Families in Business

1. 1

   The family members most frequently associated with family businesses regardless of definition are spouses, siblings, children, and parents. In-laws are not often associated with family businesses, but they are more likely to be associated with them than are more distant blood relatives such as cousins, aunts and uncles, or nieces and nephews.

2. 2

   A spouse is the family member most likely to be a joint owner, a co-manager, and single confidant consulted prior to a critical business decision. Except for ownership, the relative importance of a spouse declines as enterprises become larger.

3. 3

   After the spouse, sons, brothers, and fathers typically are the family members most frequently involved in family businesses.

4. 4

   The number of family businesses in the United States varies enormously depending on the definition of “family business” employed. Estimates range from 3 million family businesses when based exclusively on family ownership to somewhat over 1 million when based on family members voluntarily “helping out.” Only businesses that employ people other than the owner(s) qualified for inclusion in the estimates.

5. 5

   A core of businesses exhibit two or more characteristics often associated with family business. From that core, there are an estimated 2.5 million family businesses in the United States. That estimate includes all employing businesses having two or more family members as owners, and two or more adult family members who actively participate as manager, employee, or as-needed volunteer.

6. 6

   Approximately 30 percent of small employers have at least one other member of the immediate family who owns a different business, one separate and distinct from the employer’s enterprise and large enough to employ people other than the owner(s). These businesses may or may not involve other family members. The most likely owning relatives are siblings, followed by children, and parents.

7. 7

   Forty-eight (48) percent of family business owners would like to have a family member eventually take over operation of their venture. The number rises to five in eight among those whose firm employs 20 or more people. However, just 13 percent believe it is “very likely” that a family member actually will take over, though another 23 percent believe it is “likely.” Yet, only 7 percent of all operating businesses were inherited.

8. 8

   About 9 percent intend to transfer business ownership to one or more family members within the next five years. Those planning the transfer average a little less than 60 years of age.

9. 9

   Thirty-nine (39) percent say that they originally went into the business with one or more family members. Almost three-quarters of inherited businesses were transferred to more than a single family member.

10. 10

    Business ownership and operation in the United States tends to run in families. But extensive family ownership apparently does not feeze out others who want to form their own business.

Volume 2, Issue 6, 2002
ISSN 1534-8326

William J. Dennis, Jr.
NFIB Research Foundation

• 2Do one or more family members own any portion of this business? Top 100
• 2cAs a general rule, do these family member owners actively participate in CRITICAL business decisions or are they passive owners? Top 100
• 3Do one or more family members help manage this business on a day-to-day basis? Top 100
• 1Which BEST describes YOUR position in the business? Are you the:?
• 2aHow many family members own a portion?
• 2bWhich family member or members? Spouse, father, etc., NOT Fred, Ethel, etc. (Allow up to three responses.)
• 2dAre there other owners of the business who are not family members?
• 3aWhich family member or members? Spouse, father, etc., NOT Fred, Ethel, etc. (Allow up to three responses.)
• 4Do one or more family members work more than 20 hours per week in this business for wages or salary whether or not in a managerial capacity?
• 4aWhich family member or members? Spouse, father, etc., NOT Fred, Ethel,etc. (Allow up to three responses.)
• 5Are there family members over 18 who are unpaid, but who periodically contribute to the business by offering a special skill, filling in for someone, or other wise helping out?
• 5aWhich family member or members? Spouse, father, etc., NOT Fred, Ethel, etc. (Allow up to three responses.)
• 6Is there ONE person, inside or outside your business, that you are likely to talk to or discuss matters with before addressing a serious problem or making a critical business decision?
• 6aIs that person a family member?
• 6a1Which family member?
• 7Are you single, married, separated, divorced, or widowed?
• 7aDoes your spouse also own a business, separate and distinct from this one, that employs people other than the owner or owners?
• 8How many children age 18 or over do you have?
• 8aDoes one or more of your children over 18 own a business, separate and distinct from this one, that employs people other than the owner or owners?
• 8bHow many of your children age 18 or over own such a business?
• 9How many living brothers and sisters do you have?
• 9aDo one or more of your brothers and sisters now own a business, separate and distinct from this one, that employs people other than the owner or owners?
• 9bHow many of your brothers and sisters own such a business?
• 10Are both of your parents surviving, just one, or neither of them?
• 10aDoes [either/your parent] own a business, separate and distinct from this one, that employs people other than the owner or owners?
• 11Would you like one or more of your family members to eventually take over and operate this business?
• 11aDo you think it is very likely, likely, unlikely or very unlikely that one or more family members actually will?
• 11bDo you plan to transfer ownership of this business to one or more of your family members within the next five years?
• 12Did you start this business, purchase it, inherit it, or were you an employee brought into ownership?
• 12aDid you go into business yourself, with a family member, or with a non-family member?
• 13Do you believe that working with family members in this business has:?
• 14Would you consider consulting a banker about business succession planning?