Unlike other little girls, I admired out of the box women who defied convention. One of them is Estée Lauder, the founder of Estée Lauder Companies Inc. which is now one of the biggest companies in the United States of America. I can go on and on about her, but what I find intriguing is the fact that even after her passing, generations of her family have taken the helm of the company. Estée Lauder’s granddaughter Jane Lauder was recently named Global Brand President.
Family businesses seem to hold a mantle of their own with founders striving to ensure one of their children takes interest in the business, at the same time their children trying to get into the business so as to make their mark. So what can be classified as a family business?
Here are some common characteristics of family businesses:
- Strong core values: Family businesses rely on value systems which consist of truth, trust and consistency, entrenched into having high quality goods and services. Companies like Ford, Heinz and Mars have a consistent mantra: to make profits legitimately as well as have ideals which encourage active participation in the business.
- Learning from mistakes: Family businesses have a structure that can absorb losses resulting from strategic decisions. The team effort pulls the business into a platform that can resolve the issues adequately. The ability to try out ideas is good for the younger members of the family eager to prove themselves, as well as make risky and beneficial decisions. This quality enables family businesses to survive hard economic times as they are ingrained with a sense of hope. The fact that they have withstood hard times or have made wrong business decisions which they have come out of, energize them to carry on.
- They have a social purpose: For family businesses, it is not just about making money. It is about making a difference in the community. I remember a story of a family that decided to sell their company, a business that supported a whole town. As luck would have it, the town’s people caused a riot mainly because their jobs were in jeopardy. In the end the family reversed the decision and the company wasn’t sold. It was definitely a lesson that the family business was not about the family only but also the people whom it supported. One positive aspect I can mention is when the families are given a platform for charity and this is passed from generation to generation.
- Most employees are family members: In family businesses the first employees are usually family members or acquaintances that have a link to the family. This gives a sense of security to the owners as well as sometimes support to the extended family. The flip side can be when a hired family member is not eligible for the job. In some circumstances, these employees do exceed expectations because they feel a sense of ownership and loyalty to the business.
- Tense relations affect the business: The business can definitely be affected when the family starts to fight within. One example is Naivas Supermarket who was in the news over inheritance battles. This goes to show the extent of how these battles negatively affect the business unlike in non-family businesses. Thus is it vital to maintain cordial relations amongst the family members involved.
Many characteristics can be viewed as part of a family business depending on its type as well as the agreed structure that the family is willing to adopt.
Are you running a family business? What’s your experience like? Please share in the comments below.