The Fate of the Family Business
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While the Fortune 500 companies get most of the press, the fact is there are about 23 million businesses in the United States, according to the U.S. Small Business Administration. And, it’s estimated that 90% of these companies are independently-owned, family-owned or family-controlled. More surprisingly, these businesses employ more than half of the nation’s workforce.1
Yet, family business experts concur that more than 30% of all family-owned businesses survive into the second generation, and about 12% will still be viable into the third generation. 2
Why is this? Experts cite three reasons:
- Family conflict
- Failure to design a proper succession plan
- High federal estate taxes
Financial planners can look at each of these problems and recommend some potential solutions to:
- Help your family more effectively resolve conflict,
- Save taxes, and
- Transfer your business to the next generation.
1 Source: SBA’s Office of Advocacy. May 13, 2002.
2 The Family Firm Institute (www.ffi.org), 2003.
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