ST. LOUIS--(BUSINESS WIRE)--Only twenty-seven percent of family businesses surveyed have a fully structured succession plan, with more than half (52%) of respondents indicating their plans were impacted by the pandemic – 37% were slowed or paused and 15% were sped up – according to a new survey of family-owned businesses by the First Bank Center for Family-Owned Businesses. Additionally, there are differences between first- and subsequent generations (2nd, 3rd, 4th and 5th) owners/members on a variety of topics, including how and when to best involve future generations in the businesses.
Family-owned businesses, or businesses where the majority of ownership or control lies within a family, have a substantial impact on the U.S. economy. Nearly 62% of the U.S. workforce – approximately 82 million people – is employed by a family-owned business. And 64% of U.S. gross domestic product (GDP) – totaling $5.9 trillion – comes from a family-owned business.1
The 2023 Family Business Survey is the first research project released from the First Bank Center for Family-Owned Businesses. The research engaged 552 family business owners/members across first- to fifth- generation companies and was conducted in partnership with MacKenzie Corporation.
“Family-owned businesses have the challenges of their industry, of course, but also the added complexities of succeeding their parents or grandparents and working side by side with their siblings,” said Shelley Seifert, First Bank chairman and CEO. “The 2023 Family Business Survey highlights the unique attributes of family businesses, their cultures and how different generations of ownership approach their businesses differently.”
Among the survey findings:
- There are generational differences in motivations for starting and running family-owned businesses. While first-generation respondents identified self-sufficiency and passion as their top motivators for starting the business, subsequent generations chose family support and entrepreneurship as their main motivators.
- 42% of subsequent respondents started working for their family’s business to continue the family legacy, 22% were asked to join the family business, 15% needed a job, 11% needed to fill the role and 10% said it was always the plan.
- Out of the 73% of family businesses that have (or are planning to create) a structured succession plan, there’s a 50/50 split between seeking outside support and keeping the process internal.
- 37% of succession planning efforts were slowed or paused due to the pandemic.
- Subsequent-generation business owners and family members believe it’s more likely to pass ownership to a future generation in the next 10 years (49%), whereas first-generation believe it’s less likely to pass ownership in the next 10 years (27%).
- Subsequent generations see their business strategies changing in more ways than first generations over the next year, with notable differences being Corporate Social Responsibility (9 percentage points higher) and Research & Development Investments (9 percentage points higher).
“For the past four generations, we’ve experienced and overcome many of the same challenges we counsel family-owned businesses about today,” said Ed Hart, senior vice president and director, First Bank Center for Family-Owned Businesses. “It is our sole focus to help family-owned businesses thrive for generations to come.”
Full survey findings are available upon request or can be accessed on the First Bank Center for Family-Owned Businesses website. And to sign up for the mailing list, visit the Center’s website.
First Bank Center for Family-Owned Businesses
The First Bank Center for Family-Owned Businesses was created in 2021 to expand focus and resources for family-owned businesses. The Center is lead by Joe Ambrose, executive director, and Ed Hart, director. Between them, they have over 60 years of experience with family-owned businesses. The Center offers tailored resources to serve the unique needs of family business members, online tools, webinars and educational opportunities for family-owned businesses of all sizes. To visit the online resource, visit www.first.bank/Business/Plan/Center-for-Family-Owned-Businesses. For more information, contact CFOB@fbol.com.
About First Bank
First Bank, a subsidiary of FB Corporation, is one of the largest privately owned banks in the country. As a family-owned business with four generations of independent, single-family ownership, First Bank offers the stability and experience with long-term planning that helps businesses and the communities in which they operate grow and thrive. With $6.6 billion in assets and 79 locations throughout California, Missouri and Illinois, First Bank has developed a relationship-driven approach to offer comprehensive solutions for clients in commercial and consumer banking, wealth management, mortgage banking and more. For information, visit www.first.bank.
1 2021 research by FamilyBusiness.org