Study of Nearly 1,000 Family Business Owners

• Study Contents

A. Method and Sample Characteristics

• Table 1 - Profile of Respondents

Researchers from Kennesaw State University and Loyola University Chicago surveyed family business owners to measure and evaluate the impact of estate taxes on family businesses. In addition to assessing the costs of past and expected estate tax obligations, they also sought to measure the costs associated with estate planning and the impact of estate taxes on family business decision-making processes. The survey was a telephone poll conducted by the Gallup Organization. Businesses were selected for inclusion in this list if they had sales in excess of a million dollars and at least two officers or directors with the same last name. The following analysis is based on data collected from 967 family businesses from multiple industries throughout the United States. It includes an attempt to generalize from the businesses included in this study to the general population of family firms with specific focus on the agriculture and beef industries.

The general characteristics of the sample are listed in Table 1. Approximately 80% of the sample fit a more narrow definition of a family business than that described above: multiple generations of ownership, voting control, more than one member in the business. About eight in ten businesses have been in the family for at least two generations. The median family agri-business surveyed is smaller in terms of sales and employment, and the payroll of the average agriculture business is disproportionately low. The average employee cost $55,000 per year among the overall sample, but only $17,600 among the agriculture firms. This may be due more to the employment patterns in this industry. Rather than paying employees less for their work, many employees may work less due to the existence of peak and slow periods over the course of the year. The family agri-businesses are slightly more likely to have paid estate taxes on the assets of the previous generation (43%) than the other family businesses surveyed (38%).