Family businesses are optimistic about their robust growth, but many will most likely face financial problems concerning succession and personal finances, according to a recent survey by Massachusetts Mutual Life Insurance Co., the Family Firm Institute, and the Cox Family Enterprise Center at the Kennesaw State University Coles College of Business.

   Increasingly led by women and driven by strong ethical and family-oriented values, family businesses are most at risk for financial troubles centered on the lack of formal succession planning and preparation, and the personal financial issues of family business owners, according to the study.

   The survey, conducted every five years, found that family-owned businesses are growing both in terms of revenues and jobs, and they expect to continue doing so. Women are often leading that growth and have assumed leadership positions in family businesses at much higher rates than their counterparts have in primarily non-family firms in the Fortune 1000, of which only 2.5% are currently led by women.

   The study also raised red flags: Many family business owners have not adequately prepared for managerial and ownership succession, nor have they prepared a personal estate plan to ensure an efficient transfer of wealth to heirs.

   The independently conducted survey canvassed more than 1,000 family-owned, predominantly closely held businesses to gauge strengths, challenges and changes since the last survey was conducted in 2002. Among its many findings:

    Nearly three out of four firms report increased revenues over the past three years, with more than one-third reporting increases in excess of 11%. Looking forward, 22% expect double-digit growth and more than half expect an increase in sales revenues up to 10%. More than one-third expect to add employees.

    Among family business owners who expect to retire in five years, fewer than half have selected a successor; of those expecting to retire in six to 11 years, less than a third have done so. Nearly a third have no estate plan beyond a will, nearly double the number of those surveyed in 2002. And only 54% report a clear understanding of the impact of estate taxes, which can jeopardize future generations' ability to continue the business.

    There has been an almost five-fold increase in the number of women leaders in family business since 1997, and almost a third of firms indicate they may have a female successor.

    Most family businesses (60%) believe that their ethical standards are more stringent than those of competing firms. More than one third (37%) have written ethics codes, and discussions about ethics with employees, customers, and partners are frequent.

    Despite perceptions that family businesses are less rigorous planners, significant percentages of family businesses use traditional business tools and processes, such as strategic plans, buy-sell agreements, and regular formal valuations, and have active boards.