Family Businesses form the backbone of not only the Australian but the world economy. Too often though they operate under the mistaken interpretation that identifying themselves as a family business will present an image of a “mum and dad” operation. In fact the opposite is true. Customers prefer to deal with family businesses and some of Australia’s most long-standing companies such as Coopers Brewery and Akubra Hats are family owned. In this article I go through three reasons why recognising and identifying as being family businesses can not only improve sales and consumer trust, but help in lobbying government. By David Harland – one of Australias leading authorities in family business sector.
In honour of the first National Family Business Day on September 19th, I wanted to take the opportunity this month to talk about why family businesses should promote their identity to their customers and the public. In my experience as an advisor, I have learned that family businesses are among the most vibrant, sustainable, and stable businesses in Australia, and we need to do more to promote our successes. As a sector, we employ nearly 50% of Australian employees and account for 70% of business activity, yet our needs are often overlooked by policy-makers, researchers, and the business community.
Research shows that your customers prefer to buy from family businesses. Academic and industry studies on family business competitiveness have repeatedly demonstrated that developing a family-based brand identity can positively affect your bottom line. Consumers associate family businesses with factors such as stability, trust, honesty, and community involvement and this perception leads them to be more willing to do business with families. With this level of consumer trust, it’s important that family businesses promote their special status to differentiate themselves from competitors.
A real-world example of the ‘family business effect’ is that of S. C. Johnson, a multi-billion dollar global company. This fifth-generation family business decided to build their identity as ‘A Family Company’ after extensive market research showed that their customers have a positive view of family businesses. Many large and small family businesses (including well-known giants like Ford Motor Company, Brown Brothers Wines, and Raine and Horne) promote their family business identity as a way to differentiate themselves in a crowded marketplace. Lacking the enormous marketing budgets of their larger compatriots, small- and medium-sized family businesses can especially benefit from the positive effects of a family business identity.
One way to promote your family business status is to participate in Family Business Australia’s (FBA) Family Owned Australian Business’ emblem program. FBA is an organization I’ve mentioned before in this column; they are the largest family business research and advocacy group, and are doing terrific things for our sector. According to FBA CEO Philippa Taylor, FBA developed the emblem in order to let family businesses “signify to government, community, employees and customers, that their business is a major contributor to Australians’ everyday life and future.” Program participants will be limited to businesses that meet the family ownership requirement and will be able to license the emblem for use in their marketing materials.
Your business will benefit from the strength of numbers to promote important issues with Government. In repeated surveys, one of the major topics of concern reported by family business leaders is the ignorance shown by Government about the large numbers and important economic, cultural, and community contributions made by Australian family businesses. While many family businesses find themselves lumped in with SME’s in studies and statistics, the reality is that our businesses have very different needs and priorities. Many of the most pressing issues confronting family business leaders: succession, the need for patient capital, and special tax situations, simply are not on the radar of government and business associations. In order to leverage the power of the family business sector, individual businesses need to stand up and be counted.
National Family Business Day launched a new series of efforts to promote our sector to business and Government leaders. I’m pleased to note that the main event was at Parliament House and was attended by key Australian family business brands as well as educators in the family business sector, politicians and members of the Press.
Take advantage of organizations and resources specifically geared towards the needs of family businesses. Although the family business model is quite literally the oldest form of business in history, the science and study of family businesses began just a few decades ago. Fortunately, today’s family businesses have many resources available to them to help them overcome obstacles and build stronger businesses and families. Not to toot their horn too much, but FBA is one of our favourite resources for family businesses. Of particular interest to business leaders facing tough challenges are their courses, which are specifically designed for family businesses. They also sponsor informal workshops and conferences, and networking events to connect their 2500-plus member families.
Building a strong, dynamic family business sector is something that I feel very strongly about. Although it can be difficult to prioritize advocacy and education when running a challenging business, doing so can yield tremendous benefit to your business as well as the next generation of family business leaders.
After Family Business Advice? Contact FINH on 07 3229 7333