Despite myriad economic uncertainties, family-owned businesses are optimistic about what the new year will bring, according to a new survey.
Compared with a year ago, a greater number of Connecticut family-owned businesses are expecting to increase hiring and capital investments and to see higher revenues in the coming year, according to the 2012 Survey of Connecticut Businesses, released Nov. 13 by the Connecticut Business & Industry Association (CBIA).
About 62 percent of this year’s survey respondents said they’re expecting increased revenues in 2013, compared to 50 percent of respondents to the 2011 survey who said they expected increased revenues in 2012.
Additionally, 43 percent of respondents said they expect to hire additional employees in the coming year, compared with 30 percent who said they planned to increase hiring a year ago.
More than half of the respondents to the 2012 survey said they plan to make significant investments in their businesses.
More than 580 family businesses participated in this year’s survey, which was produced by the CBIA in partnership with the University of New Haven’s Center for Family Business.
In July, the CBIA and Center for Family Business launched a program designed to support and encourage growth among the state’s thousands of family-owned businesses. By the end of the program’s first year, CBIA officials said they hope to have between 200 and 300 businesses actively engaged in meetings, webinars and other program offerings.
Nearly 30 percent of survey respondents said the economy represented the biggest impediment to the growth of their respective business, followed by the overall cost of doing business and health care costs.
Family businesses make up 50 percent of the U.S. gross domestic product and account for 80 to 90 percent of all businesses in North America, according to the University of Michigan. Yet, only 30 percent of family-owned businesses survive into the second generation and just 4 percent make it into the fourth generation and beyond.
While more than three-quarters of family business owners said it was important or very important to leave a positive, lasting legacy, only 14 percent had a formal, written succession plan.
Among those who responded, 31 percent have a formal strategic plan and 51 percent do not have any succession plan at all, according to the survey.
“Businesses need to seek professional planning guidance,” said Peter Gioia, CBIA economist. “No plan means when the unexpected happens, the continuity of the business is at risk.”
Additionally, the survey showed that a number of businesses could be at risk of labor lawsuits. According to the survey, a “considerable” number of businesses acknowledged that the rules are different for family and nonfamily employees, especially when it comes to bonuses, compensation and termination.
“Again, seek guidance,” Gioia said, adding that the CBIA offers free counseling for its members.
Using the results from the survey, the association plans to demonstrate to legislators the need to address the cost of doing business in Connecticut and add to its programming for family businesses, especially related to succession planning.