Family-run businesses resilient in times of crisis | Germany| News and in-depth reporting from Berlin and beyond | DW | 10.04.2009
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Family-run businesses resilient in times of crisis

About 70 percent of German employees work at family-operated companies. Some of these firms, such as Poco, are still experiencing growth despite the ongoing financial and economic crisis.

A graph resembling economic downturn against the backdrop of a German flag

The economic downturn appears to be hitting DAX companies harder than family businesses

Over the last five years, Germany's largest family firms like Oetker, Merck or Hainel have on average earned more money than DAX-listed companies.

Crisis-resistant discount stores

Discount stores are not only becoming more popular in the food segment, they are also registering significant growth in the area of habitation. The family business Poco, based in Bergkamen, is a furniture discount chain for families with an average pre-tax income of 2,500 euros. More than two thirds of all German households belong to this target group.

Peter Pohlmann, the founder of the family business Poco, sitting at his desk

Peter Pohlmann's family business Poco is growing despite the current financial crisis

Peter Pohlmann founded his company Poco in 1989. Today about 5,000 employees in over 80 stores generate a turnover of 800 million euros. "So far, we are not feeling the impact of the crisis. We even registered 10 percent growth in the first quarter of 2009," said Pohlmann.

The discount market is growing and lucrative, especially since the purse strings of customers have become tighter due to the financial crisis. People still want to spend money but less rashly, and at the same time they are out to get a bargain.

Of course Poco is bracing itself for the impact of the financial crisis, however the company is not expecting any drop in sales before the second half of 2009. Pohlmann is not losing any sleep over the issue.

Pohlmann points out that his company was always based on sound business principles. He contributes enough of his own capital to hold a 30 percent stake in the firm. Moreover, profits are immediately reinvested into the company. "We have a golden rule that we only invest what we have already earned."

Family businesses more popular among employees

According to a survey conducted by the consulting firm Weissman & Cie, 46 percent of interviewees would like to work for a family business, while only 20 percent would prefer to take a job with a company listed on the stock exchange.

A happy Anja Jaeckel standing in one of Poco's outlets

Anja Jaeckel is happy that she's working for a family business rather than a large stock market-listed company

Anja Jaeckel says she made a deliberate choice to sign on with the family business Poco. "I used to work for a US chain where nobody’s job was safe," Jaeckel said. "Management decided whether a store was to be closed and unfortunately, I wound up experiencing that first hand. Here at Poco I feel safe."

Family businesses rarely resort to the hire-and-fire mentality that often dictates daily business at large stock market-listed companies, which are under pressure to keep their shareholders happy. Employees working for family businesses often are more motivated because the decision-making process is more transparent and shorter.

Old business principles point the way forward

Family businesses could light the path toward a more crisis-resistant economic system. "We must achieve greater liability for managers working for companies listed on the stock exchange," said Thorsten Groth from the Institute for Family Businesses in Witten.

"At the same time we must create incentives that hold responsible business methods in higher esteem than short-term profit driven activities that often endanger the survival of companies," added Groth. He believes that family businesses with their centuries of experience and sound business principles could provide the blueprint for a sustainable economic system of the future.

Author: Monika Sax/Neil King

Editor: Chuck Penfold

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