When it comes to managing a family business, separating work and personal relationships can be admittedly tricky.
It's not impossible; there's just another layer of difficulty. In fact, successful family businesses are a fairly common thing with more than two-thirds of all the companies in the world being family owned. Not only does this indicate that managing a family business can be done, but that it has a huge impact on the success of the business as well as on the global economy.
What are the secrets of these family businesses? Here are three.
Secret No. 1: Family businesses practice minimalism.
In a world that values innovation, it's tempting to ride along every trend that takes the industry by storm. But successful family businesses have a common habit of practicing minimalism in running their business – that is, being more mindful of what they invest in and whether or not it adds value to the company in the long run.
That's why you’ll rarely see a family business with such a hip and trendy office a la Google or Apple. Instead, they'd rather focus their capital on building lean frameworks and hiring core employees so that when a recession hits, they're less likely to do any layoffs or lose money from unnecessary acquisitions.
The opportunity cost to this philosophy is that family businesses have fewer chances of "winning the jackpot" during good economic times. Hence, a smaller growth rate in the short term for the chance of a higher return on investment in the long term.
Secret No. 2: Family businesses don't prioritize profit maximization.
Family businesses anticipate that they will stick around longer than the average startup, so they have a tendency to have a defensive business strategy.
As mentioned, family businesses are wary of joining the trend bandwagon. Cryptocurrency is one such example of a trend that may be seen by others as highly rewarding but is ultimately risky for the rest of us. Hence, you won't see many family businesses participating in such a business model.
That said, just because family businesses don't focus on maximizing profits doesn't mean they don't earn a profit. There are investments that may lose money in the short term but that prove to be a solid business model in the long run. Family businesses tend to spot these deals and build on them. Instead of earning profit for the sake of it, most family businesses do it the other way around: focusing on their product, their customers, and their employees, which consequentially leads to a higher profit in the long term.
Secret No. 3: Family businesses draw clear lines to avoid conflict.
Unlike non-family businesses, one weakness of family-owned businesses is that there is an increased risk of conflicts when the professional and personal worlds collide. But a common secret in overcoming conflict among successful family businesses is the clear definition of roles of every member of the family.
This is how Jayco, an RV company in the U.S., continues to be the largest family-owned company in the industry 50 years after it was established.
Derald Bontrager, CEO of Jayco and son of founder Lloyd Bontrager, says one of their rules is that they don't allow conversations about work during family gatherings. They leave business at the office.
You don't have to be a family business to apply these secrets to your organization. If you're having trouble running your business, then you could learn a thing or two from how family-run organizations maintain their momentum and stay successful in the long run.