Family businesses are the heart, soul and lifeblood of the economy. They create jobs, pay taxes and help build vibrant communities where they operate, as well as across the country. From some of the world’s largest companies to the “mom and pop” shops on Main Street, family owned companies are a force to be reckoned with when it comes to running a business — and the greatest source of wealth creation worldwide.
What the Statistics Say
The greatest part of America’s wealth lies with family owned businesses.
- According to research, family firms comprise 80 percent to 90 percent of all business enterprises in North America.
- Family businesses also account for 64 percent of U.S. gross domestic product, generate 62 percent of the country’s employment, and account for 78 percent of all new job creation.
- Research shows that family businesses are less likely to lay off employees regardless of financial performance.
Family Businesses Also Have Longevity
Research has shown that continued family control can be efficient, since families are, for example, able to positively affect their firms, apply a long-term perspective allowing for unique strategic positioning, have less human resources problems and higher firm values, or drive new entrepreneurial activity.
- More than 30 percent of all family-owned businesses survive into the second generation. Twelve percent will still be viable into the third generation, with 3 percent of all family businesses operating at the fourth-generation level and beyond.
- The tenure of leadership in a family enterprise is four to five times longer than their counterparts.
- Of primary importance among family firms is not only transferring their financial wealth but also their values to subsequent generations — encouraging children to earn their own money,philanthropy, charitable giving and volunteering.
Read All About It
In this edition of the Business Magazine, we’ll examine the opportunities and challenges that family owned businesses face today. We’ll take a look at the 100-year-old Rabe Environmental Systems, which is now being led by its third generation of the Patrizia family. We’ll also talk to husband-and-wife small business owners Laura and Dan Caflisch about operating a small, family company, plus much more.
The Manufacturer & Business Association, which was founded in 1905, was started by a group of industrialists, many of whom ran family businesses. The Association’s membership proudly represents a majority of family owned companies today. To learn more about the resources available to these companies, visit www.mbausa.org.
