HBB 3.2
9/2002
Abstract
Community
Sentiment and Rural Retail Spending
Prepared
by: Glenn
Muske
Home-Based and Micro
Business Specialist
104
HES,
(405)
744-5776
muske@okstate.edu
Winter, M., Koh, S., Fredricks, K., & Paul, J. J. (2002). Tracking family
businesses and their owners over time: Evidence from the 1997 and 2000 National
Surveys of Family Businesses. Unpublished manuscript.
Implications for Cooperative Extension. Business activity can
make significant contributions to the local economy. Family businesses are the largest contributor
to that economy, especially in rural areas.
It is also known that the longer the business can remain in operation,
the greater the likelihood of it generating greater economic
contributions. This study, using panel
data from the 1997 and 2000 National Family Business Surveys examines what
factors are significant in predicting which businesses are more likely to
continue. This information can be useful
in community development efforts as educational programs are developed and
support efforts tailored to the business owner’s needs.
Overview. Family businesses are
the heart of the American economy, contributing a major portion of the
country’s productions, employment and income.
For many rural communities, the family business represents nearly the
entire population of businesses. Many
articles written about family businesses suggest that they certain
characteristics can be found that will suggest whether these businesses will
survive for an extended period of time.
This study proposes to look at a variety of factors to determine if that
statement is true and, if so, which characteristics are significant in
developing a business continuation model.
For all communities, but especially for rural
communities, an understanding of the factors that are most influential in
predicting business success. Knowing
such information can assist in the development of educational and support
programs that are of most value to the business owner.
Most existing literature focuses on why business
owners start an entrepreneurial enterprise, usually as a response to either
positive or negative economy change.
During times of growth, people see opportunities to start a business in
a growing economy plus the household is more likely to have the option of
funneling a portion of current income into the venture. During down-turns, people start businesses in
order to maintain household income.
Factors associated with the demise of family
businesses have not been examined in such detail and what literature that does
exist is often based on cross-sectional (done at different points but each time
with a new sample) rather than surveying the same business owners at different
points in time.
Community Sentiment and
Rural Retail Spending continued
What does seem to be clear is that males are
more likely to remain in business longer than females. The usual reason for this is that females
often bring less managerial experience to the business. Along with managerial experience, the age of
the business with older businesses being more stable. Other positive factors included older
business managers, more educated managers, and positive feelings about the
business all contributed to the business staying in operation.
Yet the question is not as clear-cut as does the
business still continue. A second part
of the question is does the manager still remain involved with the
business.
This study used the 1997 National Family
Business Survey and its follow-up the 2000 NFBS. This survey interviewed 703 family business
owners in 1997 and then attempted to reinterview that
them 3 years later.
Findings. Looking at the separate parts of the research
question, businesses that were still in operation had managers around age
45. Managers younger than that were more
likely to quit because they wanted a change or for resource issues. Managers older than age 45 were more likely
to sell the business for retirement or health issues. Other significant predictors of business
continuation were being a male manager, being in operation for more years, viewing
the business as more successful and seeing the business more as a way of
life.
Whether or not the business manager was still
involved with the business was predicted by age (older managers more likely
staying involved), being male, age of the business, and overall subjective
feeling of success of the business.
Discussion.
As predicted, several factors contribute to
business continuity. While some of the
variables are similar for all businesses, the age of the manager and age of the
business also created some differences in whether a business continued. Business success, either objective or
subjective, predicted the business continuing whether the manager remained with
it or not.
This information is certainly helpful in program
development and support efforts. The
survey also showed that while certain elements may suggest which business
owners are more likely to survive, this information alerts us to the need to
work more closely with those owners who face a more difficult path to
success. The information can help us
focus our programs with the goal of on-going, successful businesses for all who
desire an entrepreneurship life style.