First Bank’s Center for Family-Owned Businesses’ Family Business Survey: Our Why and Key Findings
Family businesses are a major economic driving force in America; unfortunately, sparse data, research, and resources for them are available. In addition to the detriment of accurate representation of the family business sector, misinformation is often used. How are family businesses, such as the fourth-generation, family-owned business that I have the privilege to help lead, able to grow and innovate for the future with this dearth of resources?
In 2021, First Bank launched its Center for Family-Owned Businesses to provide family businesses the insights, solutions, and networking opportunities they need to be successful, as well as the solid framework necessary for building upon their family business legacy. As part of that effort, we commissioned the expert assistance of market research firm, MacKenzie Corporation, a second-generation family business in Orange County, CA, to conduct its inaugural Family Business Survey in order to stay apprised of the specific needs and challenges of family businesses.
We received valuable input from 552 qualified respondents* through our Family Business Survey and the results may or may not surprise you. It’s important to note, respondents were segmented based on their generation and the lifespan of their respective businesses.
The following are a few key findings from our 2023 First Bank Family Business Survey:
1. What best describes the motivation for starting the family business?
Survey result: The top four answers were establishing self-sufficiency (23%), entrepreneurial spirit (19%), supporting the family (19%), and pursuing a passion (18%). There were some generational differences in how respondents viewed the motivation for starting the family business. For example, while less than 2% of first generation respondents (G1) answered that building a legacy best described the motivation for starting the business, far more (10%) of second generation family members and beyond (G2+) answered that way.
Key Takeaway: Practical considerations and passion largely drive the first generation to start the family business, but the second generation and beyond also viewed establishing a legacy as an important motivator.
2. G2+ family members had mixed views of joining the family business when they were teenagers.
Survey Result: We asked G2+ family members, “When you were a teenager, did you picture yourself working full-time in your family business?” Only 37% said “Yes, and I was excited about it.” The remainder had mixed or negative views: 16% said “Yes, but I had mixed feelings,” 16% said “I wasn’t really thinking about it,” and 29% said, “No, I didn’t see that happening.”
Key Takeaway: Views toward the family business and interest in joining the company can be fluid over time, and a person’s career path is usually not set in stone at an early age. But the mixed views as teenagers may be something to keep in mind when communicating with the next generation about the business.
3. When asked about succession planning and how their family business plans to approach it, many are choosing to keep their succession planning internal.
Survey result: First Bank’s Family Business Survey found that 73% of respondents already have, or intend to develop, a structured succession plan. However, it was surprising to find an even split between those family business owners planning to enlist the assistance of external support and those family business owners planning to keep those efforts internal.
Key Takeaway: With 50% of family business succession plans occurring without dedicated external guidance, cross-generational communication and collaboration will grow in importance. While each transition is unique, we have generally found that external assistance is often helpful in deciding on the best succession plan and in ensuring the best communication plan to key stakeholders, such as other family members and employees.
Like-minded in our collaborative efforts to help family-owned businesses thrive, the First Bank Center for Family-Owned Businesses will soon be launching our next Family Business Survey. We invite you to participate and share your insights, knowledge, and input.
To receive a full copy of the findings from the 2023 Family Business Survey and for an announcement of the upcoming Family Business Survey, visit www.first.bank/familybusiness.
In addition to the annual survey, webinars, a symposium, roundtable discussions, and in-person networking opportunities, the First Bank Center for Family-Owned Businesses also provides other value-added services, including consulting, trusted guidance, insights from industry thought leaders, and an online repository of resources at www.first.bank/familybusiness.
About the Author: Continuing its fourth generation of family ownership, Michael Dierberg serves as the Chairman of First Bank. Michael’s passion is helping family and privately-held businesses thrive, grow, and succeed for many generations. Prior to rejoining First Bank in 2010, Michael was an attorney at the United States Department of Justice and before that served as General Counsel of First Bank. Michael is also a second-generation owner of Star Lane and Dierberg Vineyards, located in Santa Barbara, California.
*A qualified respondent is currently involved with a family business AND is a family member.