The Six Habits Of Successful Private Companies

It’s a good time again to be a privately held company. No pressure over quarterly earnings, no obsession with stock prices, no anxiety over what you can say to whom about how the business is going. Heck, nobody outside the owner has to know anything. Mark Zuckerberg probably wishes Facebook were still private.

Growth has been better among privates, too. Forbes’ 2012 roster of America’s biggest private firms, based on 2011 data, showed revenue growth of 12%, twice the growth of the S&P 500. More recent data come from a new study by KPMG and Forbes Insights, which found that 58% of private companies are poised for revenue growth of 6% or more over the coming year. Ten percent of the 473 executives who responded believed their sales will rise more than 20%. Projections are flattish to slightly up for S&P 500 earnings.

Forbes is also privately held, and we’re outdoing most of our publicly held rivals, even if we still talk about meeting revenue goals in hushed tones so as not to jinx them. Forbes has also been covering non-public companies since its launch in 1917. We care about the health of private companies because it’s the right thing to do, and because we sorta have to. They make up 99% of all businesses in the U.S.

What makes private companies great? In an unscientific analysis by my colleagues Luisa Kroll, Kerry Dolan and I, we extrapolated six habits found at the biggest private firms as well at some smaller, successful ones. I hope you can apply one or more of these lessons to your business, no matter what size.

Great companies know what they are and what they stand for. Study after study shows that employees are happier and more productive, and may even accept lower wages, when personal needs higher up the Maslovian pyramid are being satisfied by their employment. Delivering on meaning also helps build more substantial relationships with customers and partners—especially when a company isn’t getting the kind of press coverage and attention public companies typically get.

Arts and crafts retailer Hobby Lobby, no. 147 on our 2012 privates list, is run by its billionaire chairman David Green. The son of a pastor, Green had to repeat seventh grade, never went to college and worked as a stock boy. He eventually started a business selling arts and crafts items like small picture frames, and built it into a massive retail chain that doubles as a missionary organization, the equivalent of the largest church bake sale in the world. Hobby Lobby is a corporate soldier of Christ. It puts half of total pretax earnings into a portfolio of evangelical ministries. Stores are closed on Sundays, forgoing revenue to give employees time to worship. The company also keeps four chaplains on the payroll. You may personally object to the mission of Christ, but Green’s embrace of it contributes greatly to Hobby Lobby’s success by giving it a strong identity to keep both customers and employees loyal. Few companies and CEOs can realistically bring religion to work but those who are compelled to do it cannot possibly do it as a public company. In Green’s camp are also Chick-fil-A founder Truett Cathy and the duo behind Forever 21, Jin Sook and Do Won Chang, born-again Christians who keep Bibles in their office and print John 3:16 on the bottom of each shopping bag.