Family businesses are vital to our nation’s economy and employ more than 50 per cent of the Australian workforce. Yet, only a small proportion of family-owned businesses survive beyond the second generation and just a trickle manage to trade continuously for four or more generations.
In the research for my book, Family Business Success Stories, I discovered how eight of these “stayers” successfully navigated through generational transition, economic downturns and natural catastrophes provides valuable lessons for owners and operators of all SMEs. Between them, they have accumulated more than 1100 years of knowledge.
All eight businesses, the Lionel Samson Sadleirs Group, Coopers Ltd, Furphys, Dymocks, the Brown Family Wine Group, A.H. Beard, Bulla Dairy Foods and Haigh’s Chocolates began in humble circumstances – a shed, backyard, shop, small farm or even the family kitchen. They have all faced two World Wars, the Great Depression of the 1930s, several recessions, a technology revolution, the Global Financial Crisis and ongoing worldwide instability. Some have also overcome setbacks including devastating family tragedies and natural catastrophes such as floods and droughts.
Resilience, perseverance and adapting to change
No business is immune from political and economic turmoil, natural catastrophes and family tragedies. Resilience is an essential characteristic of all small businesses, whether family-owned or not. To protect their employees from the worst effects of the Great Depression of the 1930s, Coopers Limited retained all employees by having them work alternative weeks, minimising plant maintenance and reducing family shareholder benefits. A.H. Beard recycled mattress filling by collecting it, pulling it to pieces and boiling it to avoid having to purchase new materials. Haigh’s Chocolates reduced the production of their expensive chocolate boxes and increased the production of cheaper items such as their famous penny chocolate frogs.
When Lionel Samson established his trading business in 1929, his goods could only be brought in by ship. In the almost 200 years since then, the movement of goods across Australia has changed dramatically, with the introduction of rail, motor vehicles and planes, sophisticated packaging, information technology and massive increases in population. As the first holder of a liquor licence in Western Australia, the business has also seen a complete transformation of the beer and wine industries. Lionel Samson & Son could not possibly have survived as auctioneers, merchants and shipping agents. The Lionel Samson Sadleirs Group has successfully reinvented itself, comprising rail and road transport services, packaging and Plantagenet Wines.
Learn from your mistakes
Successful family businesses learn from the bad times as well as the good times. They may have made errors of judgement, including inappropriate acquisitions and unsuccessful attempts at diversification – some have had ‘near death’ experiences, where total collapse was imminent – but they retained a common belief that they would find opportunities with every setback and they grasped these.
Don’t work in isolation
The eight successful multi-generational family businesses I researched have much more in common than resilience, perseverance and their approach to change and setbacks. Their approaches to governance and succession planning are remarkably similar, and they create an atmosphere of mutual respect between the family and their employees.
When their businesses began more than 100 years ago, the founders were working in isolation. They were, for the most part, self-taught and had few, if any, mentors. Today’s new and emerging small businesses have access to the accumulated knowledge and experience of numerous successful businesses. Don’t work in isolation when you don’t need to. Learn from other family and small businesses by talking and reading. Subscribe to business blogs and become involved with business organisations that provide professional development.
Graeme Lofts, author of “Family Business Success Stories”