A family owned business “is a business in which one or more members of one or more families have a significant ownership interest and significant commitments toward the business’ overall well-being.” Based on our experience at Generational Equity, we have listed three myths about family-owned businesses and elaborated on why the myth is a myth.
Myth #1: Family owned businesses are privately held.
Some of the country’s largest businesses are family owned. Koch Industries, Carlson Companies, and Cargill are three examples. In cases where the company is very large and publicly owned, they can still be considered to be a family business. This is done when the largest shareholder is the controlling shareholder.
Myth #2: In a family owned business, the owners are family members.
No, that is actually not always the case. Family members will usually be involved in operations of the company and often times are managing the company or senior officers, however, the owner is not always a family member.
Myth #3: Family owned businesses are fading to a thing of the past.
According to a Newsweek article:
Family-owned businesses continue to form the backbone of the American economy. Consider the following statistics reported by the University of Southern Maine’s Institute for Family-Owned Business: Some 35% of Fortune 500 companies are family-controlled. Family businesses account for 50% of U.S. gross domestic product. They generate 60% of the country’s employment and 78% of all new job creation.
