As featured in Family Business Magazine.
Your family business story is your greatest asset.
Family enterprises often don’t go far enough in making their family story a major part of their brand. They don’t realize that their family story and family-owned status are underused assets that could actually add value to their business, as well as strengthen their ability to scale.
The Value of “Intangible Assets”
If you have ever had your business valued, you have seen it: the line item on the valuation that is often labeled as “goodwill” or “intangible assets.” Others will refer to it as “relationships,” “intellectual property” or “reputation. “It is also the value of the company’s brand.
While the breakdown of the value of privately held family businesses is difficult to ascertain, there is no denying that brands are more valuable now than ever. According to Ocean Tomo’s 2020 Intangible Asset Market Study, intangible assets now comprise 90% of the value of the S&P market value. This trend has been growing since the 1990s. Between 1995 and 2015, the share of intangible asset market value increased from 68% to 84%, and the pandemic continued to accelerate the upward spike.
Family businesses often produce premium products or high-quality services, and they are rarely competing purely on commodity pricing. When this is the case, the reputation or brand of the company is what allows it to charge a premium. At the same time, family enterprises are largely relationship-oriented. They rarely leverage the ability of smart brand strategies to scale the trust that individuals have in the company.
When family businesses do invest in the intangible assets of their company, their ability to grow and compete profitably increases quickly. For example, the Bacardí family discovered early on that locals in Cuba began to ask for el ron del murcielago — the rum of the bat —referring to the fruit bat icon used as the original symbol for the family’s rum. The bat logo has remained on nearly every label of every product carrying the Bacardí family name since 1862.
From then on, the Bacardís vigorously protected their name, symbol, and reputation, winning a landmark Supreme Court case in 1936 that declared that a cocktail at a bar or restaurant that is ordered or promoted with the BACARDÍ brand name “must be made with BACARDÍ rum.” This relentless focus on quality and reputation allowed the Bacardí family’s business to grow for over 130 years as a one-brand spirit company, from its founding in 1862 to its acquisition of Martini & Rossi in 1993. Now Bacardí Limited is one of the largest family-owned spirit companies in the world, with an impressive portfolio of premium brands.
Family businesses are leaving significant value on the table, and putting their legacy and long-term viability at risk, when they do not invest in the legal protection of the symbols of their brand and any intellectual property that creates unique value for the brand. .
Trust at Scale
For many family businesses, the trust of their customers and suppliers largely depends on individuals within the company and their personal relationships. This can hinder the pace of growth until that trust can be successfully transferred to the symbols of the company, such as the brand name, logo or other key elements. Telling the family story and connecting it more directly with a wide range of customer touchpoints will significantly increase the company’s ability to scale that trust and accelerate growth.
According to the 2019 Edelman Trust Barometer special report on implications for family businesses, family-owned enterprises in the United States enjoy a 24-point trust advantage over businesses in general. This is a significant competitive advantage for family businesses that is rarely capitalized on as these enterprises scale.
While many family businesses may say “family-owned” as a line in marketing materials, or as a page on their website, very few make it a major cornerstone of their brand messaging and value proposition. Many times, it is limited to a “family-owned since X year” tagline, without connecting that family ownership to the value it creates for its customers and employees.
Bigelow Tea, a specialty tea manufacturer based in Fairfield, Conn., is an excellent example of a brand that has used its family-owned status in conjunction with other markers of trust. Bigelow uses “100% family-owned” along with its B-Corp status and its membership in the Ethical Tea Partnership to stand out in a crowded category. In a recent press release regarding the company’s re-certification as a B-Corp, the family history is positioned as a significant influence:
“Third generation President and CEO, Cindi Bigelow, carries on her grandmother’s legacy by giving back to people and the planet. Simply because it’s the right thing to do. ‘Being certified, and now recertified, as a B Corp officially recognizes a commitment that has been part of the company’s DNA since it was founded by my grandmother, Ruth Campbell Bigelow, over 75 years ago. Re-certification proves how intentional we remain behind our commitment to a purpose far beyond making profits, and our aim to always do better. We’re committed to good citizenship, ethical business practices, accountability and transparency, protecting the environment, sustainability and supporting our communities.’”
For Bigelow, the “Family Tea Blenders Since 1945” tagline is not the end of its family-owned story, but just the beginning. The Bigelow family story and family-owned status are prominently featured in all of its brand touchpoints, including packaging as well as email signatures. The stories and roles of family members are detailed on their website, and the company’s signature product, its Constant Comment tea, is still only brewed by members of the Bigelow family.
