Research - 09.01.2013 - 00:00 

Success of entrepreneurial families

A study by HSG’s Center for Family Business found that critical factors of family-business success are innovation strength, multiple businesses, classically invested personal assets and an entrepreneurial focus.


10 January 2013. For the lasting preservation of financial and non-financial values in entrepreneurial families, four elements are especially important: the entrepreneurial focus of the family and the company, enterprises beyond the family business, the management of the family’s financial resources and the establishment of a “single family office” (SFO). The CFB-HSG and Credit Suisse study was based on responses to questions from 300 owners of large family businesses and additional interviews with owners of SFOs.

Entrepreneurial power of families
It turns out that successful entrepreneurial families seek innovation, growth and a willingness to change with foreseeable risk. But they only risk as much as they can afford to lose. The family’s strong emotional attachment to the business also strengthens the entrepreneurial spirit. In addition, entrepreneurial families’ companies maintain a calculated balance between caution and risk, while focusing on research and innovation.

The study shows that entrepreneurial families have very high corporate power: on average, they own almost 10 companies, although one third of the entrepreneurial families own only one company. In the history of entrepreneurial families, an average of 7.6 business were founded per family, 7.4 were purchased and more than two were closed or sold.

Trust trumps expert knowledge
Apart from investment advisers, the chief financial officers (CFOs) of the largest company in family portfolios are the most trusted asset managers. “It is especially important to the entrepreneurial families to know that their personal assets are in the hands of an absolute confidant. They may even be prepared to lower their sights regarding core competency,” says Professor Thomas Zellweger, a co-author of the study. It is important that family capital gets invested in classic investment categories.

If the private assets are very large, the establishment of a SFO can be useful. It is characterized by a strong involvement of the family that makes most of the important decisions. The SFOs in the study are mostly relatively young organizations with an average of fewer than four employees. These small teams work on selected core tasks. SFOs should ask themselves what they could do better or cheaper than others and which tasks they should outsource. One disadvantage: the cost of establishing and maintaining the SFO is high.

Bild: Photocase / Juliaw

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