Family businesses are resilient, responsible and regenerative. And they have navigated the uncertainty of the past few years with tenacity, agility and optimism. What is the secret to their success? And how are the leading family businesses reinventing themselves in dynamic and unpredictable environments?
To find out, KPMG Private Enterprise partnered with the STEP Project Global Consortium to survey nearly 2,500 family business leaders around the world (around a third were based in the U.S.). We then talked to dozens of leaders in the U.S. to hear from them directly about the opportunities and challenges they are facing as they encourage continuous renewal and performance in their family business.
So what are the secrets to the most successful family businesses? Our global research shows their long-term regenerative power comes down to their sustained spirit of entrepreneurship, transgenerational resilience and socioemotional wealth. And our data suggests U.S. family businesses are more focused on these drivers than most.
What this data tells me is that U.S. family businesses need to keep doing what they are doing. They need to continue encouraging an entrepreneurial spirit throughout the organization. They need to further develop and grow their family talent and participation in the business. And they need to remain true to their employees, their families, their stakeholders and their customers.
Brad Sprong, National Tax Leader, KPMG Private Enterprise
U.S. respondents were nearly twice as likely as their European counterparts to say they have a high entrepreneurial orientation. They were more likely than most to say they currently have multiple generations active in the business, including more women in leadership positions. And they were highly likely to rank their overall level of socioemotional wealth as medium or high. No wonder U.S. family businesses are demonstrating such resilience and capacity for reinvention.
What this data tells me is that U.S. family businesses need to keep doing what they are doing. They need to continue encouraging an entrepreneurial spirit throughout the organization. They need to further develop and grow their family talent and participation in the business. And they need to remain true to their employees, their families, their stakeholders and their customers.
Here, again, the survey is telling. U.S. family business leaders said they were more likely to focus on non-financial and employee performance dimensions than they were to prioritize financial and customer performance dimensions. Without investors baying to see short-term returns, family businesses can put their values, family and people ahead of financial results. And that has given them the resilience they need to perform in uncertain times.
The big challenge facing U.S. family businesses going forward will be in maintaining their focus on the things that made them successful in the first place. There are a lot of distractions in the world today. Some represent risks that must be carefully monitored and managed. Others are trends that may create opportunities for rejuvenation in the future.
Family business leaders will need to continue to take the current unpredictability in stride – working with the family, its advisors and its stakeholders to identify and understand potential impacts and, where necessary, adapting the business to respond.
On behalf of KPMG Private Enterprise, I would like to thank those U.S. family business leaders who participated in the development of this report. To learn more about the findings, or to discuss opportunities facing your family business, I encourage you to contact your local KPMG Private Enterprise office.
