Positive Economic Impact of Family Enterprises
The following data has been compiled by Tharawat magazine and published in Issue 22, 2014. For the purposes of the following, this definition of family business is used: "A family business will be considered a company that is controlled and majority-owned by members of the same family.”
Contributions of Family Enterprises
- Family businesses are less likely to lay people off and more likely to hire despite the possibility of an economic downturn than publically held business
- Family businesses give charitably to their respective communities and engage in extensive philanthropic activities
- Family businesses have a long-term strategic outlook due to their main motivation of creating a legacy for generations to come
- Family businesses are less likely to raise debt and are widely deemed financially prudent
- Family businesses comprise 90 percent of all business enterprises in North America, and 62% of total U.S. employment. (Small Business Administration 2011)
Surprisingly Family Businesses Do Not Surivive Succession
- Only 30% of family businesses in America will be passing the reigns to the next generation, even though close to 70% would like to keep their business in the family. (peakfamilybusiness.com 2011)
- By the third generation, only 12% of family businesses in the US are typically still viable. (peakfamilybusiness.com 2011)
- By the fourth generation and beyond, only 3% of family businesses continue to exist. (peakfamilybusiness.com 2011)
- 47% of the companies surveyed had no succession plans in place. (peakfamilybusiness.com 2011)
Contributing to Succession Failure
- Almost a third (30.5%) of family business owners have no plans to retire, ever.
- The founder's expected death (47.7%).
- The owner's unexpected death (29.8%).
- The owner was forced to retire (6.1% ) (University of Connecticut Family Business Program, 2009).