Facts & Figures
Family Business Stats

How many family-owned businesses survive the transition to the “next generation?familybusinesssurvivalrate7

  • Research shows us that approximately, only 30 percent of all family-owned businesses survive into the second generation and only 12 percent will be survive into the third generation. Surprisingly, only 3 percent of all family businesses operate at the fourth generation and beyond. Therefore, making it to the 4th generation is very rare.

 

 

Why do businesses fail during transitions?

  • Of the 70% of businesses that fail to transition successfully; 60% fail due to problems with communicationand trust. 25% fail due to a lack of preparation from the next generation. 15% fail from all other issues (e.g. poor tax or financial planning, legal advice, etc.) Therefore, roughly 85 percent of business transitions fail due to a lack of communication, trust or next generation competency. JSA Advising, LLC specializes in helping businesses in each of these three areas. Source: Williams and Preisser, 2003

familybusinessesreasonsforfailure2

 

Do family-owned/operated businesses tend to outperform publically owned businesses?

According to a Business Week article, family companies tend to outperform non-family companies for the following reasons:

  1. Long-term development, training and retention of leaders.
  2. Tight-knit family members can move quicker than bureaucracies.
  3. Invest in employee loyalty to increase productivity and reduce turnover.
  4. Reinvest in the company with a long-term perspective.
  5. Governance by people with an emotional and financial investment.

 

Why is this important to our economy?

  • More than    of all business enterprises in the United States are family owned or Privately held.
  •  of senior generation family business shareholders have not completed any estate planning other than writing a will, want the business to stay in the family, and are not confident of the next generation’s commitment to the business.
  • In the next  years, 30% of family-owned firms will experience a change in leadership due to retirement or semi-retirement.
For more information about the services we offer to help businesses overcome the above facts, please click here…

 

Unless otherwise noted, the source of these statistics is the Unversity of North Carolina:
http://www.unca.edu/FBF/statistics.html

Family Business Survival

70% of Family Businesses never make it to the second generation.

-from the family buisness institute