How family businesses drive economic growth and community resilience

I recently spoke with one of the participants in this year's Leadership Cape program. He shared that he enjoyed the program and learned quite a bit about Cape Girardeau, including many of the things you would expect: the role the hospitals play in our local economy, and the operations of local government and media, to name a few. But he specifically mentioned the number of small businesses, which play a key role in the economic engine of Southeast Missouri.

He's right, of course.

When you think about small businesses, many of these are family-owned or family-run companies. They play a crucial role in both global and local economies. The Family Firm Institute reports that family businesses generate over 70% of the global GDP and employ more than half of the world's workforce. These enterprises range from small local shops to multi-national corporations, contributing to economic growth and innovation.

Family businesses often prioritize long-term sustainability over short-term gains, ensuring resilience through economic downturns. This focus on longevity allows them to weather financial storms better than many publicly traded companies. Their governance structures, typically involving family members in key decision-making roles, enable quick adaptability and effective crisis management.

Beyond economic contributions, family businesses have a cultural and community impact. They often maintain strong ties to their communities, contributing to local development and preserving cultural heritage. These businesses often invest in community projects, sponsor local events and support charitable causes. This commitment to community welfare fosters a sense of identity and continuity, as values and traditions are passed down through generations.

There are lessons we can all learn from these organizations. Nicolas Kachaner, George Stalk, Jr. and Alain Bloch wrote in their 2012 article for Harvard Business Review seven ways family-run firms manage for resiliency: they are frugal in both good and bad times, keeping their expenses lean; they set a high bar for capital expenditures, only investing in projects with strong returns; they avoid high levels of debt, maintaining flexibility during downturns; they acquire fewer and smaller companies, preferring organic growth; they often diversify across industries to mitigate risk; they expand internationally, building patience and persistence in foreign markets; and they retain talent better than competitors by fostering commitment, trust and a strong organizational culture.

In this edition of B Magazine, we focus on the importance of family business.

Amanda Flinn interviewed several couples who work together, sharing how they balance marriage and business. Christopher Borro looked at succession planning, with insight from experts on things to consider and local examples from those who have done so successfully. One of the many things family businesses need to consider is how to incorporate the next generation into the operation. Mia Pohlman spoke to business owners who are doing this and shared tips for how to work alongside the next generation. We also have a story about philanthropy and a column from SEMO business professor Dr. Edward Crowley.

Family businesses play a vital role in our local economy, embodying resilience, innovation and community commitment. They remind us that the true value of these businesses lies not just in profits, but in their lasting impact on the economy and the community they call home.

Lucas Presson is the publisher of B Magazine and assistant publisher and general manager of the Southeast Missourian.