The results of the second annual Family Business Survey were presented Wednesday, March 27 at 1:00 p.m. in the Hoover Center. The department of business and the S. Dale High Center for Family Business at Elizabethtown College conducted this research project jointly. The survey aimed to discover how family businesses feel about the economy and the future of their businesses.
“We saw an opportunity, a niche, where very few researchers focused exactly on family businesses,” Dr. Cristina Ciocirlan, an assistant professor of management in the department of business, said. According to Ciocirlan, one of the purposes of this survey is to attract attention from the media and the government so that changes in regulation may occur to benefit family businesses. The report also stated that the survey was performed with the objectives of assessing family business confidence in the future, learning about the best practices that will make better futures for these businesses, understanding their views of the current economic and regulatory environment and understanding the challenges of family farms in Pennsylvania.
Overall, 278 business representatives responded to the survey, of which 61 percent were in the dairy industry. The average age of these businesses is 43 years and about three generations have held ownership within each family.
Fifty-five percent of those surveyed expect that family control will continue for their business in the future. On average, the number of employees for a family business is 51, but the majority of the respondents employ fewer than ten people.
The results of the survey show that 67 percent of respondents are somewhat or very pessimistic about the future of the United States economy. This outlook causes businesses to have low expectations for their own futures. A third of businesses have plans to increase prices and 15 percent expect to incur more debt just to keep operations running. Only a third project that their net income will increase, while only eleven percent plan to hire within the next year.
The majority of family businesses plan to retain business control within the family, but the study shows that most lack necessary strategic and succession planning. Succession occurs informally for the majority, evident in that only 15 percent of the respondents have a written strategic or formal management succession plan. More than half of the businesses also lack professional human resource practices with only a quarter having written job descriptions which outline the responsibilities, minimum qualifications and reporting structure for each position.
These family businesses face challenges internally and externally. The survey discovered that internal challenges are problems for family businesses. For example, a third of respondents stated that the next generation is not interested in taking over the business. In the case of farming, young people see the amount of income as too little compared to the work needed to maintain a farm. The top three external challenges that family businesses face include government regulations, taxes and costs of supplies and inventories.
Because 61 percent of respondents are a part of the dairy industry, a section of the report was dedicated to dairy farms, the number one agricultural business in Pennsylvania. 65 percent of dairy businesses expect that their families will continue to run their businesses in the future. However, dairy farmers’ perspectives about the future of the economy mirror the larger sample, with a majority having a pessimistic view.
According to Ciocirlan, this survey gives people the idea of what family businesses are going through and their expectations about the future. “The findings are useful to policy makers and politicians in the government,” Ciocirlan said. “When they look at this study and they see that government regulations and taxes were cited as the two most important challenges, hopefully they will do something about them.”
Several Etown students worked on this project with the department of business; they were involved in data collection, data analysis and interpretation of findings. The findings show how family businesses operate, how this affects their success and what needs to be done to plan for the future. Family businesses are a large part of industry in Pennsylvania, specifically family-owned dairy farms. As stated in the report, the 2013 Family Business Survey “should serve as a compass to navigate the turbulent waters of today’s economy.”