Opinion 1: Family Businesses Can Thrive In Down Economy
By Ted Clark
Special to the Worcester Business Journal
Given their undisputed importance and contribution to the economy and the social fabric of the country, it's surprising that family businesses receive relatively little publicity, recognition or special attention.
All In The Family
Rather than being seen as drivers of economic prosperity, family businesses are often regarded as an anomaly in the business world. People are often surprised when they learn that the majority of businesses in the United States are family businesses.
Family businesses do not typically generate much publicity and unfortunately when a family firm does, it is more often than not unfavorable. Publicity for family firms tends to focus on and depict conflict between family members that results in the destruction of the company.
While problems can and do exist in family firms as they do in every business, the reality of the situation is that family businesses can have significant advantages that would make a public corporation envious.
For example, family firms are typically closely-held and they do not necessarily have the pressure to provide short-term returns to investors. This luxury creates the opportunity to focus on and capture long-term opportunities in the market. Research also points out that long-term stability in management provides strength strategically as well as operationally.
Surprisingly to some, many family firms report that as the economy contracts, they actually see opportunities in the market. They see long-term opportunities where investor-owned firms see short-term peril.
Generational Ties
The family firm that has been in business for two or three or more generations has a history that they are able to pass down. Each generation passes down the lessons learned including how to prepare and prosper during downturns in the economy.
Many family business legacies include the tales of hardship and struggles of prior generations. They take these lessons and learn from the bad times and prosper during the good.
Many are speculating that the economy is headed for a downturn. If we do end up in a recession, it will be family firms that continue to provide economic stability to the region.
Given that they are locally based, they will stay in the Commonwealth and provide stability. Some will fail; the majority will remain and continue to prosper.
The reality is that family businesses have already been here through the good times as well as the bad and will remain here for the long haul. More good news is that they tend to be the most loyal to their employees and provide the types of long term employment opportunities that create a strong economic base.
This is good news for our economic region and it is the type of publicity that family businesses deserve.
Clark is the executive director of the North-eastern University Center for Family Business. He can be reached at ted.clark@neu.edu.
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