November 13, 2017
The phrase “family business” makes some people automatically think of mom-and-pop stores in small towns. But as you probably know, family-operated companies include everything from husband-and-wife sole proprietorships to companies like Mars Inc., the candy bar and food product company that employs about 70,000 people. For a perspective of just where family business fits into the landscape of commerce and employment in America, look at these facts from a study at Kennesaw State University in Georgia.
The Oldest Businesses
The oldest American business on record was the C.P. Washburn Grain Co., of Middleborough, Mass., which began in 1632, more than a century before the U.S. became a nation. But Washburn lost its place as the oldest enduring business in 1998. That’s when Charles P. Washburn IV, the eleventh generation of Washburns to run the company, was unable to pay $120,000 in back taxes and the city of Middleborough forced the company to close its doors.
– Source: The Institute for Family Enterprise at Bryant University
Judging from these statistics, family businesses are the backbone of our economy. While studies indicate that 30% of family companies fail within 20 years, a large number of these businesses have endured for hundreds of years.
The Family Institute of Enterprise at Bryant University in Rhode Island recently compiled a list of the oldest family companies in America. The results of its study might surprise you. To be included on Bryant’s list, a business must still be operating in the state of its origin, and, if it has become a public company, the family must maintain meaningful control. Among the oldest survivors:
Other survivors with names you might recognize:
In an environment where an estimated three out of 10 family businesses fail within two generations, what is it about these companies that keeps them surviving? Size and name-recognition are not key factors. For example, look at the Barker Farm of Massachusetts, which produces apples and dairy products. Now in its eleventh generation, the farm has been operating since 1642, and has only one full-time employee.
Business historian Etna M. Kelley notes that a high percentage of family companies that survive supply basic needs, such as food. She points out that two of the most enduring businesses are those that service the beginning of life … and the end: seed companies and funeral homes.
Another basic need is provided by Levi Strauss, which started by making sturdy work clothes for the Gold Rush ’49ers. Also on the list of survivor companies are distilleries and breweries, such as Anheuser-Busch.
One factor that seems to be key among successful businesses: They exercise objective judgment in assessing their operations rather than making decisions based on emotion and tradition. That may mean appointing an objective advisory board made up of non-family members with a variety of business strengths, such as accountants, attorneys and bankers. While any business can benefit from objective oversight, it’s even more important for family companies that can get mired in personal issues.
Finally, it seems safe to assume that businesses that survive for any length of time have benefited from shrewd foresight. Planning for both economic downturns and for timely expansions has helped keep the doors of survivor businesses open through decades and even centuries.