The Keys to Family-Owned Businesses Driving Double Digit Growth
Posted by Hayley Null, Manufacturing Industry Marketing Lead
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? In Part 3 of the Family Business series, Ranga Bodla, Head of Industry Marketing of Oracle NetSuite, sat down with 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, to discuss how theyâ€™re growing and differentiating their respective family businesses and outperforming the competition.
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.
To set your family business up for long term success, itâ€™s essential to mitigate risk and in turn, diversify your business. Becker has done this in a few ways. The company started out with a purely B2B model. Starting in a garage and experiencing massive growth, Becker moved to a warehouse to better sort product. Customers began to stop by the warehouse to make purchases, and now the warehouse functions as a traditional retail store and a training facility. Customers come to the Becker warehouse and host their own trainings, for free. For Becker, this is both a marketing tactic and a way to get customers in the door. Becker now considers itself a B2A (business to anyone) model. Additionally, Becker has recently moved into new sectors and broadened its service offerings. Historically serving the energy industry, Becker has more recently expanded into the construction and public safety sectors, as well as added embroidery services in house.
Coda started out as a sustainable coffee roaster, which at the time was rare. However, as other companies began to move into the space, Thwaites began to wonder: What are other things in the industry that are untapped? How do we get closer to customers? So, Coda moved to NetSuite OneWorld, established the Colorado location as a parent company and opened a second roasting location in Arizona as a child entity. Not many coffee roasters have multiple locations, and this additional plant led to substantial organic growth for Coda. From there, Thwaites started creating additional businesses that complemented the core business. Coda now offers corporate servicing for McDonaldâ€™s, Einsteinâ€™s and others.
â€œWe put Coda customers at the top of the list to get back up and running. We didnâ€™t want to outsource that,â€� Thwaites said.
Later, Coda moved into retail and started a franchising company to invest in one of its customers, Ziggiâ€™s Coffee out of Longmont, Colo. Coda is now the main supplier for Ziggiâ€™s, serving 18 open stores and selling to 30 total stores. Thwaites credits Codaâ€™s success to remaining in the sector but expanding its footprint.
“We stayed in coffee. We stayed ahead of the competition and grew the business because we donâ€™t have [just] one particular thing that weâ€™re good at,â€� Thwaites said. â€œWe have multiple legs to stand on no matter whatâ€™s going on the industry or the economy.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