“Before the multinational corporation, there was family business. Before the industrial revolution, there was family business. Before the enlightenment of Greece and the empire of Rome, there was family business.”– Willium O’Hara.
To the average American, utter the phrase “family business” and the synonyms that comes to mind might include the words “small,” “local,” and “dying.”
And while plenty of mom-and-pop firms certainly fit that description, it does not accurately reflect the powerful role that family businesses play in the global economy, let alone America.
Fact: Family businesses generate over 50% of the US Gross National Product (GNP)
Consider Walmart, NewsCorp, Comcast and Ford; Publix, Wegmans and Berkshire Hathaway. According to Boston Consulting Group, family-owned businesses account for more than 30% of all companies with sales in excess of $1 billion. Futhermore, one-third of all companies in the S&P 500 index and 40 percent of the 250 largest companies in France and Germany are defined as family businesses.
So, while ECHOtape has a long way to go before we can be considered a billion-dollar enterprise (yet!), we are proud of our personal and professional heritage! So much so that we thought we’d shine a bright light on the world’s largest economic engine, and share some fascinating information to inspire your family legacy.
How Old is Old?
Incredibly, Japan’s Hoshi Hotel has been functioning on all cylinders as a family business since 718AD. Now in its 49th generation, there is no end in sight for this dynastic hotelier.
In Italy, Venetian glassmakers, Barovier & Toso, were established in 1295; the Antinori family of winemakers has been pressing grapes since 1385; and world-renowned firearm manufacturers, the Beretta family, has been crafting guns in Italy for kings and sportsmen since 1526. Viva Italia!
Family-owned businesses are the backbone of the American economy. Studies have shown about 35 percent of Fortune 500 companies are family-controlled and represent the full spectrum of American companies from small business to major corporations.
According to Forbes, family businesses account for 50 percent of U.S. gross domestic product, generate 60 percent of the country’s employment, and account for 78 percent of all new job creation.
The greatest part of America’s wealth lies with family-owned businesses. Family firms comprise 80 to 90 percent of all business enterprises in North America.
There are 5.5 million family businesses in the US, employing 63% of the workforce, and are responsible for 78% of all new job creation. (Astrachan & Shanker, 2003)
Women Matter in Family Business
Women are increasingly participating in family businesses. Currently, 24 percent of family businesses are led by a female CEO or President, and 31.3 percent of family businesses surveyed indicate that the next successor is a female. Nearly 60 percent of all family-owned businesses have women in top management team positions.17
Over the past five years, woman-owned family businesses have increased by 37%.
According to Price Waterhouse Cooper, the future of family businesses is very bright, with strong growth in the past year and even stronger growth expected ahead. More than 30% of all family-owned businesses survive into the second generation. Twelve percent will still be viable into the third generation, with 3% of all family businesses operating at the fourth-generation level and beyond. They recognize, however, that to thrive in today’s ever-more-competitive landscape, they’ll need to out-innovate their peers and get the right people on board – an increasingly tough challenge in a world where business as usual is no longer enough.
Are there challenges ahead? Of course!! This American Life podcast did a wonderful episode highlighting the nature of family business and some very real struggles, but we believe that keeping it in the family is the only way to ensure that family stays at the heartbeat of our business and yours!
Do you have a family-owned business? Let us know how you’re doing!! We’d love to share your stories as well.