Family-owned businesses are the original mom-and-pops of Main Street, and they're feeling optimistic in the new year, according to new data.
Pricewaterhouse Cooper's "US Family Business" survey finds family businesses are feeling upbeat on growth projections, as 79 percent of respondents expect "steady growth" in the next five years. What's more, 70 percent reported revenue growth in the past year, according to the survey released Tuesday.
This sunny outlook is also in line the National Federation of Independent Business' optimism index for December, which broke 100 for the first time since October 2006.
PwC's survey was conducted among 154 family-owned and operated U.S. businesses across industries from manufacturing to retail to wholesale.
The research found recruitment of tech talent is at the top of the respondents' agenda, with one-third saying this is a main priority. Such hiring commitment also signals that business owners are optimistic and want to invest for the long haul.
"These businesses are putting more into resources like finding top talent, or making investments in technology," said Alfred Peguero, a PwC Family Business Services leader. "You don't do that if you don't think your business will be doing well in the future."
Despite such optimism, succession planning remains a perennial challenge.
Nearly one-third of businesses in the U.S. are family-owned, according to the U.S. Census Bureau's most recent data.
Many family-owned businesses struggle with handing off the reigns to their successors as nearly 60 percent say they will stay on at their company longer than planned, according to the PwC survey.
What's more, 47 percent of next-generation family members working in the business view succession as becoming more difficult because of the growing age gap between the current leadership and those in line to take over.
Peguero says this is because older business owners are staying on longer than they have in the past. "We are seeing more hesitation on behalf of older generations. We're calling it 'sticky baton syndrome.'"
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Succession plans
The survey found family-owned businesses with solid, formal succession plans are scarce.
Nearly 75 percent said they do not have a documented succession plan in place for senior roles in the company, PwC said. This maybe because many businesses think succession plans are a long, drawn-out process, said Ted Clark, executive director of the Northeastern University Center for Family Business.
"They think it's a series of smaller preparations, a buy-sell agreement—but really it's just understanding who would take over if something happens, and a plan to execute it," Clark said.
But for entrepreneurs like Dennis Groth, who runs Groth Vineyards & Winery in Oakville, Calif., it's just having the framework in place, rather than formal documentation. The 72-year-old Groth says he plans to one day pass on the business to his daughter, who is currently vice president of sales and marketing.
"My only succession plan is a plan from the standpoint that my wife and I discuss it on a regular basis," Groth said. "I love the business, I am still the CEO. … My daughter wants to pick it up, but also doesn't want me to disappear.