The vital entrepreneur: high impact at its best
The strength of resilience
Family businesses, which make up about 25% of our finalists, are different from the rest. Although they are innately conservative, they show that it’s possible to be both strategically conservative and a high-impact entrepreneur, a combination that reflects one of their most important attributes: astounding resilience.
With their self-reliance and middle-of-the-road growth strategies, they are able to survive nearly any crisis — economic or otherwise. Stability and continuity are further differentiators of family-owned companies.
And these traits are important to more than just the family. Those family roots often anchor the communities in which these businesses operate, encouraging their employees to be engaged as well.
Taking the longer-term view
Unique among all of the finalists is the very long-range (sometimes generation spanning) planning that a family business structure allows and often requires.
They are most often private companies, free from many of the short-term pressures of the public markets. They are stable and battle-tested, and they know that tough times (and good times) never last.
This long-range view affects all of their decision-making, from spending to growth to succession planning.
For instance, 61% of family-owned finalists report funding their companies through bank loans, and 58% through re-invested earnings, while 2% use VC and 12% use PE. They manage growth relative to their cash flow and keep a pace of sustained moderate growth over many years. Their median revenues, EBIT and employees are larger than the overall group, but their corresponding growth rates are lower (though still in the double digits).
They also tend to limit themselves to traditional bank funding in order to avoid the dilution of ownership that comes with other forms of capital-raising. Even so, more than half reported no obstacles to raising capital.
This is almost certainly because they rely more heavily on internal funds for expansion, as well as the confidence that banks have in their financial stability and long-term prospects, which promotes greater lending — even in down markets.