Most people think of Walmart as a corporate giant, but it’s also the biggest family-owned business in the world, highlighted recently by the Global Family Business Index. Family-owned businesses make up 80 to 90 percent of companies worldwide. One third of S&P 500 companies and 40 percent of the 250 largest companies in Germany and France are family-owned, according to McKinsey & Company, which has analyzed the characteristics of enduring family businesses. Here are a few case studies that illustrate some of the qualities that make certain family-owned firms so successful.
Chex Finer Foods
Massachusetts-based Chex Finer Foods was selected as a case study for a Bryant University Project to identify best practices of family-owned businesses. Founder Jay Isenberg was 55 with years of sales experience in the specialty food business when he decided to purchase a small food distributor. Jay’s wife Dorothy, their son David, and one other employee helped start the company out of the family garage. By 1970, Chex Finer Foods had outgrown its original facility twice.
Jay’s sales skills helped win new clients. David took over back-end operations. With an emphasis on quality products and service, Chex Finer Foods carved out a strong specialty foods niche reputation. The company expanded by offering private label products and by prioritizing sales representative training.
When Jay passed away at 86, David assumed leadership. David’s sons Jeremy and Michael later modernized the business, updating the company’s computers, budgeting, positions, and logo.
Chex Finer Foods embodies several best practices of family-owned businesses. These include having a survival mentality adaptable to changing situations, succession planning, delegating distinct roles to family members, and being professional while maintaining a family-oriented focus on people. Today the company continues to thrive by serving the needs of independent specialty and natural foods retailers in the Northeast, providing exceptional service, high-quality products, and customized sales programs.
Nebraska-based sporting goods supplier Cabela’s was born in 1961 when Dick Cabela started using local classified ads to resell fishing flies he had purchased. Scaling up to national outdoor magazines brought more sales. Dick and his wife Mary ran operations from their kitchen table with the help of temporary typists, joined by Dick’s younger brother Jim in 1963. By 1964 they had moved into the basement of Dick and Jim’s father’s furniture store. All profits went back into new mailings, updated equipment, and larger facilities, and by 1969 Cabela’s occupied a 50,000-square-foot building.
Each customer’s order was shipped with a catalog advertising other products, building repeat business. Cabela’s also built its brand by giving its retail locations distinct appearances to appeal to outdoors enthusiasts.
The rise of the Internet in the 1990s expanded Cabela’s catalog sales outreach exponentially as its website became an e-commerce store, offering everything from sporting goods and equipment to clothing. In 2004, the company went public, and today Cabela’s is a multi-billion dollar company. Cabela’s remains successful because it has adapted its mail-order strategy to the Internet while continuing to follow its founder’s family-centered policy of putting people first.
One of the one hundred oldest companies in America, glass and ceramics manufacturer Corning is now in its fifth generation of ownership by the Houghton family. Corning was started in 1851 by Amory Houghton as a Massachusetts glass works company before it moved to Corning, New York in 1868. In 1879, Thomas Edison asked Corning to produce glass bulbs for his new incandescent lamp. Corning soon created a way to mass-produce the bulbs at an affordable price, revolutionizing lighting.
This began a long history of association between Corning and technological innovation. Corning opened the country’s fourth industrial research lab in 1908 to develop glass technology. Since then the company’s contributions have included traffic lights, Pyrex cookware, the mirror for Mount Palomar’s Hale Telescope, TV tubes, CorningWare glass ceramics, glass for every manned American spacecraft built since 1961, and fiber optic cable.
Today Corning is the world’s top manufacturer of fiber optic cable, and the Houghton family retains about 2 percent ownership of company stock, with James R. Houghton recently retiring as chairman of the board of directors. Corning has continued to thrive under the Houghton family’s leadership by staying on the cutting edge of technological innovation.