Is starting a business with your loved ones a good idea? If you’ve just finished HBO’s smash hit series Succession, you’d probably say no. But, thankfully, the Roy dynasty isn’t a fair reflection of family-run businesses in the USA!
Research shows that US family enterprises are more successful than their non-family owned counterparts. They tend to generate higher profits and are less likely to be slowed down by internal conflicts. They’re also more dynamic. A study by accounting experts KPMG found that family firms are 42% more likely to implement business transformation strategies than non-family firms.
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"Family businesses at their best are world-beating," says Professor Nigel Nicholson of London Business School. "The level of competition and distrust in non-family businesses is seriously problematic."
Small business lender OnDeck recently took a closer look at family-run firms across the USA. They wanted to identify the states and metro areas where family companies are thriving.
Ondeck's researchers looked at US Census Bureau data and put all their findings into the maps below.
Here's a summary of what they tell us about family business in the USA.
The US State With The Highest Percentage Of Family-Run Businesses
South Dakota has the highest proportion (43%) of family-run businesses, according to the research from Ondeck.
That figure more than doubles when looking at South Dakota's agricultural industry; an incredible 98% of farms in the state are family-owned.
South Dakota even has a specialist business retreat centre where family farmers can strategize, bond, and work through any issues in a safe and neutral environment. It's called Paul Nelson Farm. And yes, it's owned by the Nelson family.
Keeping It In The Family
Idaho is another US state with a high percentage of family businesses; 42.3% of all companies in Idaho are family enterprises.
Alaska (38.6%) and Nebraska (37.9%) come next, followed by Iowa (36.8%) and Arkansas (36.7%).
US States With The Least Family Businesses
The family business isn't big on the North East coast of the USA. All four states with the lowest percentage of family businesses are located in the North East region.
New York has the lowest percentage overall. Only around 1 in 5 New York businesses (20.4%) belong to families. Family businesses aren't fairing much better in Massachusetts (20.8%), New Jersey (21.9%), or Connecticut (22.2%)
Delaware (23.4%), Pennsylvania (24.8%), and New Hampshire are three more North-Eastern states where family businesses are the exception, rather than the rule.
So why do family firms struggle to survive in this particular region of the USA?
David Stark, a business restructuring specialist at Deloitte, explains:
"States like New York are cosmopolitan areas full of highly educated, upwardly mobile professionals. These ambitious people want to make their own way."
"With so many opportunities available to them, why would they choose to 'just' stay at home and run the family firm? It's one of the main reasons why few family businesses in New York have survived into the third generation."
Family-Owned Businesses In The Metro Area
The metro area of Lima, Ohio, is where family businesses are really thriving. More than one in two (56.2%) of all metro businesses are family owned.
Mike Powell, operations manager of family-run Sign Solutions of Ohio, outlines why family businesses do so well in Lima.
"There's a real sense of community and togetherness in Lima," explains Mike. "We support each other. We work with each other, and all do business with each other. If one goes down, then that hurts the whole community."
"Owning a small but successful family business is something to be really proud of in Lima,'' continues Mike. "It's a goal for many people."
Once again, New York makes an appearance at the bottom of a list. Less than 1 in 10 (9.8%) businesses in the New York Metro area of Ithaca are family-owned.
Spouse Owned Businesses In The USA
Not every couple is cut out to go into business together. And there's no shame in admitting it. After all, we all need a little bit of space and independence.
But for the couples who can live and work together, running a business is a rewarding experience, both personally and financially.
Vicki Ashman co-founded a luxury underwear company with her husband.
"It brought us closer together. We work so hard for each other. We're building a business and a life. It feels special," says Vicki.
"But we learnt the hard way. I'd advise others to clearly define your roles from the start and do everything they can to separate work life from your home life."
"It's unrealistic to expect that work discussions will be confined to office hours. But there are limits. 3 am in the morning is rarely a good time to discuss business!"
This is something that the good folk of Idaho seem to have figured out.
The gem state is the USA capital for spouse owned businesses. More than 1 in 3 companies (35.6%) in Idaho are run by spouse management teams. They include Grandma's Pantry in Pocatello, Idaho, a jelly and jam artisan bakery owned by Kimberly and Frank Zenger.
"Pocatello is the perfect place for this kind of business," says Kimberly. "It's family-oriented, and I love that it's a city with a small-town feel. We couldn't be happier. Frank and I are building a self-sustaining business to pass on to our sons. It's the American dream."
Things aren't so rosy for couples in New Hampshire. Only 8.6% of state businesses are owned and run by married couples.
Check out the table below for a full breakdown of the results.
