Family to Family: Laird Norton Tyee Family Business Survey 2007

Family-owned businesses are alive and well in 2007. Starting, owning and operating a family business continues to be the cornerstone of the American dream. Many view it as the true road to financial freedom. However, there are some troubling trends that could create insurmountable challenges for family firms across the country.

Family-to-Family: the Laird Norton Tyee Family Business Survey 2007 provides a snapshot of American family companies in the early part of the 21st Century. It’s an acknowledgement of the past, a close-up on the present, and a roadmap to the future for anyone who cares about family-owned businesses.

Despite the wide, diverse and unique nature of individual family businesses, the survey found some consistent and intriguing results.

Family businesses are thriving. More than 96 percent of respondents anticipate that their business will expand or at least remain the same size over the next year. Recent economic slowdowns, particularly in sub-prime lending, have not seemed to influence this key segment of the economy. The profound optimism of family business owners has them charging forward.

Succession worries are imminent. Members of the extremely entrepreneurial baby boom generation, who launched family enterprises with gusto, are rapidly approaching retirement. Nearly 60 percent of majority shareowners in family businesses are 55 or older. Nearly 30 percent are 65 or older. Succession of the leadership will be a pivotal point in these companies’ futures, yet less than 30 percent have succession plans, and fewer than 40 percent have a successor in line and preparing for the transition.

Size shouldn’t be an excuse. Many smaller family businesses seem to avoid accepted business practices in running their enterprise. It may be that too much time is spent on day-to-day requirements, but it is essential that business leaders also direct attention to the proper infrastructure.

Perception is not necessarily reality. Nearly 95 percent of respondents indicate that they manage their family-owned enterprise like they would any other business, but the numbers say otherwise. Only 56 percent have a written strategic plan and less than 30 percent have a written succession plan.

All in the Family? More than 64 percent of respondents don’t require family members entering business to have the qualifications or related experience necessary to be successful, and 25 percent think the next generation is not competent to move into leadership roles.

The Narrow Margin. A stunning 93 percent of respondents have little or no income diversification. Simply put, all their eggs are in one basket.

Family-to-Family: Laird Norton Tyee Family Business Survey 2007 isn’t the last word. It’s the start of a conversation. When Laird Norton Tyee set about conducting a survey about family-owned businesses, the company leadership was looking for a deeper, more quantitative set of data than used before. These results put a foundation in place to build an ongoing and comprehensive view of what it means to own, operate and grow a family-owned business in America today.

There is much more. Please download and read the full survey.
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