Survey Shows Family-Owned Businesses Give Back to Communities
Amway, Bissell, Gordon Food Service, Meijer, Steelcase — these companies are household names. Even though they’re highly visible, they share a profile with many companies that are not. Like their lesser known peers, they are family-owned businesses that originated in West Michigan.
As follow up to an initial questionnaire sent out by the Family Owned Business Institute (FOBI) in the Seidman College of Business at Grand Valley State University in 2010, three groups in West Michigan — Grand Valley State University, the Family Business Alliance and Western Michigan University — developed a survey aimed to create an updated database of family-owned businesses in West Michigan counties. Along with the updated database, goals of the survey were to gauge the state of family-owned businesses in that region and determine what programs and services they might need.
“The response so far has met and even exceeded our expectations,” said Laurel Ofstein, Ph.D., Assistant Professor of Management at WMU’s Haworth College of Business. “We’ve very happy with that.”
Although the study focused on counties on the west side of the state, the findings show how valuable family firms are toward sustaining communities no matter where they do business.
Approximately 700 respondents identified themselves as family-owned, and 150 have taken the full survey so far, giving the survey a 22 percent response rate in comparison to the typical 10 percent response rate. Respondents answered questions about their corporate structure, their history and plans for the future.
“We are excited to have the results of the family business survey so we can better understand the family business community of West Michigan and start to paint a picture of resources needed,” said Ellie Frey, director of the Family Owned Business Alliance — a division of the Grand Rapids Chamber of Commerce.
The process for the current survey began last year as Ofstein helped identify approximately 12,000 companies from the 28 counties in West Michigan who were invited to register on the FOBI website and take the survey.
A business is family owned, according to J. Kevin McCurren, acting director of FOBI, if it meets two basic requirements. “First, does it have family members active in management and, second, do the owners intend to pass it on to family members?” he explained.
At this point, the results of the survey are preliminary, and although a final report will not be completed until later this year, the researchers are able to form a few initial impressions.
“They’re involved in the community and the environment because they live and work in the same place,” said McCurren.
No matter their size, or the industry in which they operate — retail, agriculture, manufacturing, etc. — family-owned businesses tend to make a sizeable impact on the communities in which they operate. They have something else in common, all family-owned businesses have needs and challenges unique to them.
As those involved in administering the survey suspected, because they provide jobs, family-owned businesses have a great impact on the local economy. Of those companies who responded, the smallest company had one full-time employee; the largest employed a total of 2,400 full-time workers. The smallest company employed no part-time workers; the largest 600 part-time employees.
Not only do family-owned businesses positively impact the local economy with jobs, but also with charitable giving or philanthropy. The survey results so far show that most companies are strong community supporters, although many don’t have a formal annual giving program but instead “give when there’s a need,” said Ofstein.
Not only are they philanthropic, according to Frey, they’re “slower to reduce their workforce in tough economic times” and because they have a personal stake in their community, “they are better environmental stewards.”
The survey also showed that many family-owned businesses have deep roots. “There is a preponderance of businesses in their third and fourth generations,” Ofstein said. This result was surprising because national studies show that only 30 percent of US family-owned businesses survive beyond the second generation.
“We were quite surprised to discover a number of businesses who are multi-generational, now into their third or fourth generations. It’s not something that happens by chance,” Ofstein said.
The results will be valuable to other family businesses to learn about the good practices they have in place to make this happen. Family-owned businesses have the dual role of protecting and preserving their heritage while looking ahead toward ways to remain innovative and continue to build their business.
“We want to make sure that we offer help (such as in succession planning and strategic planning) so that other family businesses can survive into the next generation,” added Ofstein. “As a result of the survey, we’re excited to know what tools, resources and services we can offer to help them make good decisions.” Ofstein, for example, has already recommended adding an elective course on family-owned businesses to the Haworth College of Business curriculum.
The information that the survey has gathered so far will be useful to all three groups going forward. Little data has been available on the number, needs and impact of these businesses before these studies began.
“As a membership organization, the Family Business Alliance will use the results to plan the appropriate programming. When presenting on family business, it will be wonderful to have current and local family business data to share,” said Frey.
The groups hope to release a follow-up study later this year. Any family-owned business in a West Michigan county that would like to be added to the database can register at the following link – http://gvsu.edu/fobi/survey.