University of Vermont

School of Business Administration

Family Business Facts

Family owned businesses are central to the U.S. economy.

There are 5.5 million family businesses in the US. (FEUSA, 2011) Family owned businesses contribute 57% of the U.S. GDP (that’s $8.3 trillion), employ 63% of the workforce (FEUSA, 2011), and are responsible for 78% of all new job creation. (Astrachan & Shanker, 2003) 35% of Fortune 500 companies are family-controlled. (Businessweek.com, 2006)

Family owned businesses are resourceful.

ROA is greater in family businesses, averaging a 6.65% greater return than non-family firms (ffi.org, 2010).

Family owned businesses have longevity.

The average life span of a family-owned business is 24 years (familybusinesscenter.com, 2010). About 40% of U.S. family-owned businesses turn into second-generation businesses, approximately 13% are passed down successfully to a third generation, and 3% to a forth or beyond (Businessweek.com, 2010).

The greatest part of America's wealth lies with family-owned businesses.

Family firms comprise 80 to 90% of all business enterprises in North America (J.H. Astrachan and M.C. Shanker, Family Business Review, 2003).

Women are increasingly participating family businesses.

Currently, 24 percent of family businesses are led by a female CEO or President, and 31.3 percent of family businesses surveyed indicate that the next successor is a female. Nearly 60 percent of all family owned businesses have women in top management team positions (Mass Mutual American Family Business Survey, 2007). Of the non-family firms in the Fortune 1000, only 2.5 percent are currently led by women (Fortune magazine, 2007).

Family businesses respect their communities.

Nearly 60 percent of family businesses believe that their ethical standards are more stringent than those of competing firms. More than one third (37 percent) have written ethics codes, and discussions about ethics with employees, customers, and partners are frequent (Mass Mutual 2007 American Family Business Survey).

Family businesses are thriving.

More than 96 percent of respondents anticipate that their business will expand or at least remain the same size over the next year. Recent economic slowdowns, particularly in sub-prime lending, have not seemed to influence this key segment of the economy. The profound optimism of family business owners has them charging forward (Family-to-Family: the Laird Norton Tyee Family Business Survey 2007).

Succession risks are higher than ever.

Almost a third (30.5%) of family business owners have no plans to retire, ever; and nearly another third (29.2%) report that retirement is more than 11 years away. Since the median age of the current leaders is 51, this means that many owners plan to live out their years in office. This poses unique challenges to the succeeding generation. Further exacerbating this risk is the fact that nearly a third (31.4 percent) of FOBs have no estate plan beyond a will (2007). This is worse than the 2002 survey, in which only 19 percent had no estate plan beyond a will (American Family Business Survey, 2007).

Emergency planning is vital.

In nearly half (47.7%) of all FOB collapses, the failure of the business was precipitated by the founder's death, or in 29.8% of the cases, the owner's unexpected death. Only in relatively few instances (16.4%), did the business failure follow an orderly transition, and in situations where the owner was forced to retire, the figure drops to 6.1% (University of Connecticut Family Business Program, 2009).

More FOBs are finding leadership from outside the family.

Between 10% and 15% of U.S. family firms are now managed by non-family executives (Barclays Wealth and The Economist Intelligence Unit, 2009).

The oldest family owned business operating in the US

The oldest family owned business operating in the US is the Zildjian Cymbal Co. of Norwood, MA. Founded 1623 in Constantinople and moved with the family to the US in 1929. They have sucessfully passed down to Zildjian heirs for fifteen generations (Zildjian.com, 2011).

The largest family owned business in the US

The largest family owned business in the US is Wal-Mart Inc., with $408 billion in revenues and 2.1 million employees in 2009 (Forbes.com, 2010).

Below you will find several recent surveys that have examined various aspects of family enterprise:

 

Name Year Institution or Sponsoring Organization
On the Minds of Family Enterprise Owners 2013 Family Enterprise USA
Succession Planning the Next Gen Way 2013 SEI
On the Minds of Family Business 2012 Family Enterprise USA
Family firm: A resilient model for the 21st century 2012 PwC
Family Business Confidence Survey 2012 Elizabethtown College
Annual Family Business Survey 2011 Family Enterprise USA

Family Business-Best-in-Class with Minor Flaws

2011 Egon Zehnder International
When Is a Family Business Not a Family Business 2011 Rothstein Kass
The MGI Australian Family and Private Business Survey 2010 RMIT University
Kin in the Game 2010 PwC
Australia's Top 100 Private Family Firms 2009 Dealin University
Women in Family Enterprises 2009 Family Business Solutions
Family Business Program Survey 2009 University of Connecticut, Connecticut Business and Industry Association
KPMG and Family Business Australia Survey of Family Businesses 2009 KPMG
Barclays Wealth Insights 2009 Barclays Wealth
Emotional Ownership 2008 Institute for Family Business(UK)
Family Business Management Perspectives Succession 2008 Institute for Family Business
MGI New Zealand Family & Private Business Survey 2007 RMIT University
Laird Norton Tyee Family to Family Survey 2007 Laird Norton Tyee
Next-Generation Wealth Management 2007 IBM and Actuate
American Family Business Survey 2007 MassMutual, Kennesaw State University and Family Firm Institute
Women in Family Owned Businesses 2003 Babson College
American Family Business Survey 2003 Loyala University Chicago, Kennesaw State University and Babson College

 

Last modified April 03 2013 03:08 PM