(Johnson Brothers Appliance Azure South 2018 grand opening | Photo courtesy of Johnson Brothers Appliances)
How We Stack Up
Family businesses are the foundation of the global economy, accounting for 70 percent of the planet’s GDP and 60 percent of our total employment. In 2021, Family Enterprise USA concluded that there were 32.4 million family owned businesses in the country, accounting for 87 percent of all business tax returns and 59 percent of all private sector employment.
The benefits to a family owned business are simple. Multigenerationalties foster trust in the community, making it easier to maintain positive customer relationships over long periods of time. Family businesses achieve, on average, higher financial metrics than non-family owned businesses. Family owned businesses have an average leadership tenure that is four-five times longer than their non-family owned counterparts, and working with family can help foster trust and a positive environment for the workers themselves.
Oregon is actually unique when it comes to family owned businesses. About 30 percent of our Oregon businesses are family owned, and those businesses employ close to 40 percent of working Oregonians, but that aligns pretty closely to national trends. Oregon stands out when we look at both growth of family business and their average wages.
From 2020-2021, Oregon’s number of family owned businesses decreased by about 3 percent; one of the largest decreases in growth that any state saw that year. However, we hit the other end of the scale on average wages. From 2020-2021, Oregon was the top state for wages in family businesses; Oregon family businesses paid a higher average wage than in any other state. In addition, the Portland Metro Area makes Oregon family businesses stand out, as it had the third highest average wages from family businesses among any metro area.
In Central Oregon, these trends continue. Different business directories and listings provide different figures, but there are at least 60 small, family owned businesses in this region alone, with more large, family owned businesses not being counted by that number. Many industries, particularly family owned restaurants, are underrepresented from lists like these, making it difficult to track the actual figure.
In Central Oregon, the pros and cons facing family owned businesses reflect the same pros and cons seen on a national and sometimes even international scale. Some of the most common benefits come from appreciating family, trusting those who you work with and bonding through success.
Family owned businesses also account for a significant amount of wealth. Business equity makes up 34 percent of American families’ non-financial assets, second only to primary home ownership. A successful family business can bond families, bringing them together and creating the opportunity for generational wealth.
A perfect example locally would be Johnson Brothers Appliances. After 75 years in business, the company is now in third-generation hands with plans to hand it off to the fourth. The businesses not only brought the family together, but it also provided stability and opportunity for family members to grow. That, and many workers find it easier to feel passionate while working at a mom-and-pop store, as opposed to the experience of working at a big- box store.
However, challenges persist. All of the joys of working with family still means that work relationships can be heavily influenced by personal and familial ties, creating some conflict of interest. This helps explain why one of the number one complaints from the owners and workers of family owned businesses, both in Central Oregon and across the nation, lies in creating a healthy work-life balance.
For family businesses, taking all of the issues from a workday home can be all too easy, especially if you happen to live with or near the same family members you work with. However, aside from that specific issue, most family businesses report the same challenge that nearly every business in Central Oregon has reported in the last few years; maintaining a well trained workforce.
Family members might stick around longer than non-family employees and help average retention, but that is not always the case across the board. Plenty of family businesses struggle to keep the business in the family, explaining why only about 30 percent of all family businesses pass hands to the second generation. Interestingly enough, studies have found that female-led family businesses report 40% lower family attrition rates, suggesting that this leadership is more effective at managing family dynamics and promoting unity.
Locally, there are a number of resources helping Oregon grow more family businesses. Both Central Oregon Community College and Oregon State-Cascades have programs that can help develop and promote these businesses.
COCC features the Central Oregon branch of the Small Business Development Center, which offers local advising and classes, as well as specialized services from a statewide network. While this isn’t family specific, assisting small businesses statistically winds up helping family businesses because most family businesses are small.
OSU-Cascades has the family-oriented Center for Family Enterprise. Founded in 1985 as an initiative aimed at supporting students and communities, this branch of OSU offers free business training called Family Business 360, which helps educate family businesses, their employees and advisors on succession planning, governance, family dynamics and renewing a family enterprise. After that, access to advisors helps businesses stay successful and the OSU Excellence in Family Business Awards recognize standout success stories.
While family businesses in Central Oregon can be a difficult thing to track, there is no denying their economic and social value to our society. Family businesses are some of the oldest human enterprises in existence, and it seems that Central Oregon has created an environment where they can grow and find success.
