What does it take to make a business last? To not just survive but thrive like a great Sequoia tree? To exist long enough to pass the baton to a new generation of management? Is it luck, product mix, or adhering to a strategic vision that propels some businesses to long-term success?
The answer lies in the hearts and minds of many hardworking individuals in companies large and small. Join Blueprints as we explore the secrets of their longevity in this ever-evolving industry.
Building a Legacy
The phrase ‘legacy business’ has been somewhat tarnished in recent years. Once meant to indicate the proud carrying on of a business tradition, often from one generation of a family to the next, in some circles it has come to imply an antiquated or outdated business model. In today’s world it is often synonymous with bricks-and-mortar retail—considered a waning approach to selling, superseded by new methods of management, growth, and ultimately, success.
Many businesses aren’t even intended to last; some startups are designed to scale up quickly, accumulate value, then be sold and absorbed into larger entities. But building value depends on having a type of strength or unique quality many young businesses are unable to cultivate.
The result, according to a study by the Exit Planning Institute, headquartered in Lakewood, OH, is that as many as two-thirds of businesses fail to develop an effective selling strategy, and do not recoup the substantial capital investments made by owners or investors.
For the purposes of this article, we will define a legacy business as one that has maintained significant continuity over time with a consistent brand name or image; has maintained the same core operational model within an industry; and has been run with a clear line of succession.
With many businesses initially conceived, especially in the early days of the twentieth century, as a means of providing security, employment, and intergenerational wealth-building, it’s no surprise family firms are often considered the default image of American business.
It is estimated by the U.S. Small Business Administration that about one in every five companies is family owned; in the produce industry, nearly 17 percent of businesses are run by a single family.
Because family ties represent a preexisting personal stake, these individuals already understand the importance of company success since their family’s livelihood is tied to it. As many would say, “it’s in their blood.”