Family businesses are an integral part of the US economy. Any company that has two or more family members in leadership roles, and in which the family retains a majority of the ownership or control of the business, is classed as a family business. Some family-owned businesses employ just a few people; others employ thousands.
Below are some of the key statistics regarding family-owned businesses and their place in the US economy.
Most Quoted Statistics
- 60% of the US workforce is employed by a family-owned business.
- Family-owned businesses are responsible for creating 78% of all new jobs in the US.
- Only 30% of family-owned businesses last until the second generation, and only 12% will make it to the third generation.
- 47% of people who own a family business are planning to retire within the next five years but don't have any kind of succession plan in place.
- Family businesses are contributing more than half (57%) of the total US GDP.
- Just under 20% (19.3%) of US firms are family-owned.
- Of the family firms that reported an annual growth rate of more than 10% in the year 2018, more than 80% also reported having a clear sense of purpose and agreed on values within their business.
- Almost three-quarters (74%) of family businesses report a strong sense of culture and values.
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 (31.3%) of family businesses have designated a woman as their successor.
- Just under 60% of family-owned businesses have women in top management positions within the company.
- The number of family businesses owned by women has increased by 37% in the last five years.
- 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.
Future Challenges For Family Businesses
- 40.3% of family business owners are planning on retiring 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.
- 43% of all family-owned businesses lack a succession plan, irrespective of their plans for the future.
- As many as 70% of family business owners surveyed report that they would like to pass on their business to the next generation when the time is right. However, only 30% of family businesses are successful in executing such a transition.
- 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.
Related: Gig economy statistics