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City and State Policies Cause Family Businesses to Consider Other Locations, New Survey Shows

Changes in Healthcare, Employee Retention, and Economy Also Top of Mind

SEATTLE, March 11, 2014 /PRNewswire/ -- The Pacific Family Business Institute (PFBI) announced today the results of a survey of nearly 200 of the Pacific Northwest's leading family businesses across diverse market sectors including professional services, manufacturing, and retail. The survey report sheds light on the current issues and challenges facing these businesses, and the strategies and initiatives they are implementing to drive growth.

"Family enterprise plays an integral role in the Pacific Northwest economy. As these businesses continue to grow and thrive, it is critical that our city and state policies create a friendly environment to keep these businesses local," said Rich Simmonds, co-director of PFBI. "However, our 2014 survey results reflect just the opposite – an increasing number of family businesses are dissatisfied with current tax policies and minimum wage regulation. As many as 72 percent would consider out-of-state locations, if they were opening a new facility."

In the 2014 Northwest Family Business Survey, most family businesses (55 percent) indicated that their city and state have business and tax policies that are not business-friendly. When asked what could be done to become more business-friendly, many participants recommended lowering taxes, providing tax credits or incentives, addressing issues with zoning and permits and maintaining the minimum wage. Also ranking high among challenges, are retaining qualified employees, changes in healthcare and insurance policies, and the economy.

Critical insights from the 2014 Northwest Family Business Survey include:

  • Increased interest in succession planning. The survey revealed tremendous progress as family businesses are expanding their planning around retirement and business succession through written plans. More than half of participants, 59 percent, have a written plan to address succession and ownership, which represents an increase of 26 percent since the 2012 survey.
  • Businesses lack incentive plans for senior management. Seventy-three percent of the family businesses have no incentive plans for non-family senior management. Of the 27 percent that have incentive plans in place, only 31 percent of those plans include equity-like compensation.
  • Businesses continue to be run by a family member with a controlling interest, with additional support from a board of directors.  Among the family businesses, 45 percent have a first-generation CEO and 38 percent have a second-generation CEO.  Sixty-one percent have either a board of directors or an advisory board in place.
  • Family businesses are more optimistic about their growth now than in 2012. Despite concerns about the economy, leaders are optimistic about the future, with most anticipating an increase in the number of FTEs and revenue. For most (61 percent), revenue increased over the past three years. Looking ahead three years, the majority of family businesses (71 percent) anticipate greater revenue.

"Business continuity planning is one of the great signals of business growth, viability and owner success. The process of choosing a successor, developing leadership and managing a transition is critical for future success," said Dr. Ron Dohr, co-director of PFBI. "However, it is important for family businesses to also remember that non-family senior executives play a critical role in the company's success. Planning should include not only a succession plan, but also an incentive plan for senior management to help the business achieve strategic goals and guide the organization's culture."

"The survey tells us that family businesses are resilient and continuing to thrive in the Pacific Northwest. Their challenges and successes are an inspiration for continued research in this area," said Dr. Mark T. Green, co-director of PFBI. "We hope these insights from family business leaders will spark conversations and bring greater understanding of the unique demands and opportunities that family business leaders face every day."  

The full report on the survey findings can be downloaded from the PFBI website at pacificfamilybusiness.com. The 2014 Northwest Family Business Survey is a comprehensive survey of family businesses in the Pacific Northwest, capturing the views of 195 family business leaders. Interviews were conducted with businesses located in Washington and Oregon in more than 10 different industry sectors, including professional services, manufacturing, construction, retail, hospitality and agriculture. Questions covered the businesses' history and future, management and governance structures, and the influence of multiple generations on family-owned businesses. More than 69 percent of the businesses reported more than $5 million in annual revenue. The research was coordinated by Riley Research Associates, a full-service market research firm, which designed the questionnaire in conjunction with PFBI's family business experts. Financial support was provided by Cascadia Capital, Perkins Coie Law Firm and the Threshold Group.

About the Pacific Family Business Institute
The Pacific Family Business Institute (PFBI) provides high-quality programs, resources and research designed to address the unique opportunities and challenges facing Pacific Northwest family businesses. PFBI works directly with family members, family business executives and professionals who advise family-owned companies. In addition, PFBI partners with universities, corporate sponsors and other Pacific Northwest organizations dedicated to the success of family business. For more information, visit www.pacificfamilybusiness.com.

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