Long-term planning brings family-run firms success

Swiss army knives by Victorinox, still a family business Keystone

A high equity ratio and long-term planning are two factors in the success of Swiss family-run businesses, a study has found.

Family businesses employ 60% of the workforce in Switzerland and are responsible for two thirds of the Gross Domestic Product, a report by the Lucerne University of Applied Sciences stated. But only a quarter survive into the fourth generation. Household names include Victorinox, Kambly and Bernina. The medal company Pestlaozzi is currently being run by the 9^th generation. It was founded in 1763. 

Two researchersExternal link from the Institute of Business and Regional Economics have been looking into 13 well-run family firms to find out more about their success factors. 

They found that key drivers of longevity were unity, professionalism and the ability to learn. Families that showed they could learn were able to find a balance between stability and change. They honoured the past but did not shy away from breaking with tradition in the interest of the company and family, the researchers found. 

Unified families had common goals and focused on the wellbeing of the company. These firms were able to invest quickly – without third party intervention – thanks to their high equity ratio. Their long-term outlooks allowed them to support research and development projects over several years, which non-family corporates often avoided, a statement released on Friday saidExternal link. 

The study offers nine recommendations on how owners can best manage themselves, for example through supporting good coworkers and starting the search for successors early. 

According to bank Credit Suisse, Swiss companies with family shareholders are more attractive for investors than other types of firms. The Swiss Family Business Model study published in AugustExternal link found that they had been doing an average of 9% better on the stock market than non-family firms.