The Connecticut Business & Industry Association has found family owned businesses are optimistic about the future despite the current slings and arrows of the economy.
“It’s clear that family businesses represent a key segment of our business community and have a critical impact on our state’s economic well-being,” said John R. Rathgeber, CBIA president and CEO. “Their ability to grow and prosper depends not only on the family structure that governs business operations but also on the creation of a pro-growth, pro-jobs business climate in Connecticut.”
According to Rathgeber, these businesses”™ biggest challenge is the overall cost of operation, including heavyweights like health care costs, personal income tax and energy costs. Rathgeber also pointed out that they also face challenges unique to family-run businesses, including business succession and planning issues.
The positive outlook for family-owned businesses was made on the basis of the 2008 Survey of Family Businesses conducted by the CBIA and the University of Connecticut.
The survey explored key issues facing family-business owners and examined concerns about the future.
Nationally, the survey showed family-owned businesses comprise at least two-thirds of all businesses in the U.S., contributing 64 percent of the gross domestic product and employing more than 62 percent of the work force.
A majority of family businesses surveyed cited high health care costs as having a strong negative impact on current and future growth.
Connecticut has the second highest cost in the U.S. for employee-sponsored health care.
An even greater percentage of respondents expect the cost of doing businesses to affect negatively their future growth, and three-quarters expect rising energy costs to impede their growth in the years to come.
“Family businesses clearly have pinpointed the combination of corporate and personal taxes as hampering their current and future growth,” said Jay M. Sattler, tax partner at Blum Shapiro with offices in West Hartford and Southport. “This is a critical issue that I’m hopeful the legislature will address.”
According to Sattler, family-business owners believe that state government can do more to encourage family businesses to remain in Connecticut . According to the respondents, the most helpful actions that lawmakers could take would be reducing taxes and offering tax credits.
“These numbers are up 10 to 20 percentage points from last year’s survey, indicating a stronger need for state legislators to take actions to help Connecticut’s family-run businesses continue to grow and prosper,” said Rathgeber.
Despite a troubled economy, 51 percent of family business leaders have an optimistic outlook for their firm’s profitability over the next 12 months, with 11 percent not at all optimistic about their profitability. In the areas of gross revenue/sales, net profits, and number of employees, the majority of businesses expect some increase in each category over the next 12 months.
“Family firms are better equipped than most to weather slow economic growth and hardship,” said Scott Livingston, president and CEO, Horst Engineering & Manufacturing Co. in East Hartford. “The survey results indicate strong concerns about our state’s regulatory climate and business costs, which should be a red flag to legislators.”