In addition, the Bigelow #TeaProudly campaign has enabled the company to proclaim the pride of family ownership, history and quality, while making it inclusive for customers and employees alike. For example, at the bottom of each box of tea, there is a stamp with the words, “Packed with pride by” and then a first name and last initial of an employee. These small details are creative ways to engage others in the personal story and values of the company. It is steeped in values that customers associate with family-owned, instead of simply talking about them.
Similarly, Sweet Grass Dairy, a second-generation creamery based in Thomasville, Ga., has found that its family-centered business model has fast-tracked the interest and loyalty of retail buyers. The co-founder of Sweet Grass Dairy, Desiree Wehner, was first inspired to make cheese in order to showcase the high-quality milk from grass-fed cows.
When Desiree and Al Wehner transitioned their dairy from a conventional model to an intensive grazing model, moving their cows to new pasture every 12 hours, they were so proud of the quality and flavor of the milk their cows started to produce, Desiree began making cheese and selling it locally to consumers and chefs. Now, led by the Wehners’ daughter and son-in-law, Jessica and Jeremy Little, Sweet Grass Dairy has scaled its operations significantly and sells cheese throughout the United States at major retailers.
Today, buyers are especially interested in one aspect of the Sweet Grass story: the creamery still sources 100% of its milk supply from the Wehner family’s fifth-generation dairy farm. Jessica’s brother, Clay, is a passionate advocate for humane animal husbandry and sustainable agriculture.The family connection not only provides Sweet Grass Dairy with a sustainable and scaleable milk supply, but also maintains the values that the creamery was founded on.
This legacy of family members supporting each other’s success and shared values, as well as the longevity of the family farm, has resonated with the creamery’s buyers and customers. In an industry that is rife with consolidation and competition from global conglomerates, the Sweet Grass Dairy story rises to the top.
While it is much easier to create trust through one-on-one interactions and long-term relationships with individuals, it is not a scalable solution. Like Sweet Grass, family businesses need to find creative ways to live out their values in their marketing and communications, and find ways to leverage the trust inherent in their family-owned status, in order to build brand trust.
Not Just for Consumer Product Brands
For business-to-business companies, it can sometimes feel like the softer aspects of the company, such as family-owned status, can be liabilities instead of assets. After all, in many industries, companies are often competing on price and performance through competitive bidding processes. Trust and reputation, however, are always compelling differentiators, regardless of industry, and perhaps even more so in competitive B2B environments.
For example, Veit, one of the country’s leading specialty contractors headquartered in Rogers, Minn., is a family-owned business that has embraced its legacy as the root of its values-led positioning. Instead of a traditional “family owned since” tagline, Veit’s message to its customers is values-driven: Dig Deeper. Never Settle.
The third-generation owner, Vaughn Veit, attributes Veit’s success to two principles: doing good work and treating people extraordinarily well. For example, he talks about asking his team to redo jobs that were acceptable to the customer because the job wasn’t perfect and up to the company’s exacting standards. The company showcases its leadership team by noting their “years of service” on its website, setting the tone for a servant leadership ethos that is also embodied in the company’s commitment to employee safety on the job site. All of these intangible elements of value and reputation have allowed Veit to expand quickly and attract talent in an industry where there are significant worker shortages.
For business-to-business companies, embracing their family story as a driving part of their brand allows them to connect what they value to how they create value for their customers. That alignment creates a deep connection and loyalty that goes beyond the bid spreadsheet and begins to shape the company’s growth strategy as well, allowing the business to invest in long-term relationships and opportunities. When your brand and value creation span generations, you are willing to play the long game, which resonates strongly with customers who share that same outlook.
Brand as Reputation
When family-owned businesses start to think about their brand as their reputation, the business case for carefully protecting it almost becomes self-evident. After all, what family doesn’t want to safeguard their own reputation and influence the story that future generations will tell about them? What families don’t always understand is that reputation, when attached to a business, starts to have financial, not just emotional, payoff.
Whether it is catching the attention of buyers, allowing fast-growing enterprises to scale trust beyond individuals or creating intangible value for customers that decreases their price sensitivity and increases their refusal to accept a substitute, building a strong family-owned brand has direct consequences for the bottom line now, as well as a direct impact on the company’s long-term ability to sustain growth and maintain a legacy.
Meghan Lynch is the president and CEO of Six-Point Creative.