Vantage Blog

blog date arrow
13
Oct
2013

The Benefits of Family Business

From Guest Blogger Russell Cummings...

The term "Family business" usually refers to a small or mid-sized company that has a local focus and is plagued with a familiar set of dilemmas such as succession. In spite of that very simple description, family businesses have played a powerful role in the world economy and have included, through the years, big businesses worldwide. Some examples in Australia of successful family businesses are LinFox, Smorgon Group, Cooper's Brewery and there are plenty of others.


Most of the time, the key to success of a family business lies in its unique ownership structure that allows them to plan and thrive in the long-term. But other researchers believe that it is also this structure that causes many of them to fall. So what’s really the case?


In a recent article from Harvard Business Review, What You Can Learn from Family Business by Kachaner, Stalk and Bloch, presented a rigorous analysis of how family businesses and non-family controlled businesses differ in management and performance.


And from this article, we’ve derived seven points on how family-run businesses manage for resiliency and how business managers can benefit from these principles.


1. Family Business is Frugal in Good and Bad times.


In most cases, family businesses view their money as "the family’s money” which is why they often do a better job of keeping expenses under control. This can be a weakness as often, to save a buck, they invest with shorter timeframes in mind rather than thinking of the long term.


2. A Family Business Keeps Their Bar High for CAPEX.


Family-run firms have a simple rule when it comes to capital expenditures – they make sure they do not spend more than they earn. They often run "leaner” than their corporate cousins.

3. A Family Business Has Little Debt.


Family businesses, because of their close-knit and simple structure usually associate debt with fragility and risk, and tend to avoid it. They usually have very strong balance sheets.


4. Family Business Make Few and Small Acquisitions.


Although an acquisition can transform a company and pay large rewards, it can carry a high risk. And this is why family businesses shy away from large acquisitions and prefer to make few of these deals and only favor companies that are close to the core of their existing businesses.


5. A Family Business is Diversified

.

In this day and age, diversification is important to keep a business alive and it is no different with a family-run business. Diversification has become one of the key ways to protect family wealth. In fact, the Smorgon Group in Australia is an example of a diversified family business that went from meat to steel, and paper.

6. A Family Business Is More International.


Contrary to what most people know, family businesses are ambitious about expanding overseas. In fact, they often generate more sales out of the country (USA) than other businesses do.


7. A Family Business Is Better at Keeping Talent.


Businesses that are family-owned prefer to extol the benefits of longer employee tenures thus creating a stronger culture.

With these seven points, we can conclude that despite its small and simple structure, family businesses have shown to be resilient in times of economic uncertainty. I think this is largely driven by a strong sense of ownership of the brand and finances. Yes, they are not without pitfalls, the largest being inter-generational transfer but they survive through the years by focusing more on resilience than performance.


Thanks to Russell Cummings from Strategic Business Development

From Guest Blogger Russell Cummings...

The term "Family business" usually refers to a small or mid-sized company that has a local focus and is plagued with a familiar set of dilemmas such as succession. In spite of that very simple description, family businesses have played a powerful role in the world economy and have included, through the years, big businesses worldwide. Some examples in Australia of successful family businesses are LinFox, Smorgon Group, Cooper's Brewery and there are plenty of others. ..

blog date arrow
21
Sep
2011

Time to get your Business Fit

Whilst we dodged a bullet in 2008 it appears the economy is yet again challenged by sluggish sales as customers – in B2B and B2C markets - keep their hands firmly in their pockets.


During the GFC many businesses took the opportunity to ‘right size’ and removed obvious costs, but almost all failed to leverage it to its fullest in terms of waste reduction. This continued volatility may be your last chance to prepare your business for this fast-moving tsunami of economic woe.  Cash is tightening, confidence is shaken and where to next is uncertain.

A review of overheads and operating costs is essential before the economy takes off again. Why put more business through an incapable system? You will not meet your profit and cash-flow budgets without such a review.

Here is a check list of opportunities. Tick the box next to the ones you have in your business and then estimate the annual cost/savings for each. What is your total? You should find the number is somewhere between 10% and 20% of your annual sales (depending on how hard you cut in the past).

Tick the boxes below

OPPORTUNITY

ESTIMATED VALUE

PRIORITY

 

1. Remove poor performing staff

 

 

 

2. Remove unprofitable customers

 

 

 

3. Remove waste in the sales and marketing process

 

 

 

4. Remove waste in the production process

 

 

 

5. Reduce overheads

 

 

 

6. Achieve or exceed budgets

 

 

 

7. Remove inefficient suppliers

 

 

 

8. Increase average sales/customer by 20%

 

 

 

9. Improve cash collection by 20%

 

 

 

10. Other please specify  

 

 



  You have less than 12 months to free up this cash. You will need all of it to fund your survival in this continued volatility. Already cash flow is tightening, business confidence is severely shaken, and you must take action now. Get some help as you will not make the time it needs. Your role is to make decisions, establish consequences, and deliver on your budgets. There is a cost benefit; the savings you make now will be there year after year.

The last question to ask yourself is, “what barriers are there that are stopping me from making a start on a waste reduction program”? Fix whatever issues come out of this thought process. Keep asking the question until all the barriers are dealt with and then just make a start. If you don’t start within the next week you probably won’t. If you do increased cash flow and reduced risk will be yours. 

But most importantly you will be able to take advantage  of the eventual rebound better than your competitors - a great position to be in!

For information on the Vantage Waste Reduction Program please click here.

Whilst we dodged a bullet in 2008 it appears the economy is yet again challenged by sluggish sales as customers – in B2B and B2C markets - keep their hands firmly in their pockets. ..


Latest Blogs
 
Share This
 
Search the Blog
 
Subscribe to our Blog
 
Click here to subscribe to receive regular updates on business strategy & marketing.
OUR APPROACH
Our approach line
Vantage Strategy & Marketing helps leaders improve their business by cutting through the clutter.
We work collaboratively with our clients to develop clear strategy, achievable goals and actionable plans.