For Immediate Release
Dec. 7, 2009

RECESSION HITTING FAMILY-RUN BUSINESSES HARDER THAN OTHER BUSINESSES, BUT OPTIMISM REMAINS

Family businesses are critical to Connecticut’s economic future, providing much of the employment and tax base that underwrites critical state and municipal services. Economic hardships however, are threatening the vitality of this key segment of our economy.

 According to the Connecticut Business & Industry Association (CBIA)/University of Connecticut 2009 Survey of Family Businesses, released today, family-owned companies have been hit harder by the recession than many other businesses, with most reporting a drop in profits over the past 12 months.

One of the major challenges continues to be the cost of doing business in the state, including the high cost of energy. Business regulations and state mandates are also burdensome:  69 percent of respondents say mandates and regulations have stood in the way of current growth, and 79 percent believe they will hamper future growth. Despite these hardships, employee retention is better with family-run businesses than among other Connecticut businesses, and more than three quarters (76 percent) of respondents expect no change or an increase in their workforce in the next year. In addition, most family enterprises expect to remain family-owned and anticipate their growth over the next few years will outpace their competitors.

“Family businesses play a critical role in Connecticut’s economy,” says John R. Rathgeber, CBIA president and CEO. “Their commitment and entrepreneurial spirit, a measured approach to growth, and the ability to close ranks and react quickly to changing conditions make them uniquely well-placed not only to weather the downward economic cycle but also to lead the way out.”

Emerging from the recession is a top concern for family businesses and they believe strategic planning will be critical in preparing for the eventual economic recovery. However, more than two-thirds (67 percent) of Connecticut’s family firms have not developed a written strategic plan, but the vast majority plan to remain family-owned and to continue their commitment to their employees and their communities. 

Family-owned businesses represent 90 percent of businesses nationwide, generating 78 percent of new jobs and more than half of the U.S. Gross Domestic Product and in today’s global economy, it’s critical for family enterprises to expand their customer base. But only 35 percent of family firms export, and of those, 46 percent generate half of their revenue from international sales.

“In today’s economy, international markets hold the key to growth for Connecticut companies, says Kelly Aceto, associate director, UConn Center for International Business Education & Research. “The consuming class in emerging markets is growing exponentially. In many of these countries, personal relationships are highly prized, thereby placing family businesses with clearly articulated family values in a prime position to leverage this opportunity.”

The majority of businesses surveyed emphasize family values (80 percent) and socially responsible practices (79 percent) in their operations, with 82 percent providing financial support for charitable organizations. Virtually all respondents report that quality management, high ethical standards and low staff turnover contribute positively to their business success.

“Family businesses are truly amazing…take a traditional business with traditional challenges and opportunities, apply a layer of unique family-related issues like leadership, succession and estate planning, add a heaping share of economic uncertainty, history, emotion, blood, passion, sweat and tears and what you have is one of America’s most dynamic business entities,” says Richard Kretz, managing member of Kostin, Ruffkess & Co.

The survey was sent by e-mail to Connecticut businesses as well as members of the UConn Family Business Program. There were 521 surveys returned, for a margin of error of plus or minus 4.4 percent.

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CBIA is the state’s largest business organization, with 10,000 members.

For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

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