Northwest Family Business SurveyOctober 2015
2470 Westlake Avenue n, Suite 100 | Seattle, wa 98109 | 206.466.6174 pacificfamilybusiness.com
October 2015
Dear Family Business Owner,
The Pacific Family Business Institute is pleased to present the results of the 2015
Northwest Family Business Survey. Our ongoing research offers valuable insights into the
challenges, issues, and opportunities facing family businesses in the Pacific Northwest.
As we have done every year since 2012, we spoke with regional family businesses,
asking them about business growth, succession planning, family business structure
and ownership, governance, and more. Our annual survey allows us to see how family
businesses and their operating environment are evolving over time.
This survey, conducted by Riley Research Associates, has been made possible through
the generous financial support of our sponsors, Cascadia Capital, Perkins Coie and
the Threshold Group. We are extremely grateful to the 200 family businesses that
participated in the 2015 Northwest Family Business Survey.
We use this information to continue supporting family businesses as they navigate the
challenges of balancing the needs of the business with those of the family. At the same
time, we hope our survey participants and other family businesses throughout the
Northwest can use the findings to help them continue to grow and develop.
We would love to know how you are using this report in your work. Please contact us
with any comments, questions, or suggestions for future surveys by sending a note to
[email protected]. Together, we can continue to help regional family
businesses thrive.
Sincerely,
Richard Simmonds Mark T. Green, Ph.D. Ron Dohr, Ph.D.
Co-Director Co-Director Co-Director
Page 1 of 13 2015 Northwest Family Business Survey pacificfamilybusiness.com
Executive Summary
In mid-2015, the Pacific Family Business Institute (PFBI) surveyed
200 family businesses in Oregon and Washington to gain insights into
leadership and business characteristics, and compare the findings to
those of similar PFBI surveys conducted in 2012 and 2014. The annual
Northwest Family Business Survey is intended to serve as a barometer
of family business in the Pacific Northwest.
Key Survey FindingS
BusinessGrowthandOpportunities. Businesses are now more confident in their
ability to continue and/or expand. Businesses with 1150 employees had the highest
confidence rating (9.2 on a 10-point scale), while those with fewer employees had
the lowest (7.4). Businesses with more than 50 employees were more likely than
others to have experienced a growth in revenue, with businesses with fewer than
11 employees the least likely to have experienced a growth in revenue. And looking
to the future, businesses with annual revenue of more than $20 million were more
likely than others to expect a growth in revenue in the next three years, while that
expectation decreased along with current annual revenue.
SuccessionandLeadershipPlanning. Businesses with more than 50 employees are
more likely to have conducted succession planning exercises, but many businesses
still lack formal succession planning documents. Nevertheless, about one-third
of businesses anticipate a leadership change in the next five years. The majority
of those businesses have not yet identified the new leader (58%), but most (52%)
believe the next leader will be a family member.
Those who have not yet started on succession planning face many hurdles, namely
finding qualified and interested successors, and simply finding the time to get
started on the planning. When asked about the greatest hurdle to getting started
on family business succession planning, some respondents cited generational
differences, questioning whether the second generation wants to work as hard as
the first generation, and not knowing whether the next generation truly wants to
take over the business. Others stated that the greatest hurdle is simply finding the
time, while still others pointed to disagreements within the family.
FamilyBusinessStructure,Governance,andOwnership. Half of the businesses
are owned by first-generation family members, while nearly as many are owned
by second-generation and about two-fifths are owned by the third generation or
beyond. Most businesses have a CEO who is a family member (94%), generally
either first-generation (39%) or second-generation (35%), and who owns a
controlling interest (71%), and this is particularly true for newer businesses.
Page 2 of 13 2015 Northwest Family Business Survey pacificfamilybusiness.com
Survey Methodology The 2015 Northwest Family Business Survey is a regional survey designed
to help the Pacific Family Business Institute (PFBI) and regional partners
better understand family business dynamics, challenges, and track trends.
The survey comprised 200 telephone interviews with representatives
of family-owned businesses in Oregon and Washington. To qualify as a
family-owned business, respondents had to affirm that 1) family owners
own a majority share of the business, and 2) family members are involved
in running the business.
The survey administrator, Riley Research Associates, identified potential
respondents by using a list of previous PFBI survey respondents and a
purchased list of regional businesses. Of the 200 respondents, 35% had
participated in a previous PFBI survey, while 65% were new additions.
All participants were offered a copy of the findings for their participation.
The survey questions comprised benchmark questions from the 2012 and
2014 surveys, as well as new questions introduced to address emerging
issues. The survey focused on business growth and opportunities, succes-
sion planning, family business structure and ownership, governance and
board structure, and business characteristics.
A total of 200 telephone interviews were completed, which produces a
margin of error of +/-7% at a 95% level of confidence; the margin of error
is larger for smaller subsamples. Please note that answer choices do not
always add to 100% due to rounding and/or to allowing multiple responses.
BuSineSS CharaCteriStiCS The survey participants have an average of 46 years in business, with
47% based in Washington and 53% based in Oregon. They represent many
industries, and 44% are engaged in retail/sales/wholesalea significantly
larger percentage than in 2014 (12%). Sixty-seven percent report sales
exclusively in the United States, a slight increase over the figures reported
in 2014 (63%) and 2012 (58%).
Of the family businesses that responded to the survey, 22% have been
in business for more than 60 years, and 14% have been in business for
fewer than 20 years. Sixty-five percent of the businesses reported annual
revenue greater than $5 million, and five percent reported revenue of at
least $75 million.
The highest-ranking family member tends to be a president (52%), owner
(28%), or CEO (12%). The proportion of highest-ranking family members
that were president decreased since 2014, while the 2015 survey included
a higher proportion of owners.
Thirty-four percent of respondents have 2150 full-time equivalent
employees, and 38% have 50 or more.
Page 3 of 13 2015 Northwest Family Business Survey pacificfamilybusiness.com
Survey Findings
The 2015 Northwest Family Business Survey focused on five topics:
Business growth and opportunities
Succession planning
Family business structure and ownership
Governance and board structure
Business characteristics
BuSineSS groWth and opportunitieS Business confidence (defined as optimism in the state of the economy
as expressed through business investments and spending), while still
moderate, has grown since 2014, increasing from a mean rating of
6.4 to a rating of 7.1. Most industries expressed a growth in business
confidence, with the exception of distribution and agriculture. Wash-
ington businesses had much higher business confidence ratings than
Oregon businesses (7.5 vs. 6.8).
Businesses confidence in their ability to continue and/or expand
has also increased, from a mean rating of 7.8 to a mean of 8.5. Most
industries expressed an increased confidence in their business ability
to continue and/or expand, with the exception of agriculture and
professional services. Businesses with 1150 employees had the highest
confidence rating (9.2), while those with fewer employees had the
lowest (7.4).
7.8 7.4 7.2 7.0 7.0
6.6 6.5
5.6 5.9
6.6 6.5 6.0
5.3
6.8 6.4
6.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Construction Prof. services Retail/ sales Manu- facturing
Service Distribution Trans- portation
Agriculture
Business Confidence Ten-Point Scale Where '10' is 'Completely Confident'
2015
2014
Figure 1. Respondents indicated their business confidence (optimism on the state of the economy that business owners are expressing through their investment and spending activities) using a ten-point scale where 1 is not at all confident and 10 is com