The Long View
In a world where quarterly reports and short-term gains often determine business leadership’s decision-making, privately held businesses possess a unique strategic advantage: the ability to focus on the long view. Unlike their publicly traded counterparts, these unique businesses aren’t beholden to stock market fluctuations or shareholder pressure.
Private ownership allows them to cultivate a long-term vision, invest in sustainable growth, build up reserves, attract top talent, and build lasting partnerships; ultimately, creating a competitive edge that sets them apart.
Generally speaking, a private company will sacrifice short-term gains for longer-term benefits. The inverse is often true of a publicly traded company.
Much like stewardship involves maintaining a long-term perspective, so does the careful and responsible management of privately held and family-owned companies that have been entrusted in leadership’s care. Their long-term goals don’t falter or change with passing fads.
Increased Investment in the Company
Private and family business owners often have the ability to create the best plans and strategies. With their responsibility being to the longevity of the organization and not paying out dividends to stockholders, privately held organizations are given a competitive advantage and have the flexibility to build up rainy-day reserves. Strategically, this helps to position them to better address challenges, such as market uncertainties, unplanned events, recessions, pandemics, and politics.
In fact, according to the National Bureau of Economic Research, private firms invest a higher percentage of total assets back into the business compared to public companies; ultimately, helping to foster long-term growth. Private companies frequently achieve superior financial performance over the long-term due to their ability to make strategic investments and weather short-term market fluctuations.
Improved Customer Satisfaction
Given their long-term relationships and flexibility, private companies frequently see higher levels of customer satisfaction and loyalty. It’s estimated that the average customer retention rate of specific privately held businesses generally falls between 70% and 80%, depending on their size, industry, and retention strategies. Furthermore, 81% of customers have reported they prefer brands that give them personalized customer experiences. This further reinforces how the focus on long-term customer satisfaction instead of stockholder value is beneficial for success.
Parallels Between Managing a Business and an Investment Portfolio
There are striking parallels between managing a privately held business with a long-term vision and strategically managing an investment portfolio. Both require a long-term vision, a willingness to ride out the ebbs and flows, and an unwavering commitment to the practice of stewardship. By carefully aligning business strategies with investment strategies, private business owners can build a resilient foundation for sustained success, ensuring their legacy extends for generations to come.
If you have any questions regarding building and protecting your financial or business legacy, please reach out to the First Bank Wealth Management Team.
In a world where quarterly reports and short-term gains often determine business leadership’s decision-making, privately held businesses possess a unique strategic advantage: the ability to focus on the long view. Unlike their publicly traded counterparts, these unique businesses aren’t beholden to stock market fluctuations or shareholder pressure.
Private ownership allows them to cultivate a long-term vision, invest in sustainable growth, build up reserves, attract top talent, and build lasting partnerships; ultimately, creating a competitive edge that sets them apart.
Generally speaking, a private company will sacrifice short-term gains for longer-term benefits. The inverse is often true of a publicly traded company.
Much like stewardship involves maintaining a long-term perspective, so does the careful and responsible management of privately held and family-owned companies that have been entrusted in leadership’s care. Their long-term goals don’t falter or change with passing fads.
Increased Investment in the Company
Private and family business owners often have the ability to create the best plans and strategies. With their responsibility being to the longevity of the organization and not paying out dividends to stockholders, privately held organizations are given a competitive advantage and have the flexibility to build up rainy-day reserves. Strategically, this helps to position them to better address challenges, such as market uncertainties, unplanned events, recessions, pandemics, and politics.
In fact, according to the National Bureau of Economic Research, private firms invest a higher percentage of total assets back into the business compared to public companies; ultimately, helping to foster long-term growth. Private companies frequently achieve superior financial performance over the long-term due to their ability to make strategic investments and weather short-term market fluctuations.
Improved Customer Satisfaction
Given their long-term relationships and flexibility, private companies frequently see higher levels of customer satisfaction and loyalty. It’s estimated that the average customer retention rate of specific privately held businesses generally falls between 70% and 80%, depending on their size, industry, and retention strategies. Furthermore, 81% of customers have reported they prefer brands that give them personalized customer experiences. This further reinforces how the focus on long-term customer satisfaction instead of stockholder value is beneficial for success.
Parallels Between Managing a Business and an Investment Portfolio
There are striking parallels between managing a privately held business with a long-term vision and strategically managing an investment portfolio. Both require a long-term vision, a willingness to ride out the ebbs and flows, and an unwavering commitment to the practice of stewardship. By carefully aligning business strategies with investment strategies, private business owners can build a resilient foundation for sustained success, ensuring their legacy extends for generations to come.
If you have any questions regarding building and protecting your financial or business legacy, please reach out to the First Bank Wealth Management Team.
Joseph “Joe” T. Ambrose is the Vice Chairman and Managing Director of First Bank Wealth Management which provides investment management, financial planning, trust, and employment benefit services to individuals and organizations across First Bank’s markets. Joe has been with First Bank for over 32 years, primarily focused on the acquisition and retention of family business clients in all revenue areas of the bank, including Wealth Management, Retail, Commercial Banking, and Treasury Management. Possessing over 47 years of combined banking experience, Joe serves as a member of the First Bank Executive Management Committee. You may reach Joe Ambrose by phone at (314) 995-8722 or via email [email protected].
Investment and insurance products are offered through OSAIC INSTITUTIONS, INC., Member FINRA/SIPC. Osaic Institutions and First Bank are not affiliated. Osaic Institutions does insurance business in California as Osaic Institutions Insurance Agency, CA Agency License #OH30186. Products and investment advisory services made available through Osaic Institutions are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value. First Bank Wealth Management is a trade name of First Bank, and certain products and services are provided through First Bank, and its affiliates and subsidiaries. Neither Osaic Institutions or First Bank, nor any of their affiliates or financial advisors, provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. Use FINRA’s BrokerCheck to learn about the professional background, certifications, licenses, and any regulatory violations or complaints for any financial advisor.
NON-DEPOSIT PRODUCTS: ARE NOT INSURED BY THE FDIC; ARE NOT DEPOSITS; AND MAY LOSE VALUE.