Family Business Is a Competitive Advantage

May 7, 2015 | Brand Differentiation

Being a family business can be a source of competitive advantage — provided you’re proud of being a family business. I have long held this belief, but until recently lacked the hard data to validate it.

The belief was first seeded while working in my family’s business. When I joined the company my parents had taken deliberate steps to disguise that we were a family business. My mom, for example, used her maiden name at work. The fear was “family business” did not signal professional.

I disagreed with this approach. I saw being a family business as a source of competitive advantage. My parents had created a successful company, we had a great working relationship, and we were building a business that we were proud of. These were ingredients that not only benefited us, they benefited our customers and employees.

I reversed my parents approach to marketing, and made it obvious in our website, PR, and communications that we were a family business. It was a source of pride, and I thought it helped to differentiate us from the giants of our sector.

I couldn’t validate the impact of marketing our brand as a family business, but I saw the benefits anecdotally. It was a conversation starter, and led customers to be inquisitive of our heritage. It also signaled trust, because people knew who they were dealing with, “The buck stopped with the Millers.”

The belief was reinforced further as I worked with other family businesses. Again and again I came across family’s that were building remarkable brands — brands that were highly recognizable and transitioning through the generations. In fact, fifty percent of the companies featured in my book, Sticky Branding, are family businesses.

But even though I personally identify with the value of family business, I regularly come across people who perceive it as negative. For example, I got visibly agitated in a workshop a few months ago when the facilitator said, “I hate working with family businesses. They’re all f**ked up.” I took great exception to his proclamation and called him out on it. He may have had a bad experience, but by and large I find more successful family businesses than unsuccessful ones.

The challenge was the debate was hear-say. We were arguing from our personal experiences, and anecdotes don’t settle arguments. So I was so tickled this week when I came across the facts.

Ernst & Young and Kennesaw State University’s Cox Family Enterprise Center studied 2,400 of the world’s largest family businesses. The researchers published a fascinating report that highlights a few key insights:

  • 76% of the companies studied refer to their enterprise as a “family business” in corporate communications.
  • 64% of the respondents said that being a family business helps to differentiate them from competitors.
  • 64% said being a family business improved the reputation of the company with customers.

The researchers also discovered that the business was a source of pride for the family. 68% of the respondents said the family strongly identifies with the company, “It is part of who we are.”

The family business brand radiates inside and out. It’s the cohesion of the family unit and its relationships with customers, partners, and employees that builds a remarkable brand. The family isn’t simply building a business to sell. They are building a business to grow through the generations.

And this fits very well with a quote by Steve Jobs, “I hate it when people call themselves ‘entrepreneurs’ when what they’re really trying to do is launch a startup and then sell or go public, so they can cash in and move on. They’re unwilling to do the work it takes to build a real company, which is the hardest work in business. That’s how you really make a contribution and add to the legacy of those who went before. You build a company that will still stand for something a generation or two from now.

What do you think? Is family business a source of competitive advantage or not?

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Jeremy Miller

Top 30 Brand Guru

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