t at least try to set them up with the highest-quality products and services possible. They’ll work tirelessly to deliver products like these traditional music boxes that are built to last. It’ll ensure their customers are happy, both now and in the years to come.
Care About Employees and Their Overall Well-Being
A recent study discovered that more than 80 million Americans are employed by family-owned businesses as of 2023. That amounts to over 60% of the working population in the U.S. Many people in this country prefer working for family-owned businesses as opposed to corporations that are governed by shareholders, and it isn’t hard to see why. Most family-owned businesses treat their employees like family and truly care about their physical, mental, and financial well-being.
When family-owned businesses show they care about their employees, it creates a great company culture and helps to further separate family-owned businesses from their competition. These businesses are able to showcase just how much they care about the people in their communities by treating their employees right and incentivizing them to put their best foot forward when they’re at work.
Push Boundaries With Each New Generation
Unfortunately, some family-owned businesses don’t last for more than a single generation. One Harvard Business Review report suggested that only about 10% of these businesses stick around long enough to let a third generation take over. But those family-owned operations that are able to last for two or three generations, if not even longer than that, are able to get a rare opportunity.
New generations are able to step in, find the things that may have previously held family-owned businesses back, and come up with ideas to usher them into a new era. They inject new life into these businesses, which isn’t something that the average corporation is able to benefit from since there aren’t always young people working for them who have risen up through the ranks. They also aren’t always able to find young people who have a true passion for their companies, which is something that new generations have when they’re a part of family-owned businesses.
It’s one more reason why family-owned businesses have earned an edge over their competition over the years. These kinds of businesses are the backbone of the country in a lot of ways, and they aren’t going to go away anytime soon.
