Good news for families that run a business — you’re one of the most successful and trusted business types out there, according to a new report from Ernst & Young, a business management company.
“Family businesses and their leaders are the ultimate entrepreneurs,” said Carrie Hall, the family business leader at E&Y. “They must continually innovate to grow and pass on a thriving business from one generation to the next. Our survey demonstrates how this entrepreneurial thinking across generations results in business success and strong family ties.”
The report, which surveyed 25 of the largest family businesses from across the world, found that 76 percent of family owned businesses market their company as family owned because they want to establish trust with the consumer.
And apparently it’s working. The Harvard Business Review reported that family businesses are still the most trusted type of business across the world because the “family business” marketing moniker helps the company “identify, differentiate, and build trust with customers and employees.”
HBR cited a report from Family Business Magazine that said 60 percent of Americans prefer to buy products from family owned businesses.
This isn’t always the case, though, as distrust for family businesses has crept up in recent years. For example, developing countries across the world have grown a distrust for newer family businesses over concerns about their lack of history and credibility, HBR reported.
“Companies in younger economies generally do not yet have a storied legacy on which to draw,” HBR reported.
That’s why it’s important for family owned businesses to establish trust from the beginning. The University of Massachusetts Amherst’s Family Business Center recommends that family businesses be honest from the beginning about the realities of their company when they’re working with a new client, even if that means the client may not stick with the business.
“Some of the tools for trust building are honesty — even when that means airing a troublesome and potentially dangerous issue-inquiry and curiosity, coping with difficult interactions, and caring about both parties in the discussion — looking for the win/win instead of the win/lose outcome,” Shel Horowitz wrote for UMass.
Family members who work together in a family owned business should also trust each other, which will show customers that trustworthiness is a valued quality by the business, according to columnist Chuck Gremillion of the International Reprographic Association.
Family members can build that trust by sharing ideas, opinions and plans with each other to create that trusting bond, Gremillion wrote.“Family businesses start with an inherent advantage because family members typically know and trust one another,” he wrote. “The key becomes to build upon that trust and never breach it.”