Family Enterprise of the Year Award finalists share insights for long-term success of their business family
Family enterprises generated almost half of Canada’s private sector GDP and almost seven million jobs in 2017. These statistics are part of a recently released white paper, Family Enterprise Matters: Harnessing the Most Powerful Driver of Economic Growth in Canada, produced by the Family Enterprise Xchange Foundation (FEX-F) based on Conference Board of Canada research.
To Jim Burton, chair of the FEX-F, the numbers clearly show that family enterprises are a main driver of economic growth in Canada. “Whether it’s the corner coffee shop or the manufacturing plant at the edge of town, family enterprises contribute to employment and economic growth while also impacting the overall social well-being of their community,” he says. “Family enterprise matters, family enterprise advice matters and family enterprise research matters.”
Until now, most information forming the basis of advice for family enterprises came from anecdotal evidence or European and U.S. studies, explains Mr. Burton. “With our research, we hope to provide information and guidance for family businesses, the adviser community and policy-makers.”
In the past, federal or provincial governments sometimes made decisions without fully understanding the needs of family enterprises, and policies created unintended consequences, he says. “Better information can lead to better decision-making and ensuring that policy helps to advance this important part of our economy.”
Canadian research can also further the exchange of learning with the international community, says Mr. Burton. “Family enterprises are important across the globe. While they face similar issues everywhere, there may be approaches that are unique to their jurisdiction, and we want to learn from their best practices and experiences.”
FEX is committed to providing business families with leading-edge thinking, knowledge and advice, he says. “In our view, it is critical that advisers are trained to provide family-centric advice and that business families are aware that they need advisers who understand their unique needs.”
Family enterprises can draw on unique strengths, says Mr. Burton. Among the business metrics where family-owned firms outperform their counterparts is longevity, with data showing that 70.1 per cent of Canadian family-owned enterprises in operation in 2007 were still in business in 2013, compared to 65.2 per cent of other firms.
Among the reasons family enterprises outperform their counterparts on longevity is a commitment to the family’s core values, he says. “In addition to economic success, family enterprises consider their continuity and legacy as important – which may differentiate them from a company that is more focused on quarterly earnings.”
But family enterprises also face unique challenges, says Mr. Burton. Take the topic of continuity, for example, which is gaining more prominence as the boomer generation heads into retirement. Planning for continuity and involving the next generation affect not only the business but also family dynamics.
Skilled advisers can help to explore a range of options in addition to traditional succession, he suggests. For example, enabling the next generation to start their own enterprise as “intrapreneurs” or involving them in philanthropic endeavours via the family foundation can allow them to advance the family legacy without joining the original business. “Advice for family enterprises has to consider family issues in addition to business issues – and that takes a special level of knowledge,” he adds.
By obtaining the Family Enterprise Advisor (FEA) designation, advisers can develop deeper relationships with their family enterprise clients and gain a broader perspective of the issues business families face – including generational transition.
When family enterprises succeed, everybody wins, says Mr. Burton. “That’s when they can sustain a multigenerational commitment to job creation and to the social cohesion that builds community and national prosperity.”
For more stories from this feature, visit globeandmail.com