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Survey of Advisors to Family-Owned Businesses

Executive Summary

With the help of the Family Firm Institute, we surveyed advisors to family-owned businesses across the United States. Our goal was to gain an understanding of how the present economic situation is affecting the services they provide to clients, as well as to tap in to their outlook on the future of our economy.

Although we cannot guarantee the statistical accuracy of the data provided herein, we encourage all advisors to family-owned businesses to compare their experiences and assumptions against our findings. We also encourage all readers to compare this survey with our Chicago Area Business Leader Survey Results (November 2008 and February 2009) to get a larger perspective on the overall outlook of Chicago-area business leaders. These survey results can be found at survey.BlackmanKallick.com.

While we will not offer any specific advice based on the collected survey responses, we do identify some interesting trends that might be worthy of particular attention as well as offer possible reasons for the outcome of the data on page 3.

If you do not see the specific details you require to help you analyze your particular goals and assumptions, please feel free to contact us directly, and we will share any further information we have.

Interesting Observations

Increase in Focus on Succession Planning and Compensation Planning

When we presented this survey at The Family Firm Institute's Midwest Chapter Meeting on April 22, laughter broke out as soon as the bank financing slide was shown (see top of page 8.) No one was surprised to see the huge increase in the amount of time spent advising clients on bank financing. However, the dramatic increase in succession planning and compensation planning were of more interest. (See page 7 and bottom of page 8.)

The reason for the increase in discussions focusing on compensation planning can likely be attributed to business owners' need to find more creative ways to retain and reward staff when money is limited.

We found that the reasons for the increase in succession planning discussions are less clear cut. Perhaps there is now a greater focus on long-term planning. The current generation of leaders who enjoyed a relatively long period of growth could be having difficulty "going back into the trenches" to fight the effects of another downturn. Or, the downturn might have given family-business owners and their advisors a chance and the impetus to focus on the bigger picture.

Maintaining Current Staffing Levels

The chart on the top of page 11 reveals that the majority of family advisory firms are keeping their staffing levels constant. Some are even increasing versus decreasing their staffs, but the trend seems to point toward maintenance. Perhaps they are assuring readiness for the eventual upswing? Perhaps the decrease in billing due to the economy will be offset by more creative compensation? Or, as we see with other closely held businesses, perhaps family advisory firms are more able to adjust to changing business climates without having to draw the hard quarterly performance and profit lines of their publicly traded counterparts.

Dwindling Project Pipeline

While the word on the street seemed to be that clients were simply pushing back project timelines, this survey shows that project pipelines have waned. (See bottom of page 10.) This runs counter to the staffing results mentioned above.

Greater Economic Optimism or Have We Found the Bottom?

Comparing this survey to what we have read in the papers and our business leader surveys, we see that the family business advisors who took our survey believe the upswing to be a nearer-term event than other groups. Two-thirds of our survey participants believe economic recovery is a year or less away.

There are many reasons why this might be the case. For example, the slight improvement in the stock market and a slowing of the increase in unemployment. It's also Spring, which generally begets optimism. But, perhaps, there is also something unique about advisors to family-owned enterprises and/or an uplifting byproduct to the long-term planning discussions they are having with clients.

Two Questions to Ponder

As we assessed the survey and discussed the results with other advisors to family-owned business, we kept returning to two larger questions:

Has the role of the family business advisor changed due to the economic crisis? Will this be an enduring change, requiring a refocus on the services and strategies provided?
All signs point to an eventual economic recovery. However, it is also clear that some things will not return to where they were before the recession. What will this "new normal" look like?
If you have any comments or questions about this survey, please contact Stuart Baum at 312-980-3211 or sbaum@BlackmanKallick.com.

View survey results as PDF or right click on this link to download PDF only
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This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.