Seizing opportunities: Why family firms can hold upper hand

Family businesses are the backbone of the global economy and are critical to economic activity and employment here in Canada.

According to EY’s Growth Barometer report, family businesses are growing faster than their non-familyowned peers, and they’re adapting to the changing market environments while seizing the upside of uncertainty.

With growth top of mind for family businesses, here are some key attributes that EY is seeing among leading privately held family businesses.

Recruit and retain top talent

More than one- third ( 38 per cent) of family businesses are targeting growth of six per cent to 10 per cent for the current year, and more than 27 per cent are looking at revenue growth of 11 per cent to 25 per cent. Family businesses understand that reaching their growth goals depends on their ability to attract, hire and retain top talent.

Long gone are the days when employees exchanged their loyalty to a company f or a reasonable i ncome and a pension plan. Today, employees are motivated to work hard if they believe in their company’s mission and values, not just for a bigger salary and company benefits.

Family businesses weave t heir values in to every nuance of their organization. Employees get to witness first- hand the family business owners’ motivation and dedication, which can create employee loyalty to the company’s mission.

Respond more quickly to changing market conditions

Family businesses are well suited to dealing with changes in their work environment. They tend to be nimble; information flows easily throughout the business, meaning leaders can respond more rapidly to changing internal and external market conditions. Given the free flow of information between family leaders and their employees, this fosters a high- performing work environment of action and agility.

Take a long- term perspective

Access to capital is fundamental to achieving growth. However, companies driven by their capital agenda may be tempted to forgo their values in order to meet investors’ revenue targets. Some family businesses that have gone public have been the subject of criticism for their use of dual share classes in order to retain operational control.

A private family business is not subject to the whims of stock markets. With no external shareholders to please, family leaders can afford to take a longer- term perspective and make strategic decisions that won’t let them lose sight of their company’s mission. Family businesses often think in terms of generations, meaning they can make capital spending decisions based on what’s right for the company, its employees and the wider community.

Deeper connection to their community

Family businesses are personal in nature and often have deep roots in their communities. With the hard work family leaders put in to making sure their busi- nesses are financially viable, the company’s reputation is important to them. A privately held family business is more likely to invest in the community, recognizing the economic and social impact they can have on the long- term viability of the community and, in turn, on their business. Family businesses tend to take pride in their social responsibility and see the benefit of putting aside some of their profits to benefit their community, unlike other companies that are ultimately driven by the bottom line.

Family business leaders who continue to harness these family business attributes will be uniquely positioned to take advantage of market opportunities in this time of disruption and uncertainty.