Why Are Family Businesses Important?

We talk a lot at Tulcan about how part of our mission is to protect family businesses, particularly those that manufacture products in America. But it occurred to us that maybe we need to make the case for why protecting family businesses is a worthwhile goal.

What is it about family businesses that makes them important and worth fighting for? Who’s to say giant multi-national corporations aren’t what we should be focusing on?

The way we see it, the family business is the closest we can come in today’s world to re-creating the trade guilds of days past, where masters passed down their knowledge to apprentices. And we don’t think it’s a stretch to say that safeguarding that knowledge of how to make things is the key to America’s future growth.

First, why manufacturing is important

So much of America’s domestic manufacturing has long since been lost to China and other countries. The trade-off was cheap goods, but that was an incredibly short-sighted trade.

Domestic manufacturing makes America resilient, not subject to the whims of other countries. It provides millions of good-paying jobs (see the chart below), along with many other jobs that spring from manufacturing, such as in logistics, retail, and services. It’s even more environmentally friendly–China is the biggest polluter in the world!

This chart from the World Economic Forum shows a 20-year decline in real wages (wages adjusted for inflation) that coincided with the beginning of the U.S. deindustrialization of the early 1970s. It took until 2019 for workers to reach a real wage that matched wages in 1973. Source: World Economic Forum

And as domestic manufacturing goes away, the hard-earned knowledge goes with it. So even if an entrepreneur wants to start a manufacturing operation here, he’s already behind the eight ball because he’s in competition with foreign companies that have been honing their craft for 50+ years now.  

So how do family businesses fit into this picture?

When you're recruiting people to come work with you in your business, invariably, character is everything. When you’re only as strong as your weakest link, the last thing a business owner wants to do is introduce a weak link into the chain. What complicates the process, though, is the fact that in businesses like those in the Tulcan family, you have to learn by being trained…and you can’t get that in trade school.

So what’s a business owner to do? Technology can augment his operations, make them more efficient, but it can’t replicate or replace the human labor. He has to have people, but people who are willing to learn. And they have to buy into what he’s doing, who don’t just see the work as a paycheck. The flip-side is that he has to make them feel appreciated and valued, not just monetarily but on a human level. He has to make them feel like they’re part of something important. In short, he has to care about them.

Now where is the best place to find someone you…

●      trust

●      care about

●      are comfortable pushing to be the best they can be

●      know is going to stick around through thick and thin; and

●      know has a sense of responsibility for the company and would rather do anything than let you down?

You see where we’re going with this…Invariably, your progeny are the ones who fit this description the best.

The constant battle of owning a business is trying to create a perpetual learning environment where you're continually recruiting, training, and trying to retain employees. For the kids of a small business owner, their childhood naturally becomes that training ground. They’re crawling around on the shop floor. They’re cutting up with the production guys. They’re listening in on Dad’s phone calls in the office. This is exactly how it went at places like Dyson, the leadership of Shannon, and several others.

So when the kids grow up and are ready to join the workforce, they have a ready-made place where they’re already friends with most or all of the employees, they know the business, the clients know them…in other words, they have what so many young people lack: motivation. All they need to do to see what the path forward looks like–career and financial independence, a family of their own, the rewards of community involvement–is to look at their parents.   

The Tulcan Way Supports the American Way

Our goal is to nurture the family and create a multi-generational training ground where young people grow from apprentice to teacher and eventually pass along the trade, the ability to make things.

The good news is that many of our businesses are multi-generational families that work at the plants, where you have the grandfather, the son, and the grandson all working on the floor. And they train as apprentices and then pass on the craft to the next generation.

And in fact, this is much more the way America runs than corporate America. The supermajority of the supply chain of industry in the United States is family-owned and family-run.

Still, family business or not, the major challenge for business owners will continue to be to find, train, and retain great employees. The clients are there, there’s no lack of people spending money. Finding great talent is the hardest challenge.

But when you do find that young guy or gal who’s got that fire to learn and to succeed, we believe that the family business is simply a better incubator than a giant corporation. At a small company, a new recruit can easily talk to anybody from the janitor to the CEO and pick their brain. Everybody’s right there, pulling together toward a common goal and sharing in the work and the rewards.

And even if they’re not connected by blood, that can still feel just like family.