Across the world, family businesses contribute significantly to economic activity. It is estimated that over two-thirds of all companies are operated or owned by family firms. Research shows that in 2012, 70% to 80% of all businesses in Europe were family-owned. With this level kind of contribution, it is inevitable that family-owned firms have both a financial and social impact on the economies they operate in.
Success Factors for Family Businesses
For family businesses to succeed, they need a proper governance structure. The family involved should develop a way of relating concerning business matters to ensure free-flowing communication and collaboration. Families need to assess their portfolios to understand what works for them to better align their strategy. Lastly, family businesses must develop a credible succession plan to grow the firm long term.
Top Family Businesses in Switzerland
Switzerland is home to many family businesses with 17 out of the 500 largest family businesses globally found within its borders. They generate approximately USD181 billion while giving jobs to almost 500,000 people around the world. Here are some of the most notable family businesses and how their family-owned orientation positively influenced their growth.
The Rothschild Family
The Rothschild family business is one of the most notable in modern history. The family business traces its origins to Mayer Amschel Rothschild (1744-1812) who started a bank in Frankfurt, Germany in the 1760s. He caught the entrepreneurial bug watching his father, Amschel Moses Rothschild, deal in silk and other commodities as a trader. After an apprenticeship at a Hanover bank, he returned home to continue trading.
In time he transitioned to trading in valuable artwork for wealthy clients like the Crown Prince Wilhelm. The banking experience he had gained earlier gave him insights that eventually led to the establishment of his banking services. The French revolution brought about significant growth for the business as Mayer was contracted by the French army to deliver various items. He also facilitated financial transactions during this period.
Concerned about the succession of his family business, Mayer sent his five sons to live in different European cities with the goal of each starting a bank there. They settled in Frankfurt, Naples, Vienna, Paris, and London, starting banking firms in the 1800s and fulfilling their father’s wish to expand and diversify across several borders.
As another means to secure the succession of the family business Mayer made provisions in his will to facilitate intermarriage among the descendants. Although seen controversial by some, it ensured that the Rothschild family business endured and as a result was passed on to other generations. Today the Rothschild family business spans several industries such as private equity, real estate, financial services and mixed farming among others, all controlled by family members.
The philanthropic impact of the Rothschild family business as a whole has been tremendous over the decades. Many charities, foundations, orphanages, public libraries, hospitals, and homes have been born as a result of the Rothschild family business’ support. These beneficiaries stand as a testament to what family firms can achieve for the public good if proper succession takes place over generations.
The Chopard Family
Chopard is a 158-year-old watchmaking company that has stood the test of time through war and peace. As a family business, it has seen successive generations not only take over its management but also secure its future as it passed from one family to another.
In 1860 Louis-Ulysse Chopard formed the L.U.C watch manufactory to produce both pocket watches and ladies’ watches. Customers hailed the watches as innovative products including Russia’s Czar Nicolas II. When Louis-Ulysse passed on in 1815, his son Paul-Louis took over the business together with his grandson Paul-Andre. The duo continued operations, and in 1937 they relocated it to Geneva, Switzerland.
Eventually, Paul-Andre put the business up for sale since he didn’t have any heirs to pass it on to. Karl Scheufele III bought it, marking its transitioning of ownership to another family, where it still belongs to this day. Karl Scheufele III released successful product lines and also launched the company’s own watch movement production facility.
Karl’s children, Caroline Gruosi-Scheufele and Karl-Friedrich Scheufele, joined the family business. Caroline took over artistic supervision, and Karl proceeded to oversee watchmaking. Today Chopard employs people globally and is recognized as one of the few remaining watchmaking firms that are still family-owned.
In 2013, the company embarked on a journey to sustainable luxury, which focuses on optimizing the entire product value chain to source and produce jewelry responsibly. Chopard adopted the Kimberly Process system of warranties to ensure it doesn’t purchase or deal with any conflict diamonds. It has also included Fairmined gold in its products to ensure the artisans who source the gold aren’t exploited but are treated fairly.
In March 2018, during Baselworld, Chopard paved the way for the watch and jewelry industry with a unique announcement; from July 2018, the Maison will only be using Ethical Gold for its creations.
The Kuehne + Nagel Family
Founded in 1890, Kuehne + Nagel (KN) is an international logistics firm started by August Kühne and Friedrich Nagel. In 1907 Friedrich Nagel died, and his partner took over his shares but left Nagel’s name in the firm’s name intact to preserve his legacy. When Kühne died in 1932 his two children, Werner and Alfred, took over as joint partners. Alfred Kühne started expanding the company internationally, and as a result, it moved to Switzerland in 1975.
Klaus-Michael Kühne joined his father Alfred in the business during the 1960s and began leading KN’s expansion in the Far East and Europe. When his father died in 1981, Klaus became a joint chief executive with Roland Rowland, who was in charge of Lonrho, which had just acquired a 50% stake in KN. When Germany was reunified KN decided to buy back its shares from Lonrho and in 1994 ended up listing publicly. Its logistics business continued to grow, and Kühne appointed Klaus Herms as the CEO.
Today KN is present in more than 100 countries with 1,300 offices staffed by 76,000 workers. From a small, family-owned commission forwarding agency, the integration of various heirs skilled in running the business eventually led to its growth and dominance in several industry segments. Once again such a firm points to how resilient a family-business can be with sound succession planning.
The Impact and Importance of Family Businesses in the World
The world economy heavily depends on family businesses for jobs and financial activity. Family-owned firms need to straddle the business and family fronts to ensure that none negatively affects the other. A dual focus on these two areas yields long-lasting fruit exemplified by some of the most notable family businesses that have grown to become world players today.