The No.1 state for family businesses? South Dakota!
South Dakota is home to a greater percentage of family businesses than any other state in the nation.
At least, that was the takeaway from a recent report from OnDeck, a global online small-business lending company.
As part of this survey, OnDeck analyzed information from the U.S. Census Bureau’s annual business survey to identify the states with the highest proportion of family- and spouse-owned companies. The findings revealed that nearly half of South Dakota businesses (43.4%, to be exact) are family owned.
To put these numbers into context, the states with the lowest percentages of family businesses were New York, at just over 20%, and Massachusetts, at just under 21%—two states with nearly 27 million people between them.
Putting it differently, the percentage of family businesses in sparse South Dakota (population 895,000) exceeds the percentage of family businesses in New York and Massachusetts combined.
The data has become the centerpiece of marketing on behalf of the Prairie Family Business Association, an outreach of the Beacom School of Business at the University of South Dakota in Sioux Falls. Executive Director Stephanie Larscheid is happy her home state took the crown.
“We’re proud of our commitment to family businesses,” says Larscheid, whose organization has expanded to North Dakota, Minnesota, Iowa and Nebraska. “No matter where people are from, ours is a culture of supporting one another, of community, of people telling their family business story and of being proud they’re a family business. Our families have made it work for generations. They still spend time diligently working that fact.”
According to Larscheid, most of South Dakota’s family businesses are in three industries: agriculture, manufacturing and banking. To hear her tell it, this breakdown indicates South Dakotans love to farm and make things, and they love financing their endeavors with families they know and trust.
Larscheid isn’t just basing these facts and figures on current data; the organization is 31 years old and has tracked this information religiously since the beginning.
“I believe some of [the longevity] is the hard work ethic of people in this part of the country and their willingness to create family business environment for their employees,” she says. “The way they treat and compensate and reward and retain employees – that’s where you see them being able to be successful over time and not be sold or acquired by a competitor or private equity.”
Looking forward, Larscheid says she expects to continue offering support to her group’s 260 members, as well as informed perspectives on a range of topics. Family business owners need all the help they can get; even, apparently, when the local economy is teeming with them.
Matt Villano is a writer and editor based in Headlsburg, Calif.