Why Family means Business
09 Oct 2017
The Advantages of being a Family Business...
by Mark Hutchinson
Most of you know that Hutchinson Engineering started back in 1970 by Creighton Hutchinson and most of you know that he is my Dad and a big part of the reason that we are the company we are today. Dad was 70 this month, we celebrated as a family and we celebrated as a company, no one wanted to miss out on honouring him and of course having some fun in the process.
It's been well documented that there are advantages and disadvantages to growing a family business, on the whole we believe it's been good for us and good for our customers. Successful family businesses are a win/win. They benefit both the local and global economies, and in a big way. We think we have our own set of unique advantages but don’t take our word for it, here are some thoughts from Reg Athwals book: Unleash Your Family Business DNA.
- Stability: Family position typically determines who leads the business giving us longevity in leadership, which delivers stability within the team.
- Commitment: Since the needs of the family are at stake, there is a greater sense of commitment and accountability. This level of commitment is almost impossible to generate in non-family firms. This long term commitment leads to additional benefits, such as a better understanding of the industry, organization and job, stronger customer relationships and more effective sales and marketing. Hoshi Ryokan, a Japanese inn keeping business founded in 718, is said to be one of the oldest family businesses in world. Family members have operated the business for 46 that’s right, 46 generations. That level of family commitment has led to an understanding of the business that outsiders, or those relatively new to the business, simply wouldn’t be able to replicate. Ford Motor Company managed to stay afloat during very difficult economic times, when other companies, such as Chrysler and GM, were begging for bailouts. Why? I’m sure when all is said and done there are several reasons, but I don’t think it’s any coincidence that Ford’s family name was literally on the line.
- Flexibility: You won’t hear, “Sorry, but that’s not in my job description” in a family business. Family members are willing to wear several different hats and to take on tasks outside of their formal jobs in order to ensure the success of the company. Estee Lauder, who led one of the world’s most famous family businesses and was the only woman on Time magazine’s list of the century’s business geniuses in 1998, said of her company’s success, “I have never worked a day in my life without selling. If I believe in something I sell it, and I sell it hard.” Lauder did everything from cooking up pots of face cream to personally giving free demonstrations, from designing the packaging of her products to training the saleswomen who would sell them.
- Long-term Outlook: Non‐family firms think about hitting goals this quarter, while family firms think years, and sometimes decades, ahead. This “patience” and long- term perspective allows for good strategy and decision-making. In describing his reasons why he didn’t want to take his company public, Michael Otto, second- generation CEO of Hamburg, Germany’s $18.5 billion retailer Otto Group, said, “We don’t have to come up with a good story every quarter for the investors and the press.”
- Decreased Cost: Unlike typical workers, family members working at family firms are willing to contribute their own finances to ensure the long‐term success of the organization. This could mean contributing capital, or taking a pay cut. This advantage comes in particularly handy during challenging times, such as during economic downturns, where it’s necessary to tighten the belt or personally suffer in order for the business to survive.
We believe we have built a long-term vision for our family business that is compelling and gives purpose to why we are doing this, it’s grounded in our values, sounds like we are in good company!
Here’s to the next generation at Hutchinson Engineering…
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