The impact and sustainability of family businesses
Not all companies are equal in the face of climate change. Family-run businesses are better equipped than others, as by definition they have a long-term horizon.
(Opinion originally published on JDN)
Local roots, a web of trusting relationships, a long-term culture: it's hardly surprising that French family businesses demonstrated a high degree of resilience during the pandemic crisis. Although they rarely make the headlines, they nevertheless represent over 80% of our productive fabric.
The challenges of transmission
However, they all face the same difficulty: passing on the business. In fact, over two-thirds of them do not make it past the second generation, and this percentage decreases with each successive generation.
Passing on an estate also means passing on a certain attitude to the world. Here, it's the new generation of a large family association refusing to take a plane to attend a seminar lasting a few days. There, it's a descendant who is directing all his investments towards agro-forestry. When it's not the entire historic business that is being redirected by an heiress in search of a balance with the family history...
In a family business, concern for future generations is not an abstraction: when it comes to passing on productive capital to heirs, the link is tangible. Passing on means maintaining this link.
So how can we facilitate intergenerational dialogue and create the conditions for a serene handover?
(Re)inscribe impact in the company's DNA to guarantee its long-term future.
A heritage that is passed on is also human and intangible capital, a capacity to create jobs, to support local industries and to take a long-term view. The key to long-term success lies in our ability to redirect our activities and redeploy our capital to keep pace with the economic changes of our time. Two centuries ago, the Peugeots were millers. Then the family mill became a foundry, the foundry became a factory, the factory, automobile production lines. Today's industrial revolution is one of impact. Taking into account the social and environmental consequences of one's activity is not a matter of greatness of spirit: it's the guarantee of maintaining the conditions for future profitability.
For a company director with a genuine concern for the long term, putting impact at the heart of his industrial project today is a way of stepping over the critical transmission stage. Indeed, it's a philosophy of action that brings everyone together: some because they want to see what they've created endure, others because they'd be prepared to refuse an inheritance that they couldn't turn into a vehicle for commitment.
Become a player in the impact revolution for future generations
Investing and becoming involved with impact entrepreneurs is one way of initiating and spreading this approach: learning by doing, as it were. There are several ways for family businesses to get involved: investing in evergreen funds, creating a dedicated investment vehicle or participating in a specialized multi-family office. The most ambitious even go so far as to run an in-house deal impact club, which has the indirect advantage of creating links between the generations.
To realize their full potential, impact finance start-ups will need the patient capital and experience of the managing families of France's finest SMEs and ETIs, who can give new meaning to their mission. Impact finance and family businesses are a marriage of the heart and the mind.