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What You Can Learn From Family Business

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What You Can LearnFrom Family Business "Harvard Business Review"
iris221293
Mind Map by iris221293, updated more than 1 year ago
iris221293
Created by iris221293 over 6 years ago
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What You Can Learn From Family Business
  1. Family Business
    1. focus on resilience more than performance
      1. forgo the excess returns during good times
        1. invest with a 10- or 20-year horizon
        2. Seven differences in their approach
          1. 1.- They’re frugal in good times and bad
            1. don’t have luxurious offices
              1. keep their expenses under control.
                1. have leaner cost structures
                  1. 2.- They keep the bar high for capital expenditures
                    1. judicious when it comes to capex
                      1. capex investments have a double hurdle to clear
                        1. a project must provide a good return on its own merits
                          1. judged against other potential projects,
                        2. " we do not spend more than we earn"
                          1. 3.- They carry little debt
                            1. associate debt with fragility and risk
                              1. debt means being beholden to a nonfamily investor
                                1. 4.- They acquire fewer (and smaller) companies
                                  1. acquisitions worth 2% of revenues VS nonfamily businesses acquisitions worth 3.7%
                                    1. prefer organic growth (partnerships or joint ventures ) vs acquisitions
                                      1. favored smaller acquisitions
                                        1. 5.- Many show a surprising level of diversification
                                          1. 46% highly diversified VS 20% of the comparison group
                                            1. diversification key to protect the family wealth
                                              1. 6.- They are more international
                                                1. ambitious about their overseas expansion
                                                  1. on average 49% of their revenues come from outside their home region
                                                    1. 7.- They retain better talent that their competitors do
                                                      1. 9% of the workforce turned over annually VS 11% at nonfamily firms
                                                        1. extol the benefits of longer employee tenures
                                                          1. they create a culture of commitment and purpose
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