From sports stats to TV ratings, political polls to weather forecasts, people just seem to love statistics. They’re easy to digest, encourage debate and can turn us on to things we may never have thought of before. From the oft-quoted “What percentage of family businesses survive into the third generation?” to the obscure, “How does compensation for CEOs in family companies compare to CEOs in non-family companies?” — here are a few of our favorite facts and stats about family business. Nine out of 10 readers may find them interesting and thought-provoking.
Family Business and the US Economy
Ownership and Transition Planning
The Business of the Family Business
Family Business Financial Performance
Women in Family Business
Oldest Family Businesses
Largest Family Businesses
Family Business and the US Economy
Family-owned and family-controlled firms comprise 80% to 90% of all business enterprises in North America.
- Family Business Review, September 2003
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.
- US Department of Commerce, Bureau of the Census
Companies with fewer than 500 employees (many of which are family-owned) accounted for 64 percent (or 14.5 million) of the 22.5 million net new jobs between 1993 and the third quarter of 2008.
- US Department of Labor, Bureau of Labor Statistics
Small businesses (companies with fewer than 500 employees):
- Represent 99.7% of all employer firms
- Employ just over half of all private sector employees
- Pay 44% of total US private payroll
- Have generated 64% of net new jobs over the past 15 years
- Create more than half of the non-farm private gross domestic product (GDP)
- Hire 40% of high-tech workers (e.g., scientists, engineers, and computer programmers)
- Made up 97.3% of all identified exporters and produced 30.2% of the known export value in FY 2007
- Produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large firm patents to be among the 1% most cited
- US Small Business Administration; US Dept. of Commerce, Bureau of the Census; US Department of Labor, Bureau of Labor Statistics
Family businesses are represented across the full spectrum of American companies, from small businesses to major corporations. One-third of Fortune 500 companies are family-owned or family-controlled.
- Family Firm Institute
Ownership and Transition Planning
More than 30% of all family-owned businesses survive into the second generation. Twelve percent will still be viable into the third generation, with 3% of all family businesses operating at the fourth-generation level and beyond.
- Joseph Astrachan, PhD, Editor, Family Business Review
By 2017, it is estimated that 40.3% 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 had selected a successor.
- 2007 American Family Business Survey
The majority (two-thirds) of family business owners in a Barclays/Economist poll want to ensure a livelihood for their dependents by running the business.
- Barclays Wealth Insights, 2009
Among family firms that have identified a successor, 85% say it will be a family member.
- American Family Business Survey, 2003
Among family business owners, almost a third (30.5%) have no plans to retire, ever.
- 2007 American Family Business Survey
Nearly a third of family business owners (31.4%) have no estate plan beyond a will. Only 53.5% of these owners reported having a “good understanding” of estate taxes that could be due.
- 2007 American Family Business Survey
In 2002, it was estimated that only 10% of family companies had a female CEO or President. By 2007, that number was estimated at 24%. This far outstrips the numbers in the world of non-family businesses, where, for example, only 2.5% of Fortune 1000 firms are led by women.
- 2007 American Family Business Survey
The Business of the Family Business
Between 10% and 15% of US family firms are managed by non-family executives.
- Barclays Wealth Insights, Volume 8, 2009
Research shows that family businesses are less likely to lay off employees regardless of financial performance.
- Journal of Business Ethics, 2007
A majority of family businesses (60%) 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.
- 2007 American Family Business Survey
Slightly more than one-third of family businesses (36.6%) have a written strategic plan. Slightly less than one-third (31.1%) use a formal process to establish a strategic plan.
- 2007 American Family Business Survey
The majority of family companies (84%) say they have plans in place for dealing with both business and family issues should a key manager or shareholder become incapacitated.
- PriceWaterhouseCoopers Family Business Survey 2007
The environment for innovation in family businesses improves when more generations of the owning family are actively involved in it.
- Family Business Review, 2005
When asked, “Who is your most trusted advisor?” business owners rank their spouse as number one. In order of “most trusted,” spouses are followed by accountant, business peer, parent, lawyer and financial services advisor.
- 2007 American Family Business Survey
Among family companies:
- 37.4% have buy-sell agreements or other arrangements defining who can own stock and how it is transferred
- 64% have regular formal valuations of the worth of the business
- 33% have an active board of directors and 50.9% rate the contributions of their board as outstanding
- 55.4% have formal family meetings at least once a year
- 2007 American Family Business Survey
Family Business Financial Performance
Among the companies listed on the S&P 500, 34% are family businesses, in which the founding family has, on average, 18% of firm equity. Family firm performance is greater and EVA is 5.5% greater ($118.6 million on average) when founding families maintain an ownership stake.
- Ronald C. Anderson and David M. Reeb, 2003
In the S&P 500 companies, ROA is greater in family businesses, with a 6.65% greater return than non-family firms.
- Ronald C. Anderson and David M. Reeb, 2003
Family firm CEOs earn on average 10% less than their non-family counterparts.
- Ronald C. Anderson and David M. Reeb, 2003
Women in Family Business
The number of family businesses run by women grew 37% between 1998 and 2003. Average annual revenue of these companies was $26.9 million in 2002.
- Boston Business Journal, September 2003
It is estimated that 1.2 million businesses in the US are run by husband-and-wife teams.
- National Federation of Independent Businesses
34% of family firms expect their next CEO to be a woman.
- American Family Business Survey, 2003
Oldest Family Businesses
America’s oldest family business is the Zildjian Cymbal Co. of Norwood, Massachusetts, founded in 1623.
Houshi Onsen, a spa and inn located in the mountains a few hours from Tokyo, is the world’s oldest family business, founded in 718.
Largest Family Businesses
Wal-Mart Stores, Inc. is not only the world’s largest retailer, but also the largest US family-controlled public company.
Koch Industries, a family-owned oil and gas conglomerate headquartered in Wichita, Kansas, surpassed Cargill, Inc. in 2010 to become the US’s largest privately-held company.
