Businesses owned and operated by families have been a part of American life for generations. If you weren’t raised in a family that was running a business, chances are you had a friend or a distant relative who was. Throughout the decades, the “family business” has become a revered institution—and for good reason.
Consumers tend to admire a family-run business. They are often perceived as possessing a high level of integrity and upholding higher standards of quality than other companies. In addition, family businesses are believed to maintain stronger commitments to the local neighborhoods and to be more customer-focused than larger, “nameless” corporations. In short, they are viewed as indispensable members of the community.
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In 2021, nearly 30 percent of all companies in the United States were categorized as family-owned businesses, according to the U.S. Small Business Administration. Just like in other industries, a growing number of cannabis businesses now fall under that category. So how did the cannabis industry–with its shadowy past that is anything but family-friendly–come to be a winning option for families running a business?
As it turns out, the traits most frequently associated with family-owned businesses are also the same traits a successful cannabis business needs to succeed. Good fiscal governance, high ethical standards, a willingness to plan for the long term, and a focus on internal culture are among the most critical attributes to maintain. All of these are strong features of the family-owned business.
Fiscal responsibility and high ethical standards
The bonds of family are often the driving force keeping family businesses focused on values and integrity, which safeguards the business from threats. In fact, 60 percent of family businesses believe that their ethical standards are more stringent than those of competing companies, and nearly 40 percent of family-owned businesses have written ethics codes, according to the American Family Business Survey.
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Businesses run by families tend to be more fiscally responsible, helping to ensure the future of the business (and the family). Family members are typically committed to the business, which leads to a strong and robust organization.
Planning for the long-term
Since they don’t face the same profit goal pressures as many public companies, family business leaders tend to focus on the next generation, not the next quarter. This allows family-run businesses to favor long-term planning over short-term gains. Investors are typically willing to be patient with regard to earnings, profits, and repayment, which enables long-term strategies to flourish.
Furthermore, families often reinvest profits back into the firm to finance growth and expansion. Consumers recognize and appreciate these values and will reward family-run businesses with their loyalty.
Culture mirrors the family
Finally, family-owned businesses almost always offer employees the benefit of a strong internal culture that mirrors the values inherent in the family owners. According to the Conway Center for Family Business, family-run businesses score significantly higher on worker motivation and leadership than most larger companies. In a study of 114 family firms and 1,200 other large companies it was found that family businesses were more likely to put customers and employees first as well as emphasize social responsibility in their policies and operations.
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In an industry that is still battling stigma in many parts of the country, these family-business attributes send a strong signal of stability, responsibility, and accountability. Cannabis operations run by families showcase how positive, family-focused business practices can diminish negative stereotypes in the industry.
And for an industry that is subject to ongoing regulation, a focus on ethics and integrity elevates cannabis businesses as stable, responsible members of the business community. What’s more, a solid employee culture builds the reputation of the industry by providing career opportunities where workers can build a solid future.
As an instrument of growth and stability for an ever-changing industry, the cannabis family business is here to stay.
*This article was submitted by a guest contributor. The author is solely responsible for the content.