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Family-owned businesses continue to be the cornerstone of the American economy. According to the Small Business Administration, in 2011, family businesses comprised 90 percent of all business enterprises in North America, and 62% of total U.S. employment.
Among the many challenges of owning a family business, is ensuring those at the helm have the business acumen to keep the family legacy alive. Online degrees in businesses can equip small business owners with the knowledge and skills to run their family businesses efficiently.
The 2013 Family Enterprise USA (FEUSA)survey of 230 family firms reveals that family-owned businesses had a good year in 2012, and while the outlook for 2013 remains positive, the majority of family firms surveyed are reluctant to add jobs in the new year.
Over the last year, 70% of the survey respondents reported increased revenue, and 54% said they hired more employees in 2012 to keep up with the pace of business. In the coming year, 75% of survey participants said they are optimistic that business will continue to grow, but only 45% plan to increase their workforce, a 10% decrease from last year’s hiring trends. The study suggests that family firms are curbing their employment due to economic uncertainty.
“At the core of family owned enterprises is a focus on long-term, sustainable growth and that is why they continue to be a beacon of hope for hiring and revenue growth, despite the sluggish economy,” FEUSA President Ann Kinkade said in a press release. “But continued unease about the economy, uncertainty about tax policy and federal irresponsibility toward our debt and deficit is a hardship on planning and development for the primary drivers of our economy, family firms.”
Ninety-one percent of respondents reported concern over economic factors and the government policy. Leading the list of worries is reducing the deficit and debt, followed by estate taxes, of which 41% of respondents are in favor of eliminating, 20% would like to see it reduced, and 28% think it should remain the same. Estate taxes can hinder family-run business growth because they can take a significant bite out of businesses passed down through the family.
“This extra tax burden limits the ability of families to pass on an asset they have taken risks to build,” the survey reports. “The financial and human resources it takes to plan around the ever-changing tax and keep the business operating drains investment that would otherwise go to business expansion.”
As politicians debate increasing personal income taxes, nearly half of family-owned businesses say this will adversely affect their ability to expand.
“As lawmakers continue the debate on the fiscal cliff, the message from the FEUSA survey is clear,” Kinkade said in a press release. “Family-owned enterprises are a stable and resilient force for long-term economic growth and jobs, but they need certainty in government policy from their leaders, tax policy that encourages investment and growth and a commitment to reduce our federal debt and deficit.”
Follow Elise Rambaud Marrion on Twitter @elisermarrion.