We family businesses make up about 90% of American businesses, according to the US Bureau of the Census. We are responsible for 60% of the US employment and over half (57%) of the Gross National Product!
A family business is classified as a company with two or more family members in leadership roles, and in which the family retains a majority of the ownership or control of the business. Some family-owned businesses employ just a few people, others employ thousands, and into Fortune 500 companies.
So, I thought I’d share some of family business statistics!
Family Businesses Are:
- Family-owned businesses are responsible for creating 78% of all new jobs in the US.
- 35% of Fortune 500 companies are family companies.
- 74% of family businesses report a strong sense of culture and values.
- The oldest family-owned business operating in the US is the Zildjian Cymbal Co. of Norwood, MA. Founded in 1623 in Constantinople and moved with the family to the US in 1929.
- The largest family-owned business in the US is Wal-Mart Inc., with 2021 revenue of $559 billion and 2.2 million associates worldwide
- Families own for an average of 78 years.
- More than 30% of all family-owned businesses survive into the second generation. 12% will still be viable into the third generation, with 3% of all family businesses operating at the fourth-generation level and beyond.
- More than half (60%) of family businesses report that they believe they hold themselves to higher ethical standards than their competitors. The same number also report that they regularly discuss ethical issues and standards during meetings with management and during discussions with employees and customers.
- 1% of entrepreneurs said they grew up in a family business.
Expectations for 2022
- Top five priorities in 2022: expand into new markets/client segments (57%), introduce new products/services (50%), strategic M&A (45%), increasing the use of new technologies (43%), and rethinking/revising the business model (43%)
- 96% expect growth in 2022, up from 82% expected in 2021
- 50% expect to increase diversification in their family and business holdings within five years.
- 40% of US family businesses say they want to see the next generation’s increasing involvement in decision-making and management (globally, only 24% of family businesses are focused on next-gen involvement).
- 67% already have next-gen family members working in the business and anticipate they will become majority shareholders within five years.
- 54% expect to be family controlled or family owned within five years.
- Despite continued fear of job losses, 1 in 5 employees have either left their jobs or are planning to quit in the next six months, according to the Edelman Trust Barometer.
- 3% of family business owners are planning to retire at some point in the future. However, less than half of those who are planning to retire within the next five years have a clear succession plan in place. Many have no plans at all.
- Levels of trust, transparency and communication are felt to be quite high. However, only 56% say there is family alignment on company direction.
Women in Family Businesses
- 24% of family businesses are led by a woman who holds the rank of president or CEO.
- More than a third of family businesses have designated a woman as their successor.
- Most female-owned family businesses are younger than their male counterparts. The difference is ten years on average.
- The majority of female-owned family businesses report high levels of family loyalty and alignment on key issues such as long-term goals, ethos, and pride in the business.
- Family businesses that are owned by women report an attrition rate 40% lower than their male counterparts.
- Over the past five years, woman-owned family businesses have increased by 37%.
- There is also evidence to indicate that women-owned family businesses are better prepared for transition scenarios and have higher success rates than businesses controlled by their male counterparts.
- 93% of US family businesses engage in some form of social responsibility activities, and have for decades
- ESG is environmental, social and governance principles
- Environmental includes things like climate risk, carbon-emissions, waste and water management
- Social includes social justice, diversity & inclusion, human capital management, data security and privacy
- Governance includes business ethics, board governance (i.e., diversity)
- The idea is centered on trust with customers, community, and stakeholders
- Employees are becoming more “belief-driven” in the wake of the pandemic, with 6 in 10 of those changing jobs seeking a better fit between their own and their employer’s corporate values.
- Companies that prioritize ESG can increase employee engagement.
- Customers often reward companies with strong ESG initiatives, and many are willing to pay more for products and services from companies that have strong ESG values.
- 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.
Here’s a short video explaining the key takeaways from the PWC 2021 Family Business Survey.
To learn more, check out these sites and studies from which I got the statistics for this blog:
- Cornell University – https://www.johnson.cornell.edu/smith-family-business-initiative-at-cornell/resources/family-business-facts/
- Edelman 2021 Trust Barometer – https://www.edelman.com/trust/2021-trust-barometer
- Family Business Alliance – https://www.fbagr.org/resources/cited-stats/
- Family Business Center – https://www.familybusinesscenter.com/resources/family-business-facts/
- Gaebler – https://www.gaebler.com/Family-Business-Statistics.htm
- Inc Magazine – https://www.inc.com/encyclopedia/family-owned-businesses.html
- PWC 2021 Family Business Survey – https://www.pwc.com/us/en/services/trust-solutions/private-company-services/library/family-business-survey.html
- Startups Anonymous – https://startupsanonymous.com/blog/family-business-statistics/
- WeForum – https://www.weforum.org/agenda/2021/09/corporate-values-employee-motivation-employee-activism/