Access to labour and capital
Multi-generational family businesses have access to a pool of family members that tend to be more loyal and more committed to the business. Another interesting advantage of being a family in business is access to capital from within. We all know getting a bank loan comes with a number of financial restrictions and can often entail a long and tedious process. However, families in business have the additional option of turning to one another for financial support in times of need. More often than not, if family members can help, they will, and this can lead to a major advantage over the competition.
This reminds me of a client that was over-leveraged and could not get additional funds from the bank. Turning to his family for help, he was shown an unbelievable outpouring of support—some remortgaged their homes to put money back into the business, while others who were employees refused their salaries. This support allowed the business to not only survive the next few years, but really thrive. This company is now successful financially and in managing their family component. The third generation is currently leading the business, while the fourth is being groomed to take over in the future.
This family business made it through a difficult time thanks to the support provided by family members. However, many of its competitors were unable to do the same, as they did not have the option of turning to family for help. The competitive advantage of being a family in business is pretty clear in this respect.
