The vast majority of U.S. family business owners polled in a recent survey believe policymakers, the public and the media need more education about family businesses’ contributions to their communities and to the economy. And the focus of such educational efforts, survey respondents said, should be on estate, gift and generation-skipping tax policies and business tax incentives.
The online survey was conducted in January 2011 by Family Enterprise USA (FEUSA), an independent non-profit membership organization whose mission is to increase the public’s knowledge and awareness of family businesses’ positive contributions. The 187 respondents were owners, presidents, vice presidents or directors of family firms. More than two-thirds (70%) were from companies that were founded at least 30 years ago; 14% of the respondents’ companies were 100 or more years old. Almost a third of the survey participants’ businesses (31%) were in the second generation of family ownership; 43% were in the third generation or older.
More than half (57%) of the respondents said they were Republicans. Nearly a quarter (24%) identified themselves as independent. Only 10% said they were Democrats. (Of the remainder, 7% said they’d “rather not say,” and 1% identified themselves as “Other.” The total does not add up to 100% because percentages were rounded.)
Feeling misunderstood
More than three-quarters (76%) of the respondents said policymakers don’t understand family businesses’ needs and issues “at all”; only 24% said policymakers have an adequate understanding of these matters. They were somewhat more optimistic about the general public—60% said the public doesn’t understand family firms’ needs and issues; 40% said the public understands them adequately.
Nearly all of those polled (93%) said policymakers “need to be more aware of the positive contributions made by family businesses to their communities and the economy.” They also said the general public (81%), the media (79%) and business school/university educators (66%) should be made more aware of family firms’ contributions.
When asked to rank a variety of issues that could be brought to the attention of federal policymakers, 48% of the survey participants gave the top ranking to “changes to the estate, gift and generation-skipping tax policies”; 19% put this item second on the priority list. The issue ranked second-highest was “creating incentives for growth and strategic rejuvenation of existing ventures”—22% listed this as priority No. 1, and 29% ranked it at No. 2.
By contrast, only 13% said providing policymakers with facts about family businesses (prevalence, economic impact, societal contributions, etc.) should be a top priority. Just 4% said this was their No. 2 priority; 16% listed it as No. 3.
FEUSA president Ann Kinkade notes that the ranking of priorities reveals a bit of a disconnect: Survey participants feel that policymakers and the public don’t understand why it’s important to help keep family businesses operating, yet these respondents assign a low priority to dissemination of research results on family businesses’ economic impact and other key statistics.
FEUSA’s outreach activities will emphasize the link between educational efforts and policy goals, says Kinkade, who was previously the director of the University of Wisconsin-Madison Family Business Center. “Sometimes people don’t know what they don’t know,” she reflects. “[Family business owners] don’t know that we need those facts so we can make a case that’s credible—but we’ll help them with that.”
More than two-thirds of respondents (69%) reported that they “always” describe their companies as a family business, and 24% say they “sometimes” do. Yet in answer to the question, “If you were to associate your business issues with those of other businesses, which of the following would you most likely choose?,” only 20% said “other family businesses.” The majority—60%—said “other businesses in my industry/field.” (Eleven percent said “other businesses of a similar size,” and 9% said “other businesses in my community.”) That conundrum, Kinkade says, represents another challenge for FEUSA, which will advocate for recognition of family-owned businesses as an important sector within the business community.
Advocacy initiatives
Kinkade says the organization will use the survey results to help refine its still-evolving vision and mission. She plans to present the findings at family business center events, where she will continue the research by asking attendees to weigh in. FEUSA plans to conduct further studies in the future, Kinkade adds.
While most survey participants would prefer a focus on tax and other economic policy issues, FEUSA must limit its lobbying activities because it is a 501(c)(3) organization whose member dues are tax-deductible. However, Kinkade points out, “There is a huge amount of education that can be done around these issues that’s not considered lobbying.”
The survey findings also reveal a need to educate family business owners themselves, Kinkade notes. Only 54% of respondents said family business owners “understand adequately” family business needs and issues; just 36% said family business owners “completely understand” them, and 10% said family business owners don’t understand family business needs and issues “at all.” One of the questions FEUSA’s board and staff will ponder, Kinkade says, is, “How do we educate family business owners who don’t know what their issues are?”
About 75% of the respondents reported that their companies had 100 or fewer employees. FEUSA contends, however, that a family firm’s contribution to the economy extends beyond the number of people on its staff. A family business’s ability to retain its existing employees and to hire new workers may be more relevant in today’s economy, the organization noted in its survey report. Indeed, only 6% of the survey respondents planned a reduction in their employee ranks in the next 12 months; 42% said their number of employees would not change, and 52% predicted that they would increase the number of people they employed.
“People who take good care of their companies,” Kinkade asserts, “are good community citizens.”
For more information about FEUSA, see the group’s website at www.familyenterpriseusa.org.
Shared identity
| If you were to associate your business issues with those of other businesses, which of the following would you most likely choose?
|
| 60% | Other businesses in my industry/field |
| 20% | Other family businesses |
| 11% | Other businesses of a similar size |
| 9% | Other businesses in my community |
| Source: Family Enterprise USA Annual Family Business Survey, 2011
|
Increasing awareness
| Which of these groups needs to be more aware of the positive contributions made by family businesses to their communities and the economy? (Check all that apply.)
|
| 93% | Policymakers |
| 81% | The general public |
| 79% | The media |
| 66% | Educators (universities, business schools, etc.) |
| 43% | Family business owners themselves |
| 9% | Other |
| Source: Family Enterprise USA Annual Family Business Survey, 2011
|
Key issues
| The following is a list of issues that could be brought to the attention of federal policymakers regarding their impact on family businesses. Please rank the issues in terms of importance to you. (1 = most important; rank the top three.)
|
| Priority | 1 | 2 | 3 |
| Changes to the estate, gift, and generation-skipping tax policies | 48% | 19% | 14% |
| Creating incentives for growth and strategic rejuvenation of existing ventures | 22% | 29% | 19% |
| Continued incentives for entrepreneurship | 7% | 19% | 23% |
| The taxation of dividends and capital gains | 10% | 24% | 22% |
| SEC regulations and their effects on private companies | 0% | 5% | 6% |
| Facts about family businesses (prevalence, economic impact, societal contributions) | 13% | 4% | 16% |
| Source: Family Enterprise USA Annual Family Business Survey, 2011
|