Family-Owned Businesses Create 78% of New U.S. Jobs, According to SCORE

Family businesses employ 60% of the U.S. workforce and create 78% of all new jobs, according to SCORE, a network of volunteer, expert business mentors.

SCORE said that “family businesses” are defined as businesses operated by two or more family members, with majority ownership held within the family.

Altogether, family-owned businesses generate 64% of the gross domestic product (GDP).

Family owned businesses vary in size and structure:

  • Of the 28.8 million small businesses in America, 19% are family-owned.
  • Family businesses range in size from a staff of two people (including the owner) to thousands of employees.
  • 2 million family-owned businesses are run by a married couple.

Family-owned businesses attribute their success to good governance and positive culture:

  • Good governance: 94% of family-owned businesses are controlled by supervisory or advisory boards.
  • Customer and employee care: 74% of family-owned businesses report having strong values and positive company culture.
  • Focus on the next generation: More than 40% of businesses include younger family members on their boards and committees to nurture business and management skills.

Despite their success, many family-owned businesses face serious challenges with succession:

  • Only 30% of family businesses survive the transition from first to second-generation ownership.
  • Even fewer (12%) of family businesses survive the transition from second to third-generation ownership.
  • Ultimately, just 13% of family businesses remain in the family for more than 60 years.

Looking towards the future, 47% of family business owners report that they expect to retire in the next five years, but do not have a succession plan.

Find out more at score.org.

 

Copyright Today’s Credit Unions