Family Businesses Are Poised to Take Off

Date: April 13, 2016

Large corporations are less ready for tomorrow’s constantly changing environment.

Family businesses are entering a golden age. 

Facing an increasingly volatile business environment, family businesses are better equipped to weather bad economic times than publicly traded companies, according to a Harvard Business Review article

Large companies are losing clout in the American economy. Corporations’ share of GDP, their workforce and their assets have plummeted 50 percent since 1975, but small family businesses are facing the evolving economy with stability, the article says. 

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Family-run businesses enjoy many advantages, including higher employee loyalty, decreased risk of investors pulling out, and tighter control of the company’s image, Harvard Business Review reports.

“There is often a personal connection between the family and the communities in which it operates; reputations matter to families,” Harvard Business Review reports.

And these businesses usually have a shorter chain of command, so executing business strategies becomes more streamlined. This means family businesses can accomplish more than big businesses—and more quickly, too.

“Companies will need to build the capacity for flexibility, adaptability, and decisive action in response to shifting market conditions,” the article states. “The new mantra is to shorten the distance between leaders and the frontlines.” For many family businesses, this agility already exists—and is paying off. 

Family-owned businesses are expecting bigger profit margins at a time when small business owners as a whole are still uncertain about their future. Seven out of 10 family businesses experienced revenue growth in 2014, and 79 percent expect steady growth for the next five years, according to PricewaterhouseCoopers’ most recent US Family Business survey.

In these economic conditions, it looks like bigger is not always better, and for family businesses in particular, the future is looking bright.

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