While the term “family business” may still bring to mind the little Mom and Pop store on the corner, the reality is that family businesses make up a huge segment of the economy, in the United States and worldwide.
Earlier this year, The Center for Family Business at the University of St. Gallen produced the Global Family Business Index, which lists the 500 largest family-owned businesses worldwide. With huge names like Wal-Mart, Ford Motor Company, and Berkshire Hathaway included, it’s not surprising to find that the combined annual revenue of these 500 firms is over $6.5 trillion!
In other words, these 500 family-owned businesses represent the third largest economy in the world behind the U.S. and China!
In nearly all these cases, these are long-established corporate behemoths in which the founding family has maintained a majority stake in the company and decision-making rights in company policy and leadership. The average age of these companies is 88 years, so several generations have already been involved.
Although they may have begun as the dream of one brave entrepreneur, they’ve grown over the decades, often strengthened by family ties and loyalty in ways that other types of businesses can’t be.
But there’s a new and different breed of small business starting to emerge in the U.S. that is seeking to capitalize on the benefits of family loyalty right from the start, and they’re finding a lot of success in the post-recession economy.
Meet the Fampreneur
The term “fampreneur”, coined by global business sales platform, BusinessesForSale.com, refers specifically to groups of two or more family members who intentionally pool their resources, time, efforts, and talent in a business venture in order to capitalize on strong family ties while spreading the risk.
Although the term first gained traction based on survey results in the U.K., U.S. trends have proven to be right in line with them, as confirmed by similar studies by PWC and others.
This unique style of start-up has become far more popular in recent years than in the past. Traditionally, small businesses have been started by one brave entrepreneur while other family members buckle down, tighten their belts, and do their best to support the lone wolf as he or she gets the business off the ground.
In uncertain economic times, that aversion to risk makes a lot of sense.
But now, with the economy finally in full recovery, we’re seeing less aversion to risk and more desire to invest in a brighter future for the entire family. Spouses, siblings, or multi-generation partnerships are pooling their capital and jumping into business building with both feet.
Or, perhaps more commonly, they’re seeking out a high-yield established business opportunity and turning it into a family enterprise.
That’s the fampreneur: entrepreneurs taking the best aspects of those multi-billion dollar family-run corporations and applying them to new, vibrant ventures in the growing U.S. economy.
And the real news here is that it’s working!
For more details on the fampreneur phenomenon, you’ll enjoy reading BusinessesForSale.com’s full survey-based report: The Rise of the Fampreneur.
