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According to the Harvard Business Review, seven sustaining practices of family businesses include:
1. A lean operation-this means that the company is careful with their spending. Instead of spending profits on fancy offices, these type of operations tend to be frugal (thoughtfully spend) with their earnings in both good times and bad.
2. Spending restrictions on capital projects (projects that require significant financial ans manpower investment)–all projects are carefully assessed and prove that it is likely to have a good return on the necessary investment. In addition, before investing, potential investments are weighed against alternative investments and projects.
3. Carrying little debt–in order to make sure that the company ownership stays within the family the typical family owned enterprise borrows money conservatively (with low risk).
4. Acquiring fewer and smaller companies–growth comes organically, through patience and persistence of their own brands. They are more likely to develop partnerships and joint ventures instead of the risk of purchasing another brand.
5. Diversify–forty six percent of family businesses are diversified. This means that they develop multiple product lines across different industries to protect themselves during economic downturns (periods of decreased consumer confidence and spending). The theory is that if one industry is not doing well, another one should make up for the losses.
6. Are More International–by ambitiously entering foreign markets. However this growth is focused on steadily increasing market share over time and limiting the amount of the initial investment necessary to enter the market.
7. Retain Talent Better than Competitors–typically, family businesses invest in their people! People enjoy working for these companies because of the culture of commitment and purpose, reluctance to laying people off during downturns, and offering promotions to existing staff.
Some examples of large family owned businesses include:
Mars, Incorporated (McLean, VA)–Who doesn’t love Milky Way’s, Skittles, Snickers, Three Musketeers and M&M’s? Obviously a lot of people do! Last year, Mars employed 70,000 associates worldwide and sold more than 30 billion dollars in products (source mars.com). The business is still entirely owned by the Mars Family who value their privacy. They will not give press interviews and with the exception of one family member to be photographed in public.
Your quest is to post the name of a product that the Mars Family produces, and one fun fact that you learned about the company. (Only one post per product)
SC Johnson (Racine, Wisconsin) —Beginning as a parquet floor company in 1886, SC Johnson has grown to a global enterprise producing such products as Windex, Pledge, Ziploc, and Raid. SC Johnson boasts of a cool 7.5 billion dollar revenue stream from its operation of 12,000 employees.
Your challenge is to share a green tip from SC Johnson with your classmates. (Only one post per tip).
Do we have any class members whose family owns a business? If so, please share with the class.
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I agree that keeping up with market conditions is important if you’re willing to develop a successful business and stay competitive over the years. Also, Sales enablement with training courses can help you boost conversion rates and boost your sales team’s efficiency, so such solutions are definitely worth considering.
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