Winter 2009 Openers

Building a family brand; Your asset strategy should consider your business

Building a family brand

Family companies can enhance their competitiveness by leveraging their family status to create a brand identity, according to research recently published in the Journal of Small Business Management. If marketed correctly, a family brand appeals to consumers, the investigators reported.

The study -- by Justin B. Craig of Bond University in Australia, Clay Dibrell of Oregon State University and Peter S. Davis of the University of North Carolina at Charlotte (Journal of Small Business Management, 46[3]: 351-71, 2008) -- found that "promoting family ownership can play a substantive role in establishing a firm's appeal to customers in a manner that is unique to the family business context," the researchers wrote. "[O]ne of the advantages of family businesses that we have empirically established in this research is the signal that family ownership communicates to customers about the types of values, beliefs, and norms likely to prevail in family-owned businesses."

The investigators analyzed survey data from leaders of 218 family businesses with six to 499 employees. The results showed that building "a family-based brand identity" contributes indirectly to a company's growth and profitability. This effect occurs only if the message has a "customer-centric orientation," as opposed to a focus on the company's product attributes, the researchers noted. "[T]he real long-term benefit for the consumer lies not in the specific product or service that the family business produces or sells, but rather, it is in the perception that the family is committed to being customer-centric," Craig and colleagues wrote. "A challenge for managers seeking to change their firms' competitive orientation will be to define customers' expectations about family-brand values and to discover ways to incorporate this in their efforts directed at building better customer relationships.'

The competitive edge might be related to values "implicitly associated with family membership," such as trust, the authors wrote. "Consequently, when evaluating among alternative providers, functional attributes (e.g., size, market share dominance) may take a back seat to those reputational attributes associated with family-based branding in the purchase decision."

These findings are particularly relevant for smaller family companies with limited resources. "Lacking the substantive economies of scale and scope available to their larger brethren, small and medium-sized family businesses may be especially inclined to leverage their distinctive family name to create a form of reputational capital or family brand equity that helps enhance performance," Craig and associates noted.

Consumers' trust in family-owned brands was also explored in a recent article on, an online exchange that focuses on branding. "Customers frequently perceive family-owned brands as emblems of success and prestige," wrote author Randall Frost, "but this is also because these brands lend themselves to trust. The family name, when used as a brand, serves to reassure the customer." 

Globalization poses challenges for family business owners, who tend to think in national terms, Frost wrote. "Regardless of the economic futures and fates of family brands, the actual families behind the brands are subject to the same triumphs and tragedies in life -- just like families everywhere," he added. "Perhaps that is why consumers -- a demographic comprised of parents, children, and cousins -- relate to family brands so well."

Frost's article is available online at


Your asset strategy should consider your business

When designing an investment portfolio and considering asset allocation, many business owners fail to consider their business assets and thus overexpose their wealth to risk, noted wealth adviser Christopher G. Didier and economist Brian L. Beaulieu in a recent white paper. 

Didier is managing director of the private asset management group at Robert W. Baird & Co., headquartered in Milwaukee. Beaulieu is executive director at the Institute for Trend Research in Concord, N.H., and chief economist for Vistage International and TEC. "We find all too often that the business is ignored in wealth management planning, diminishing the benefits of diversification and creating unnecessary risk to the business owner’s wealth preservation strategy," they wrote.

Some business owners fail to consider their company as an asset because it has not been valued for sale. "To owners, and those who advise them, the portfolio becomes something separate from the business," Didier and Beaulieu wrote. Also, because business owners are their company's major decision-makers, they consider the business to be "under control" and don't believe it necessary to discuss the business with their wealth adviser. 

The authors advise business owners to create a business market index that compares their company's data against industry data and macroeconomic indicators, and then build a correlation matrix that compares the company's performance against the performance of other financial assets.

"To be fully balanced," Didier and Beaulieu wrote, "the owner would want to invest more heavily in asset classes with a lower correlation to the business and start avoiding asset classes that are more highly correlated with the business." They cited as an example an owner of a home-building company who engaged an adviser to design an investment portfolio that would behave differently from his business to protect him from the home-building industry's ups and downs. The industry has since hit a downturn, but the portfolio is helping to protect his long-term wealth.

Didier and Beaulieu noted that many business owners have invested in assets they are familiar with, such as real estate. "Unfortunately, a large component of most businesses is already significantly invested in real estate," they pointed out. "So diversifying by adding more of what you are familiar with may not be diversifying at all."

They also advise business owners to be mindful of liquidity risk. "Be sure you have ample liquidity in your investment portfolio so that you can meet any unanticipated cash needs," Didier and Beaulieu wrote. "This is particularly a concern on the downside of the business cycle when credit conditions tighten and liquidity is at a premium."        




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Winter 2009

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