By Richard M. Segal
Isn’t it amazing that when the term “family business” is used it conjures up images of mom and pop operations like the corner party store or dry cleaner? For those of us who work with family firms, we know that the images couldn’t be further from the truth. Another image that always seems to go with “family business” is dysfunction - both in the family and in the business. Again, it couldn’t be further from the truth.
Certainly, some family businesses have their turmoil and qualify for soap opera status, but they are not the norm - they are the exception. In fact, family businesses do grow up and become a large part of the Fortune 500. While I’m not a big one for lists, they do sometimes tell a story.
Even though I doubt that the 2008 Fortune 500 is still accurate (as some of the high-ranking companies aren’t even around now), that in itself might be an indicator of the depth of our ailing economy.
Most lists rank size based on revenues and that can be misleading. Perhaps there are other better indicators like number of employees, profits, ROI or net worth, but revenue has always been the gold standard for such lists.
Family Business Magazine occasionally publishes a list of the largest family businesses in America based on revenues. The Winter 2009 issue of the magazine has a current list - it was last published five years ago. It is always interesting to see what household names make the list, but before we look at them, let’s be clear on the magazine’s criteria. In order to be on the list the following conditions must be met:
-¢ A single family controls the company’s ownership.
-¢ The controlling family’s members are currently active in the top management.
-¢ The family has been involved in the company for at least two generations - or seems likely to be. Note that these businesses can be publicly traded as long as the family controls ownership, like Ford Motor, where the family controls some 40 percent of the voting stock. Speaking of Ford, isn’t it interesting that they seem to be the strongest of the Big Three these days. Who would have thought that it is the family business that isn’t looking for the “bailout” (at least not yet)?
Besides Ford (2), here are some of the other household names on the Family Business Magazine list with their ranking in parentheses: Comcast (7), General Dynamics (8), Bechtel Group (9), Tyson Foods (10), Mars (12), Murphy Oil Soap (15), The Gap (18), Fidelity Investments (21), Meijer (22), Marriott International (25), Enterprise Rent-A-Car (28), Masco (23), The Trump Organization (32), Nordstrom (35), S.C. Johnson & Son (38), EstÃÂ©e Lauder (40), Gordon Food (48), and Kelly Services (49). That’s in the top 50. An impressive list, wouldn’t you say? Consider, too, that what is a household name in my house, might be different in yours.
Here are a few more out of the next 50: Kohler (52), H & R Block (59), Hallmark (60), The Washington Post (61), Levi Strauss (62), Hasbro (65), Perdue (71), The New York Times (76), E & J Gallo (85), J.M. Smucker (91) and Mary Kay (100). Many other companies on this list would be familiar by their key products or service, but perhaps not by their company name like News Corp (6) that now publishes the Wall Street Journal.
The revenues of these 100 companies have a ceiling of $378.75 billion to a floor of $2.25 billion.
Have you noticed a company missing? Number one on the Family Business Magazine list is also number one of the Fortune 500. Imagine that - the largest business in the country, perhaps the world, is a family business. One more hint - America shops here!
It’s Wal-Mart, of course. And while many might take issue with the retailer’s business practices, no one can argue its success. The Walton family remains largely very private, but the strategic plan of founder Sam Walton for a discount retailing mega-store phenomenon remains hugely public.
Family businesses grow up to become leaders in their fields and fierce competitors with their non-family peers. Imagine that Ford actually picked up market share in the fourth quarter of 2008! In fact, Wall Street has often pointed out some of the advantages that family firms hold over their competition: speed in decision making and action, long term thinking and patient capital (a willingness to wait for a return on investment).
You may notice in the Family Business Magazine list that the companies represented are a cross section of the business world - from manufacturing to cosmetics, from construction to food service, from investments to journalism and hospitality to retail. Not only do family businesses transcend the business spectrum, but they compete well everywhere.
Yet, somehow there is this collective lack of self esteem among family firms. It is almost as though they whisper, “We are a family business.”
The value of the list is that family businesses should not whisper, but shout with pride that they are a Family Business, much like S.C. Johnson & Son, which concludes its TV ads with the tag line, “A Family Company.” The maker of products such as Windex, Glade and Pledge thinks being a family owned and managed business is a strong selling point and they boast about it. So does Ford with the iconic simple blue oval logo that simply says, “Ford.” Clearly these family businesses think the fact that they are family businesses is an advantage, not a curse.
You should too.
When you position your family’s involvement in your business do it not with a whisper, but rather with a Bang!
Richard Segal is the chair of the Family Business Council, a membership organization of family owned businesses. He can be reached at [email protected].