The Keys to Family-Owned Businesses Driving Double Digit Growth
According to the EY Growth Barometer, family-owned businesses have outperformed non-family companies since 2006. Thirty four percent of family businesses are targeting double digit growth rates, compared to only 26% of non-family businesses.
Whatâ€™s the secret behind family businesses growing faster than their peers?Â
On this episode of â€œThe NetSuite Podcast,â€� Oracle NetSuiteâ€™s VP of Field Engagement and Marketing, Ranga Bodla, answers that and more, diving into the impact family businesses have on the American economy, how these types of companies have changed over the years and the trends weâ€™re seeing helping them succeed in the world today. You can listen now on Apple Podcasts, Soundcloud and YouTube.
Bodla also discussed these topics in the blog post below with three leaders of family-owned businesses: Tommy Thwaites, President of coffee roaster Coda Coffee, Devin Becker, Vice President of Becker Safety and Supply, a distributor, and Jason Kencevski, CEO of Speedmaster, a car parts manufacturer.
Investing in Talent
Family businesses focus more on talent as a growth mechanism compared to their peers. This manifests itself in a number of different ways. At Coda, Thwaites invests in systems that allow his employees to work remotely.
â€œAs long as weâ€™re growing, and expectations are met, itâ€™s more motivating for employees to have a better workplace and enjoy what theyâ€™re doing,â€� he said. With the help of NetSuiteâ€™s cloud software, Coda sales reps can access anything they need â€“ from financials to customer data â€“ anywhere, in real time. â€œThis maximizes everyoneâ€™s family time.â€�
Becker remains focused on two top priorities: company culture and customer service. â€œRelationships are a huge part of the reason weâ€™ve been so successful in our market. We treat people with respect and we care about them. Theyâ€™re not just a number,â€� Becker said.
To maintain the unique Becker company culture, the company maintains a thorough and lengthy interview process to ensure itâ€™s hiring the right people with the same mission and values as the family business. In turn, this translates to a consistent customer experience. As Becker sees little turnover, customers interact with the same employees over and over, building better relationships and ultimately driving superior customer service.
Speedmaster also places a major emphasis on investing in the right people and empowering employees. This means everyone at the company is working on something important.
â€œWe offer interns the ability to work on products they normally wouldnâ€™t be able to work on. Interns donâ€™t go to Tesla and work on the most important part of the car,â€� Kencevski said. â€œThey will at Speedmaster. Within six months, interns will be handling a product that could potentially win a Golden Globe or Oscar-level automotive award.â€�
In addition to giving all employees large responsibilities, Speedmaster focuses on creating a trusting culture where employees have the confidence to try fresh ideas without fear of messing up or being reprimanded. This leads to innovation across the company and the products.
â€œTrue innovation stems from a good culture,â€� Kencevski said.
Using Technology to Scale
While all three family businesses have very different products and business models, the trio agrees that the right technology is a fundamental to business longevity.
Speedmaster has always been an early adopter of technology, sometimes learning at its own expense.
â€œWe tried SAP before we started [with NetSuite] and we had a hard time moving from handwritten documents to a system that works, because it just didnâ€™t work,â€� Kencevski said. â€œItâ€™s not fair to generalize technology. Technology is out there, but not all of it works. When you find technology that does work, then you can scale.â€�
Speedmaster uses NetSuite to innovate every area of the business, from the products it manufactures to marketing to IT infrastructure. Key to the business, NetSuiteâ€™s ecommerce solution, SuiteCommerce Advanced, has improved Speedmasterâ€™s omnichannel presence, providing a more transparent, seamless experience for its customers.
â€œStay ahead of the curve with technology,â€� Kencevski said. â€œTechnology doesnâ€™t put you ahead, but itâ€™s the only way to stay ahead. Itâ€™s made us different by providing more data, more information and more transparency so much quicker to customers, resellers and suppliers.â€�
Becker Safety and Supply went from handwriting invoices and using QuickBooks and Fishbowl to fully automating the business and eliminating repetitive manual processes with NetSuite in 2016.
â€œI was frustrated with the amount of time it took to do things. We spent so much time fixing broken systems that we couldnâ€™t grow and scale,â€� Becker said. â€œNetSuite is the main reason weâ€™ve been able to grow and scale as fast as we can, and we have been.â€�
Becker moved into ecommerce to maintain consistency between in person, in store, online and phone orders.
â€œWe always need to know whatâ€™s going on with [a customerâ€™s] account every time and any way they interact,â€� he said.
In Beckerâ€™s instance, technology is a competitive advantage, as most of its competitors still use fax machines.
Echoing Kencevskiâ€™s sentiments, Codaâ€™s Thwaites says that it is important to recognize that if you have the wrong technology, you need to move on and try new things â€“ even if itâ€™s painful.
â€œA lot of people will stick with the wrong technology and keep spending the money because theyâ€™ve already sunk so much into it,â€� he said. â€œYou need to just cut your losses and try something else.â€�
For many family-owned companies, scaling the business means going international. In Speedmasterâ€™s case, the company decided to move its headquarters from Sydney to LA to establish a global presence and to be able to ship from America to the rest of the world in a shorter time frame than from Australia. From there, Speedmaster also expanded to China.
â€œAt the time, moving to China was the only way to scale further. America and Australia didnâ€™t have as many opportunities for automotive,â€� Kencevski said.
Today, the company is in talks with Michigan and Texas to bring manufacturing back to the US. For Speedmaster, the decision to go international was a no brainer.
â€œYou stand out a lot when you have multiple locations and youâ€™re an international brandâ€¦The world has become a lot quicker and more connected,â€� Kencevski said. â€œThe speed to market needs to be a lot quicker. With technology and supply chain, you can connect China, America, and Australia in a global supply chain, easier and quicker than ever before.â€�
Speedmasterâ€™s business continues to evolve, but the main focus remains developing an innovative culture and innovative products.
â€œWe try to push innovation to make sure our products are very successful and popular,â€� Kencevski said. â€œWe have seven or eight patents and we design products that give us a longevity of at least 5 â€“ 10 years to ensure that we have a good income stream in the short to medium term.â€�
For more recommendations for differentiating your family business, access the on-demand webinar