3 Myths about Family Businesses

3 Myths about Family Businesses

The misconceptions around family business are widespread and often clouds people’s perceptions about the industry. But not in this excellent article by Carrie Hall of Forbes magazine, where she torpedoes some of the most prevalent myths concerning family businesses. David Harland – Family Business Advisor

When the Forbes World’s Billionaires list  was released, I immediately recalled a recent meeting in Chicago (which I wrote about here) for CFOs of mostly family-owned businesses with $3 billion or more in revenues. One thing that became clear at that meeting is that leading family businesses are successful because they never stop being innovative, and they never become complacent in their success. As one CFO said, “We’re never satisfied. Just because you won a trophy today, doesn’t mean you play the game any differently.”

I couldn’t agree more. And the Forbes list not only confirms that family businesses remain the single biggest contributor to global wealth, it also underscores their importance to the world economy. According to the list, roughly 40% of the wealthiest of the wealthy — including 55 of the wealthiest 100 and 6 of the top 10 — come from multigenerational businesses that are at least 20% controlled by family.

Moreover, the substantial presence of family businesses on the list also helps to dispel three major myths surrounding family businesses.

  • Myth #1: Tech entrepreneurs and financiers are the largest wealth holders. Of course they’re on the list, but they are outnumbered by representatives of family businesses and multigenerational wealth. It should come as no surprise, then, that some of the best innovators are rooted firmly in family businesses rather than the hottest VC-backed company.
  • Myth #2: Family businesses are just small fries. The view that family businesses are all small- or medium-sized companies is disproved by the Forbes list. Take a look at this year’s tally and you’ll see that some of the world’s largest companies are family controlled, proving that with proper management, guidance and succession planning, family businesses are built to not just survive, but thrive for generations to come.
  • Myth #3: Family businesses won’t last. For years, there’s been speculation that family businesses will fall by the wayside as the capital markets grow, but that’s simply not true. The large number of family businesses on the list is a testament to the continued contributions by this sector. If anything, highly successful family businesses have an even stronger foothold than they did 20 years ago.

I’d be hard-pressed to find a better way to effectively tout the relevance of family businesses than by highlighting this year’s list-makers. And their success provides inspiration. If so many home-grown businesses can have such a monumental impact on the global economy, what can your family business accomplish?

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