Close to one third of owners state that they are NOT satisfied either with the rates of growth, or the current size, of their businesses.
The average rate of growth in sales over the previous three years is about 16% (median of 10%; range minus 25% to 300%) compared with 10% for the study in 2003.
It is interesting to note that approximately 20% of the 2006 BRW Fast100 growth companies identify themselves as family-controlled entities, most of which were established within the previous 10 years.
Within this context, Zahra (2005) reported that family involvement in the business can promote entrepreneurship, whereas long tenure of CEO founders tends to stifle entrepreneurial flair geared towards growth.
Family versus non-family firms
A range of organisational characteristics (e.g., business planning; family organisation and governance) and ownership factors (e.g. business objectives; culture) has been found to influence organisational performance in both family and non-family firms (Aronoff, 2004).
Although a number of investigations of organisational performance report non-significant differences between rates of growth of family versus non-family firms, the present investigation reveals some interesting findings.
In comparison to non-family enterprises:
- A higher percentage of family firms are satisfied with their size - 68.7% (54.5% for non-family businesses) and growth rate - 66.8% (51.9% for non-family businesses). However, fewer family firms, 52.7% (72.15% for non-family businesses) wish to become major players in their industry.
- A higher proportion of family firms plan to achieve growth by increasing profit margins - 19.6% (15.2% for non-family businesses).
- Less than half as many family firms plan to achieve growth through joint ventures - 3.1% (7.1% for non-family businesses).
For both family and non-family enterprises, the three prime strategies for achieving growth are through increasing sales, increasing profit margins, and via new product/process development. Almost 9% of family enterprises (versus 2% for non-family businesses) are NOT planning to grow (Table 8.1).
Please note that in the body of this Article, except in Tables and where the context makes it clear, statistics for non-family business owners are included in parentheses.