Kreischer Miller

FOR IMMEDIATE RELEASE

Contact: Leza Raffel

(215) 884-6499

 

 

REGIONAL SURVEY REVEALS FAMILY BUSINESSES MAY BE UNPREPARED FOR SUCCESSION

 

 

HORSHAM, Pa. -- They loved Lucy, drank Fizzies and spun 45s.

 

Now, the first of the baby boom generation is about to retire and their sons and daughters are partially through their careers of running the family business.

 

Baby boomers built an economic empire by creating their privately held family businesses, and are in the process of passing these businesses on to their next generation family successors.

 

However, when the time comes for the senior generation business owners to retire, it is unlikely that their sons and daughters will be as prepared to continue operating their family’s business in the same manner as they did, according to a recent regional survey of 3,000 family-owned businesses in the tri-state area. This could have an alarming impact as privately held family businesses account for 60 percent of the total employment in the United States, and 78 percent of all new U.S. jobs.

 

Most family business operators believe that the concept of future leadership is important, but few have developed the necessary leadership and training plans to ensure their family business survives to future generations, according to the survey by Kreischer Miller, a leading Philadelphia area public accounting and business advisory firm, in partnership with Bryant University and the Delaware Valley Family Business Center. The survey also explored the areas of governance, ownership and compensation, and management as it relates to family business.

 

Although 88 percent of 3,000 family business owners rank leadership succession as their top issue, the survey revealed that:

 

  • 87 percent of the businesses surveyed do not have a formal mentoring program for their next generation leaders
  • 85 percent do not have a written family policy statement
  • 83 percent do not have a written family mission statement
  • 48 percent of owners have not ensured that their family and employees know about their management succession plans
  • 43 percent believe their family successors are unprepared for leadership
  • 39 percent do not have a clear, long-range strategy for their business

 

The failure by family-businesses to implement plans to prepare future generations may be due, in part, to a lack of governance, according to the survey. Most companies do not have regularly scheduled family meetings or specific family business polices, and most do not have formal processes to manage family conflict.

 

In fact, the survey revealed that only 36 percent of businesses have non-family members on their company’s boards of directors, which ensures there is a healthy separation of business from family issues. While a majority of family businesses operators restricts ownership to family members, most believe that their relatives should attain their leadership roles based on merit rather than entitlement.

 

About the Survey and its Respondents

  • Businesses surveyed are located in Pennsylvania, New Jersey or Delaware
  • Most businesses have been in operation for at least 45 years
  • Most businesses are in their second generation of leadership
  • The median number of employees is 70.

 

Participants in this survey included representatives from various industries, ranging from manufacturing and distribution, to construction and real estate. This shows that regardless of the industry, family businesses deal with a unique set of issues.

 

“The 2005 Family Business Survey was created to help family businesses take a look at where they stand,” said Mario Vicari, CPA, CVA, and a Director at Kreischer Miller. “It is our hope that family businesses will evaluate themselves against the survey results and take action so they can enjoy a safe and profitable transition as the baby boomers pass the torch.”

 

Founded in 1975, Kreischer Miller, a leading full service public accounting and business advisory firm in the Greater Philadelphia area, offers a wide range of services including audit and accounting support, tax strategies, technology solutions and human capital resources. The firm’s family business practice is dedicated to serving the unique needs of closely held, family businesses and their owners, and is committed to the value of sharing information, resources, and knowledge about best practices in family business. For more information on Kreischer Miller, log onto www.kmco.com. To obtain a copy of the 2005 Family Business Survey, call (215) 441-4600.   

 

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EDITOR’S NOTE:    To schedule an interview about the study with Kreischer Miller or to speak with a family-owned business dealing with succession issues in your area, call Leza Raffel at (215) 884-6499.