Family businesses act to recession-proof the economy, list shows
5 May 2009
121 of the top 500 private Australian firms are family businesses, the first list of the top 100 private Australian family businesses has shown.
The list compiled by family business expert Dr Linda Glassop from Deakin University shows that family businesses are significant contributors to the Australian economy, deserve government attention and the market's respect.
"These significant family businesses employ around 30% more employees and generate approximately $42 million more in revenue than their non-family counterparts," Dr Glassop said.
"Yet the government often lumps all family businesses into the category of small business like the local butcher or fish-and-chip shop.
"Inghams Enterprises (#5) may have started off as a small family chicken farm, but with nearly $2 billion in revenue and 7,500 employees, they are hardly a small business!"
Dr Glassop said very little is known about individual family businesses in Australia.
"While family names such as Meyer, Smorgen and Packer regularly appear in the media, prominent private family businesses are less obvious as they avoid scrutiny by not being listed on the stock exchange," she said.
"It is not surprising to see family names like Pratt (#1), Inghams (#5) and Fox (#4) heading up the list, but less well known family names are Ramsay (#2) and Buckeridge (#3)."
Dr Glassop said the Top 500 Australian firms garner respect from the economy in general and their influence permeates the wider society.
"My list shows family businesses deserve the same treatment," Dr Glassop said.
"The effect a single family can have on the economy, on employment, and social stability, should not be underestimated.
"The demise of Ansett and sale of Arnotts to international interests generated significant debate and concern for the Australian public.
"European research indicates that family businesses are less likely to inflict deep job cuts (in excess of 6%). Recent retrenching in Australia from non-family businesses like Pacific Brands suggest these non-family businesses are more interested in profits than community wellbeing. ''
Dr Glassop said there was mounting evidence worldwide that family businesses outperform their non-family counterparts.
"Some of the reasons for this have to do with the fact that family money is at stake," she said.
"Family businesses are less likely to take on mountains of debt or undertake high risk ventures.
"Family businesses tend to operate by stealth, slowly building equity and reinvesting in the family business. The recent example of Kleenmaid (#96) going into receivership is an exception. A former employee explains that Kleenmaid has a history of poor financial management, excessive senior management salaries and wild spending on websites and showrooms when the window cleaner remains unpaid! Such behaviour is not typical of a family business. The prudent behaviour demonstrated by most family businesses means they are more likely to ride out the current economic storm. ''
On a state basis, the majority of family firms reside in Victoria (43); followed by New South Wales (38) and then Queensland (21). The majority of non-family firms reside in New South Wales (154) followed by Victoria (113) and then Queensland (41).
"While banking regulation, government intervention and the like may be deemed necessary in the current economic climate, if Australia wants to recession-proof the economy, then there is a need to nurture and encourage the next generation of family dynasties," Dr Glassop said.
"Identifying family firms will aid with keeping social and economic focus on the practices of these influential families and their firms. ''
The top Australian family firms can be found in 24 of the 29 industries represented by the Top 500 firms. The industries with the highest concentration of family firms are: Motor Vehicle Retailing and Services (20), Construction (17), Food, Beverage and Tobacco Manufacturing (14), Machinery, Motor Vehicle Wholesaling (8), Personal, Household Good Retailing (8) and Property, Business Services (8).
The Agriculture, Forestry and Fishing industry is dominated by family firms (86%) and the Transport and Storage industry also has a significant representation of family firms (60%). There are five industries that have no family firms and a further 10 industries that have only one family firm.
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