Today, with the world at such an uncertain point, we look towards something almost like a port in a storm. Stability, consistency and a reminiscence of a prior time can give us a belief in a future of stability.
In America, we grew up with local businesses where at least one was known to be passed down from generation to generation. It could be a restaurant, bakery or an automotive repair shop. Family businesses represent 59% of today’s private workforce but have been struggling to hold on after COVID-19 and the recent surge of inflation. When surveyed in 2022, American consumers have found to trust locally-owned and family-owned businesses compared to franchises. Though most people favor family-owned and local businesses, not many people know that some of our biggest companies are in fact family-owned businesses. We view family-owned businesses as the small coffee shops that are right around the block, but most of the biggest U.S. companies are family-owned businesses.
Editorial Director at Camden Wealth Nicholas Moody said, “Most people don’t realize that family businesses are actually the engines of economies. For all the noise and razzle-dazzle of public companies, it is actually family businesses that have the power,” as he discussed the benefits and importance of family businesses worldwide. In many ways, he is entirely factual. Around 90 percent of the world’s economic growth is contributed to by family-owned businesses.
In developing nations, family businesses have become the ones that matter most to their economy. In India, one of the most successful developing nations with one of the densest populations in the world currently, have found that family firms make up around 90 percent of their industrial output and 27 percent of their employment. This was back in 2014, and now they contribute 79 percent annually to the national GDP of India.
As there is a trend with family businesses that are on the rise for many emerging economies, it has been found to create sincere stability in their business, allowing them to influence the more general economy. In developing nations, there is a higher likelihood of the business remaining within the family, becoming a social identifier for the family in many different cultures.
Due to their rapid growth rate, the ability to stay within the family creates stability for emerging economies, and family businesses are more likely to experience rapid growth, with 57 percent in China, and 40 percent in India and the Middle East before COVID-19. Another reason they are helpful to emerging economies is the higher likelihood of them branching out into other areas of business, which allows for the creation of cash flow in these economies.
Finally, the emergence of family businesses creates the knowledge of being in it for the long run. Most family businesses in emerging economies are still developing business strategies decades after beginning, creating the ability to become adaptable when tides could be continuously changing.
Family businesses have much more influence and impact than many Americans believe they do. Emerging economies have begun embracing business and family, making it a benefit that will positively impact the rest of their community, providing better lives for everyone.
