Three Reasons To Celebrate Family Firms
19th September 2017 Jonathan Flack, US Family Business Leader at PwC
Today we celebrate U.S. Family Business Day – a day dedicated to recognizing the contribution of family firms across the country.
When you think of the biggest drivers of the U.S. economy, family businesses are often forgotten, or grouped with private companies at large. Many operate under an antiquated view of family business – envisioning a mom and pop retailer or perhaps a small ice cream shop.
Yet, family business are so much more than a subset of private companies. This is the sector that creates 63 percent of annual US GDP and accounts for 50-80 percent of jobs in the majority of countries worldwide (Family Firm Institute). And this growth is expected to continue. In fact, 83 percent of respondents to PwC’s 2017 US Family Business Survey indicated that they have plans to grow their businesses in existing markets in the coming years.
Today we celebrate U.S. Family Business Day – a day dedicated to recognizing the contribution of family firms across the country. In the spirit of celebration, here are three ways family entreprises stand out, and how they can continue to remain a vital part of the economy.
Family businesses are entrepreneurial and innovative
Family businesses actually prove to be better at innovation than their non-family counterparts. According to Harvard Business Review, family firms get more innovative output out of each dollar spent on R&D than non-family businesses, measured by number of patents, new products and revenues generated from new products. Two-thirds of family businesses say that the need to continually innovate will be a challenge over the next five years, with only 21 percent prioritizing innovation. To keep up with the pace of change in industry and the world, family businesses have an opportunity to further capitalize on their entrepreneurial spirit to invest in near-term innovation. Also, a robust innovation strategy often leads to business diversification which in turn can extend the life of the enterprise, a win-win.
Family businesses are great places to work
Family businesses make for great places to work, with a strong commitment to their vision, values and the community, while offering a wide range of career development opportunities. To maintain a competitive advantage, family firms are as focused as ever on their talent strategies. In fact, 70 percent of family businesses admit that attracting and retaining the right talent will be a challenge over the next five years. Continued efforts and clear communication around companies’ sense of commitment and energy will help further their reputation for being a positive place to start a career to attract the right talent and foster growth and new ideas.
Family businesses are long-term oriented
The family enterprises that have survived for many generations are often those that have focused on their long-term strategic plan. Successful family businesses have a strong sense of purpose and governance structures. These firms prioritize topics such as innovation, succession planning, diversification and talent retention. In fact, we found that the vast majority of of firms with three generations and older highlight the business’s long-term future as a priority. As family firms look to the future, they must be agile in anticipating what’s far over the horizon while actively focusing on the middle-distance, reevaluating their succession plan, prioritizing innovation and taking talent diversification seriously.
These are just some of the reasons we’re highlighting family enterprises and celebrating their lasting impact on our economy and economic future.
Join the conversation - Join PwC and Family Business United on Twitter today, 9/19, at 1:00 p.m. ET (7.00pm GMT). Follow me on @PwCPrivateCo and tweet using #USFamilyBizDay.