Taking the Pulse of Family Business

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Another trend that has been unfolding over time is that increasingly daughters and granddaughters are taking over the family business. Three years ago, MassMutual Financial Group and the Raymond Institute American Family Business Survey released a report that found that woman-owned family businesses have increased by 37% in the last five years.

DAUGHTER POWER.

According to the study, these are substantial businesses with $26.9 million in average annual revenues, with some reporting $1 billion in sales. Moreover, the report also stated that women-owned businesses were more likely to focus on succession planning, have a 40% lower rate of family-member attrition, tend to be more fiscally conservative, and carry less debt than male-owned businesses.

"In many cases," says William O'Hara, founder and director of the Institute for Family Enterprise at Bryant College in Smithfield, R.I., and author of Centuries of Success, "daughters get along with their fathers better than sons do. There isn't that male competitiveness in those relationships, and more are coming into the forefront." Moreover, O'Hara says that in researching his book, which examines family businesses around the world that have survived 200 years or more, he found that "in cases where families allowed women to provide leadership, they saved the family business."

Going forward, every challenge also creates an opportunity. The hurdles posed in the past over succession have, according to industry watchers, pushed more and more families to bring in outside experts and begin the process of implementing formal plans and infrastructures. Indeed, a proliferation of family-business institutions -- many tied to business schools -- have emerged all over the country. And while generational differences in values may introduce friction, according to O'Hara they also offer a spur to change, which can be positive.

NEW GOALS.

"There's a contrast of value systems playing out," O'Hara says. "But it's also a [sign] that society isn't as wedded to the traditions as they were years ago. We're a more explosive society in terms of what can be done. A lot of young people are using that to their advantage [in terms of] what can be accomplished. There aren't necessarily the same limits. They aren't confined to doing just what dad or uncle did 20 to 30 years ago."

The critical factors and issues facing family businesses will be the focus of this multi-part special report to be rolled out over the next four days on BusinessWeek Online. The first part will spotlight some of the oldest, continually run family-owned businesses in America. Parts two and three take a look at transition, first from the perspective of boomers who are preparing to let go of the business, and then from that of the younger generations getting ready to take over. Finally, part four will consider the various options available to families that decide it's time to exit the business.

Perman is a staff writer for BusinessWeek.com in New York.