Two of Australia’s big four in transport and logistics – Linfox and Visy – are family enterprises. The transport industry is dominated by family run businesses, and if Linfox and Visy are anything to go by, the model is incredibly successful. We take a closer look at the reasons why family businesses work so well and what the challenges are.
The demand for transport and logistics in Australia is dictated by the size and dispersed population of our country, and from colonial times and into the future the delivery of freight is crucial to our wellbeing as a nation.
No wonder that family businesses find fertile ground in transport sector. Lindsay Fox at 19, bought a single truck and changed the course of his family's history. So how do family businesses achieve success and longevity?
Gallagher National Head of Transport and MBA alumna Roz Shaw comes from a background of running her family’s transport business over 30 years and knows first-hand why the family business model works. She is also a former chairperson of Family Business Queensland and member of the Family Business Australia board.
“Family businesses outperform non-family businesses in several ways,” Shaw says. “They invest for the long term and are prepared to sacrifice short-term profits for a long-term gain which is more sustainable.
“They also have an edge over non-family businesses because they are trusted more by customers. They have skin in the game: their name is on the line so they make socially conscious decisions.”
What are the family factors for success?
Family Business Australia partnered with KPMG on an extensive survey of family businesses, which found there are identifiable characteristics shared by the successful respondents.
- a mature CEO (sometimes older is just better!)
- diversity in leadership governance team
- governance mechanism that facilitate agreement and communication
- competitive focus on what is happening outside the business
- having an entrepreneurial culture
- access to financial resources to fund strategy implementation.
Growth into the future
Shared values rate high across all businesses, from Linfox to Queensland-based Nolan’s Interstate Transport, and succession planning is an important aspect of how they transition into the future. Businesses that seek new opportunities are more successful than those which focus on maintaining their market position.
“You need to let the kids define what they want to do. That’s the most important thing,” Lindsay Fox says in an interview. “Then you need a unified position with everyone who is working within the family.”
Shaw says that it is important to ensure a family business is run on sound business principles. “That means family members working in the business are paid at market rates and must perform without fear or favour. This helps ensure both family and non-family members can grow in their roles with confidence that their ability will be recognised.”
Creating a positive culture
Family Business Australia has formulated 12 commandments for making a family business work.
- Leave work at work and home at home.
- Communicate. Don’t avoid bad news. Family members must be transparent about their intentions, motivations and reasons.
- Have clearly assigned roles for each family and non-family members.
- Pay the market rate. Remunerate the job, not the person.
- Develop a succession plan before you need it. Ensure it is endorsed by all involved.
- Develop a robust management structure for both business and family governance.
- Prepare the next generation.
- Use external advisers; they can be an objective sounding board.
- Undertake professional development to build lasting support networks and better manage business ownership transition.
- Enhance your family business brand. Research shows consumers have more trust in family businesses, so make sure they know you are family owned.
- Build your online profile. Customers expect to be able to access your business around the clock.
- Make philanthropy part of your strategy. Not only can it make your business stand out in the community, it can strengthen the bond between generations and the legacy of family business values.
Let another family run business do your insurance
Gallagher is also a successful multi-generational family-run company. Our company was founded in a basement in 1927 and has grown into one of the largest insurance broking and risk management firms in the world.
We have 30 years of experience in the transport sector in Australia and are passionate about helping your family business to thrive. Lean more about how we can help your business by clicking the link below.