Each year, our colleagues at the Pacific Family Business Institute (PFBI) conduct a survey of approximately two hundred family business leaders in the Pacific Northwest. They ask about topics such as growth, succession planning, governance, ownership transitions, structure and more. This survey is one of the most comprehensive in our region and the results are a window into the health and future of our family business community here in the Northwest. The results for the 2015 Northwest Family Business Survey are now in! And they include some interesting and important observations:
- Business confidence is up from 2014 in every category, as family business owners in various industries reported increased optimism about growth and expansion. This is a good time to be running a family business in the Northwest!
- About one-third of family businesses surveyed expect a leadership change in the next five years. The majority of these, however, have not yet identified a successor! As veterans of the process will agree, succession planning is a long and deliberate process that frequently takes years. This may put several of our family businesses in the difficult position of having to accelerate that process just to meet their timeline.
- “Generational differences” continue to be the most oft-cited challenge in succession planning. This means many things to many people, but most frequently it reflects the concern of the older generation as to the commitment and work ethic of those next in line. Also frequently cited was simply the lack of time. Ownership and leadership succession always come second to maintaining and growing a healthy business, but family business leaders need to be careful not to procrastinate on such important topics.
- As in years past, the larger and more mature businesses surveyed tended to have a better handle on the challenges and pressures around them. The larger companies were more likely to have formal, written succession plans, which PFBI advises on to assist with the difficult transitions of leadership. They were also more likely to have established systems of governance, such as boards of directors with non-family members, which promote stability and continuity. Finally, they were more bullish on prospects for business growth and expansion in the future.