Survivors strategise for success

I have spent a great deal of my time as business journalist during the past three decades or more analysing how companies survive over time.

It is a matter of record that very few get past their first year, let alone survive to be 30 years old. Most business ideas fail early on, which is the natural outcome in the capitalist system.

But many companies have survived beyond three decades and, it appears to me, most of those that can claim real longevity have some clear themes in their stories.

Firstly, most of the longest-running companies are family owned.

As much as I love the family business sector, I think this is a rather self-fulfilling outcome, because typically these businesses are structured to survive the passing of the assets from one generation to the next, which keeps the operations intact.

Western Australia is home to the country’s second oldest family business, Lionel Samson Sadleirs Group, which can trace its roots back to the first settlers’ arrival to establish the then Swan River Colony in 1829.

The founders were import-export merchants, although a dominant part of the business these days is the related sector of logistics, which relates more fundamentally to a subsidiary acquired by the family in the 1930s, the Sadleirs transport business, a trading name under which the group now largely operates.

This brings me to a second theme. While many long-running family businesses have stuck to their knitting, a more hidden signal of success is those businesses that have evolved from successful roots in one industry to emerge as major forces in another.

A good example is Wesfarmers, which started as a farmerowned cooperative in WA at the outbreak of WWI. For much of its first 70 years in operations, its various expansions were a natural addition to its desire to meet farmers’ needs. Perhaps an aberration was the establishment of a radio station in the 1920s, which later became the main ABC operation in WA a few years later.

While Wesfarmers still retains a strong link to its rural roots through fertiliser operation CSBP, it’s really diverged from its rural focus in the 1980s, having changed structure and listed on the stock market. An early experiment in retail – owning the Charlie Carters chain – was arguably an exercise in trying to ensure a better marketplace for farmers’ produce. Although that was not a great success, it laid the foundations for the retailing experience that has become Wesfarmers’ greatest strength, especially hardware though the Bunnings brand.

These days, Wesfarmers is forging ahead in lithium mining and processing.

But once a company lists on the ASX, it increases its chances of being taken over and subsumed into another business. Rare exceptions are firms such as Qantas, which has survived as a founding entity in aviation and then as a public company for decades.

Qantas’s longevity could, in part, be attributed to its management prowess, but I think a larger element is the unique circumstances surrounding aviation, especially airlines that are recognised as national carriers and, therefore, receive special treatment in terms of routes, airfields and help in times of crisis.

They are also, historically, difficult to takeover due to their special place in the national consciousness.

All this brings me to a very different business that breaks both these moulds.

I was lucky enough to attend the 120-year celebrations of the Gold Estates, a company that has been a public entity for a great deal of its long life and has stuck to the business of land development throughout that period.

While Gold Estates’ origins were as an unsuccessful goldmining enterprise, it was founded as a new company Gold Estates of Australia (1903) in order to capitalise on the remaining assets of the otherwise failed predecessor bearing largely the same name.

The UK company operated in WA for almost seven decades before the foreign owners decided their capital would be better deployed elsewhere, and effectively became subject to a management buyout by another old WA family business, the Alex Gregg-run Richard Noble & Company, which had managed Gold Estates' operations here.

The rest, as they say, is history.