I recently came across this term ‘Shinese’ – a word used to refer to long-lasting companies. Interestingly, about 90% of all businesses worldwide that are more than 100 years old are Japanese. They all have fewer than 300 employees. They are also all family-owned businesses. We then studied the research done on these companies to find out what makes them stick longer. Here are some reasons we found that you could also apply to your business:
- Chasing growth cautiously: These businesses keep tight control of their costs and would make the decision to spend only when it is necessary and possible benefits have been thought through. Besides, they rarely borrow to expand and focus on operating cash flows. They believe that growth should be chased only when it can be done comfortably with internal accruals and cash flows. This is, of course, something that young entrepreneurs and startups might not appreciate but the family-owned businesses that are already established would.
- Continuous improvement in the product: These businesses have continuously improved their products or services, while also evolving them with the change in technology and consumer needs. Some of them like bakeries, restaurants focus on conserving the traditions to create their own niche.
- Building a lasting relationship with customers: They put effort into building a long-lasting relationship with the customers. This is their constant focus.
- They are seudo-professionally managed: This is quite interesting! Typically, Japanese business owners bequeath entire companies to their eldest sons. But if business owners don’t trust their sons to lead the company, then they can legally adopt a ‘son’ (often marries into the family) and he goes on to run the business. This is very different from how businesses are succeeded in India, but perhaps Indian business owners can think of other creative and workable ways to ensure that businesses are run by able people.