Family Business Facts
Family owned businesses are challenged.
- More than 60% of family business owners report that “reducing the United States deficit and debt” as their number one concern. Successful family firms embrace a sense of stewardship and fiscal responsibility, and they expect our government to do the same. (Family Enterprise USA 2013 Survey of Family Firms)
- The average life span of a family-owned business is 24 years (familybusinesscenter.com, 2010). About 40% of U.S. family-owned businesses transition into a second-generation businesses, approximately 13% are passed down successfully to a third generation, while 3% survive to a fourth or beyond (Businessweek.com, 2010)
Family owned businesses are central to the U.S. and global economy.
- Family-controlled firms now make up 19% of the companies in theFortuneGlobal 500, which tracks the world’s largest firms by sales. That is up from 15% in 2005. (McKinsey 2014)
- 58% of small to medium enterprises (SMEs) are looking to emerging markets to sell their goods, 11% to manufacture for them & 12% to purchase from them. (Tharawat Magazine 2014)
- 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)
It’s about “families in business” more than family business.
- 77% of all new business ventures established in the United States are founded with significant involvement of the family in the business, and another 3% engage family members within the next two years (Chua, Chrisman & Chang 2004).
- 48.1% of entrepreneurs said they grew up in a family business. (OnStartups, 2009).
- 32% of our family businesses were apprehensive about the transfer of the business to the next generation, and 9% see the possibility of family conflict as a result (PwC Family Business Survey 2012).
- 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 fourth or beyond (Businessweek.com, 2010).
There are greater opportunities for women in 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 invest in 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).
Succession remains a constant challenge.
- 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).
- 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).