‘Shirtsleeves to shirtsleeves in three generations.’
You may have heard that proverb. It highlights the point that wealth rarely survives beyond three generations.
The actual figures make for stark reading. According to a report by the Boston Globe, only 12% of family-owned businesses make it to that point.
So what’s the secret to family-business longevity?
How do you create and ensure a lasting legacy?
Let’s take a look at an example of a family business still blazing a trail decades since its inception – Patagonia.
Patagonia was founded in 1973 by Yvon Chouinard with a clear vision:
“To build the best product, cause no unnecessary harm, and use business to inspire and implement solutions to the environmental crisis.”
Fifty years later, Patagonia is still committed to responsible and sustainable clothing. They use recycled and organic materials. Donate 1% of their sales to environmental causes. And are outspoken advocates of policy change to address the climate crisis.
By staying true to their original purpose, Patagonia has built a loyal customer base. An audience that shares their values of social responsibility and sustainability.
That’s how they have differentiated themselves from the competition. That’s how they’ve survived so long. And that’s why you could say with confidence they’ll be around for generations to come.
What can we learn from this example?
That a clear purpose and well-defined values are important for setting a business apart from the competition. And in creating a lasting legacy.
Patagonia’s purpose remains unchanged but how they’ve achieved it has had to evolve. Because we live in a very different world than the one in which they began. And the definitions of social responsibility and sustainability have changed in that time.
The same principle applies to you and yours.
What can you do?
Engage your family, board members, and employees in refining your purpose and values. Clearly articulate your purpose and your values. Communicate it to stakeholders.
But most importantly: involve family members in defining the value of continued ownership. Not just to them as individuals. But to the survival of the business and its legacy for generations to come.