Study identifies lack of income diversification, succession and strategic
planning as critical pitfalls
SEATTLE, May 23 /PRNewswire/ -- New nationwide research on family
businesses shows that the overwhelming optimism of family business owners
might be premature. A lack of strategic vision, succession planning and
governance policies could spell the end of many family-owned enterprises in
the near future.
"Family businesses need to heed the warning signs," says Rich Simmonds,
managing principal at Seattle-based wealth management firm Laird Norton
Tyee (LNTyee.) "We spoke to top family business leaders in the country and
the message is clear. An ongoing lack of succession and strategic planning,
and an overwhelming lack of income diversification, could damage our
economic heart and soul's ability to thrive."
Critical insights from Family to Family: Laird Norton Tyee Family
Business Survey 2007 (http://www.FamilyBusinessSurvey.com) include:
-- No new leaders: Nearly 60 percent of majority share owners in family
businesses are 55 or older and 30 percent are 65 or older, but less
than 30 percent have succession plans and fewer than 40 percent have a
successor lined up.
-- Family finances tied to business success: 93 percent of respondents
have little or no income diversification, deriving the majority of the
family's income and security from the business.
-- Lack of qualification requirements: Two thirds of family businesses
don't require family members have the qualifications or related
experience necessary to be successful when entering the business.
Twenty-five percent think the 'next' generation is not competent enough
to take the reins.
-- No formalized goals: Nearly half of American family businesses are
operating without a written strategic plan.
-- It's not all bad: The survey highlights best practices from each of
seven regions across the United States. (See pages 21-22.)
The full results of the project can be found at
http://www.FamilyBusinessSurvey.com.
Family to Family: Laird Norton Tyee Family Business Survey 2007 is a
comprehensive survey taken about family-owned businesses in America. The
project surveyed nearly 800 family business leaders from across the country
-- 83 percent of who identified their title as CEO, president, chair of the
board or vice president. Questions covered business histories and futures,
management and governance structures, and the influence multiple
generations of families have, and will continue to have, on the businesses.
Each company reported more than $5 million in annual revenue.
The survey was commissioned by LNTyee and the Laird Norton Company. It
was conducted by LNTyee, the Austin Family Business Program at Oregon State
University and the Albers School of Business and Economics at Seattle
University.
"As a seventh-generation, 152 -year-old family-owned business, the
Laird Norton Company believes that the survey will provide valuable
information to family business leaders everywhere," said Jeff Vincent, CEO
of the Laird Norton Company. "The survey will also educate the larger
business community about the significant contribution family businesses
make to the economy and the unique challenges they face."
The project grew out of a roundtable discussion held by Laird Norton
Company in 2005. Family business leaders expressed frustration, not with
the day-to-day operations of their firm, but with long-term planning. In
response, LNTyee set out to establish a new baseline of information for
family-owned businesses with data more relevant to their needs than
previous studies.
"The most surprising outcome of the survey is that the needle is stuck
on conventional wisdom," says Simmonds, who leads family business
initiatives at LNTyee. "We're seeking deeper understanding of family
businesses so that we can continue to build resources to support them. We
feel this information is extremely important for businesses of all size, so
we've made it available on the Internet at
http://www.FamilyBusinessSurvey.com."
About Laird Norton Tyee
Laird Norton Tyee is the Pacific Northwest's largest privately held
wealth management firm, with more than $4 billion in assets under
advisement. The organization serves high-net-worth clients including
individuals, families, private foundations and nonprofit organizations with
investment stewardship, personal strategic planning,
generation-to-generation wealth transfer, and family and business
governance. Through an open-architecture approach, Laird Norton Tyee helps
clients pursue industry leading resources that let their wealth serve as
the launching pad for reaching their goals.
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