Family businesses are generally more successful than non-family businesses. This emerged from research from the Erasmus Center for Family Business (ECFB) in collaboration with BDO Accountants and Rabobank. The secret turned out to lie primarily in the way the company is run.
Family businesses do not work with well-defined tasks and goals. They actually work very informally. Decisions are made based on experience and feeling: does something suit us or not? It is very recognizable to the agricultural sector, which for the most part consists of family businesses.
Non-family businesses, on the other hand, work very formally
In business, the informal way of leading is often viewed with contempt, according to researcher Pursey Heugens of the ECFB. Non-family businesses, on the other hand, work very formally. Everything is registered and measurable and on the basis of this it is decided whether goals have been reached or not. These goals are also aimed at the short term: Quarterly figures are important. If the goal is not reached, adjustments will be made in good time or the associated promotion will not take place.
The working method is completely different for family businesses. It is not about goals attached to a performance bonus. People do not think for quarters, but for generations.
Business Manager Vs. Manager
The way they work is also different. The researchers compiled a list of policy areas and compared how family businesses and non-family businesses scored on them. Family-owned companies performed better in terms of sustainability, shareholder relations, investment period and decision-making style. Concepts such as shareholder relations do not usually apply to agricultural companies, but the rest certainly do. It is also partly a matter of translation. A director? It is the leader of the farm for farmers. Employees? It can also be the family members.
Another striking difference with non-family businesses is that family businesses are more committed to corporate social responsibility. They more often enter into a dialogue with the environment about sustainability and about their own business operations. They are also more involved in the local community. And what about employees or family members who come up with new and sustainable ideas? They often have the opportunity to develop them further. Due to the informal management style, such an idea does not have to go through the board of directors or the shareholders first. The lines are short and shifts can be made quickly. It can give you an edge over other companies.
Differences between generations
The different generations are also interesting. The proverb says that the first generation builds, the second builds up and the third destroys. However, that turns out not to be true, according to Heugens. “All generations do better in family businesses than in non-family businesses.”
Ed van de Vijver, family business consultant at BDO Accountants, agrees. He sees differences. “Second generation has expanded and developed the company with a lot of entrepreneurship, third generation are often more careful because they are careful about what their predecessor has achieved. This means that business development stagnates a bit, but it does not mean that things go bankrupt. ”
The fourth generation then gives a sweeping forward. Heugens: “They continue a company that has always managed to cope with the storms. They have also managed to make business acquisitions well. Businesses where things did not go well have stopped. The fourth generation therefore belongs to the survivors. I see a very strong kind of selection in that the best are left. It makes them very powerful companies, even if it does not mean that they will by definition succeed. ”
With informal management, companies therefore have a strong asset to achieve success. However, a lot can also go wrong. Farmer or gardener and business are strongly intertwined and it is abrasive. Heugens: “Farmers are first and foremost farmers. While they are also the owners of a family business with associated family dynamics. They just do not see the last thing. “
But according to him, one should make all kinds of family matters negotiable. You can not talk about it, but sooner or later you will have to deal with it. Like when the takeover happens. It must then be determined whether the replacement is suitable, where he or she is to live, whether the company continues in its current form or not, etc. If all this is not clear, then it is the breeding ground for conflicts that endangers the continuity of the company.
Invite everyone involved when discussing business issues
Catching something is starting to look like a formal affair, but it doesn’t have to be. Heugens: “It would be formal if the route was strictly defined. The strength of family businesses is precisely that the process is tailored. Tailored. Do what suits your situation, but do it. ”
Van de Vijver: “Often business issues are discussed only between father and son. They understand each other in half a word and think that what they are discussing is not interesting to others anyway. It may be, but the others feel overlooked. That’s often the sore point. Not that siblings do not take over, but that they are kept out of everything. Partners can get difficult. Then invite everyone involved if you need to discuss business issues. If they do not want to be there themselves, fine, but you are at least transparent. “
Against this background, the ECFB comes up with a number of tips. One of them is not just to act informally, but to approach this in a structured way. Discuss together what common values and visions are; what do we think and what do we want? Then make employees or family members jointly and severally liable for the named parts. It makes it clear who is responsible for what and who to contact if there are any questions or issues.
Start with achievable goals
Another tip is not to want to do everything at once. First things first, the researchers say. Start with the most achievable goals, such as improving sustainability and productivity. Use the relaxed demeanor to achieve these goals. Sooner or later, earnings will come from it. Otherwise it does not work.
Finally, Heugens advises joining a family business company. They are all over the country. There are, for example, Gelderse Familiebedrijven Genootschap (GFBG), Limburg Family Businesses Association and Brabant Family Businesses Association. These companies have no commercial basis. They are a platform to meet and learn from each other.
Heugens: “It is striking that all kinds of companies are involved, except agricultural companies. Farmers will say they do not feel understood there because it is about completely different businesses. It is true. The nature of the companies is quite different, but the family dynamics are the same. In SMEs, for example, they face exactly the same family problems. Talking about it can give you ideas for your own situation. And it increases the viability of your business. ”