Competitive Ability of Small Family Owned Businesses

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Competitive Ability of Small Family Owned Businesses Shayne J. Miller Embry Riddle Aeronautical University Competitive Ability of Small Family Owned Businesses Studies show that less than 30 percent of family businesses survive to the second generation, and just 10 percent hang on to be passed down to the third. Sound bleak? It is not. Those are far better survival odds than for small businesses not run by a team of family members. Around 90 percent of the companies on this continent and a similarly large percentage of businesses located around the world are family-owned. Some of the more recognizable businesses still managed by family members include Benneton, Beretta, Estee Lauder Inc., Tootsie Roll, Playboy, Gucci, Carnival Cruise Lines, Harley-Davidson, Inc., U-Haul, Ford Models, Forbes Inc., and Ford Motor Co (Lagorio-Chafkin, 2010). They vary widely in regard to the overlap of family and business issues, and much can be learned from studying their experiences. Economic Impact Before going into the how they can compete in an ever more challenging market, let’s discuss the economic impact that family owned businesses have on the World economy. For the purposes of this paper, a family business will be considered a company that is controlled and majority-owned by members of the same family. The impact and scope of family enterprises on a global basis are enormous. These entities create an estimated 70%-90% of the global gross domestic product (Family Firm Institute Inc., n.d.). Small business, including family firms also employ over half of US workers and are less likely to lay off employees regardless of financial performance Family-owned businesses are also the backbone of the American economy. Studies have shown that about 35% of Fortune 500 companies are family-controlled. In addition, family businesses account for 64% of U.S. gross domestic

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