Family Business Facts, Figures and Fun

Although you may not know it, family businesses are economic powerhouses. They create jobs, pay taxes and help build vibrant communities in Central Ohio and across the country.

America's Economic Engine

  • Family-owned businesses are the backbone of the American economy. Studies have shown about 35 percent of Fortune 500 companies are family-controlled and represent the full spectrum of American companies from small business to major corporations. In addition, family businesses account for 50 percent of U.S. gross domestic product, generate 60 percent of the country's employment, and account for 78 percent of all new job creation.1

  • The greatest part of America's wealth lies with family-owned businesses. Family firms comprise 80 to 90 percent of all business enterprises in North America.2

  • Roughly 90 percent of the families responding to a survey in "From Longevity of Firms to Trans-generational Entrepreneurship of Families: Introducing Family Entrepreneurial Orientation indicated that they control more than a single firm. The results of the survey suggest that there is strong entrepreneurial activity undertaken by controlling families beyond their core (i.e., largest) company.3

  • Small businesses, including many family firms, employ just over half of US workers. Of 119.9 million non-farm private sector workers in 2006, small firms with fewer than 500 workers employed 60.2 million and large firms employed 59.7 million. Firms with fewer than 20 employees employed 21.6 million.4

  • Research shows that family businesses are less likely to lay off employees regardless of financial performance.5

Family Businesses Have Longevity

  • Recent research has shown that continued family control can be efficient, since families are, for example, able to positively affect the resource inventory and usage of 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.6

  • The mean age of family control in the family's core company is 60.2 years, with the 2.8th family generation being in control.7

  • Of primary importance among family firm wealth holders is transferring not only their financial wealth but also their values surrounding their wealth to subsequent generations. Primary values taught include encouraging children to earn their own money, philanthropy, charitable giving and volunteering.8

  • The environment for innovation in family businesses improves when more generations of the owning family are actively involved in the business.9

    The Schoedinger Family

Central Ohio has family business longevity. Meet Conway Center members David, Mike, Randy and Jay Schoedinger of Schoedinger Funeral and Cremation Service. 157 years in business and still going strong.

Family Businesses Create Wealth

  • Family-owned businesses have strong entrepreneurial activity across time. On average and over the family's history these families controlled 6.1 firms, created 5.4 firms, added 2.7 firms through merger and acquisition activity, spun off 1.5 firms, and shifted industry focus 2.1 times. These families exhibit a significant level of entrepreneurial activity over time, in terms of rearranging the portfolio of activities through founding activity, mergers and acquisitions, as well as divestments.10

  • The largest family-owned business in the US is Wal-Mart Inc., with $443.9 billion in net sales and 1.4 million U.S. employees in 2012.11

  • In the S&P 500 companies, ROI is greater in family businesses, with a 6.65 percent greater return than non-family firms.12

Women Matter in Family Business

  • 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.13

  • Of the non-family firms in the Fortune 1000, only 2.5 percent are currently led by women (Fortune magazine, 2007).14

Big Issues Face Family Businesses

  • By 2017, it is estimated that 40.3 percent of family business owners expect to retire, creating a significant transition of ownership in the US. Less than half of those expecting to retire in five years have selected a successor.15

  • Nearly a third of family business owners (31.4 percent) have no estate plan beyond a will. Only 53.5 percent of these owners reported having a "good understanding" of estate taxes that could be due.16

  • A majority of family businesses (60 percent) believe that their ethical standards are more stringent than those of competing firms. They also report ethical standards being discussed often or always at meetings with employees, in discussions with customers and during board meetings.17

Source References

1 (Perman, Stacy. "Taking the Pulse of Family Business," 2006. Bloomberg Businessweek. Retrieved November 2012: http://www.businessweek.com/stories/2006-02-13/taking-the-pulse-of-family-businessbusinessweek-business-news-stock-market-and-financial-advice)

2 (Astrachan, J. H. and Shanker, M. C. (2003), Family Businesses' Contribution to the U.S. Economy: A Closer Look. Family Business Review, 16: 211-219. Retrieved November 2012: http://onlinelibrary.wiley.com/doi/10.1111/j.1741-6248.2003.tb00015.x/abstract.)

3 (Zellweger, Nason, Nordqvist. From Longevity of Firms to Transgenerational Entrepreneurship of Families: Introducing Family Entrepreneurial Orientation. Retrieved November 2012: http://c.ymcdn.com/sites/www.ffi.org/resource/resmgr/docs/goodman_study.pdf.)

4 (Zellweger, Nason, Nordqvist. From Longevity of Firms to Transgenerational Entrepreneurship of Families: Introducing Family Entrepreneurial Orientation. Retrieved November 2012: http://c.ymcdn.com/sites/www.ffi.org/resource/resmgr/docs/goodman_study.pdf.)

5 (US Department of Commerce, Bureau of the Census. Statistics for All U.S. Firms That Were Family-Owned by Industry, Gender, Ethnicity, Race, and Veteran Status for the U.S.: 2007 Survey of Business Owners. Retrieved November 2012: http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=SBO200700CSCB04&prodType=table)

6 (Greater Washington D.C. Family Business Alliance. Family Business Fun Facts. Retrieved November 2012: http://www.dcfamilybusiness.com/resources/knowledge-base/family-business-fun-facts)

7 (Zellweger, Nason, Nordqvist. From Longevity of Firms to Transgenerational Entrepreneurship of Families: Introducing Family Entrepreneurial Orientation. Retrieved November 2012: http://c.ymcdn.com/sites/www.ffi.org/resource/resmgr/docs/goodman_study.pdf.)

8 (Deutesche Bank Group. Wealth with Responsibility Study/2000. Retreived November 2012: http://www.bc.edu/content/dam/files/research_sites/cwp/pdf/wwr.pdf)

9 (Greater Washington D.C. Family Business Alliance. Family Business Fun Facts. Retrieved November 2012: http://www.dcfamilybusiness.com/resources/knowledge-base/family-business-fun-facts)

10 (Zellweger, Nason, Nordqvist. From Longevity of Firms to Transgenerational Entrepreneurship of Families: Introducing Family Entrepreneurial Orientation. Retrieved November 2012: http://c.ymcdn.com/sites/www.ffi.org/resource/resmgr/docs/goodman_study.pdf.)

11 (Walmart 2012 Annual Report. Retrieved December 2012: http://www.walmartstores.com/sites/annual-report/2012/WalMart_AR.pdf)

12 (Anderson, R. C. and Reeb, D. M. (2003), Founding-Family Ownership and Firm Performance: Evidence from the S&P 500. The Journal of Finance. Retrieved November 2012: http://onlinelibrary.wiley.com/doi/10.1111/1540-6261.00567/abstract)

13 (Mass Mutual American Family Business Survey, 2007. Retrieved November 2012: http://www.massmutual.com/mmfg/pdf/afbs.pdf.)14 (University of New Hampshire Center for Family Business. Family Business Facts. Retrieved November 2012: http://www.familybusiness.unh.edu/usefulinfo/FamilyBusinessFacts.pdf)

15 (Mass Mutual American Family Business Survey, 2007. Retrieved November 2012: http://www.massmutual.com/mmfg/pdf/afbs.pdf.)

16 (Mass Mutual American Family Business Survey, 2007. Retrieved November 2012: http://www.massmutual.com/mmfg/pdf/afbs.pdf.)

17 (Mass Mutual American Family Business Survey, 2007. Retrieved November 2012: http://www.massmutual.com/mmfg/pdf/afbs.pdf.)