Furthermore, corporate owners were more concerned about business financing because they would usually have to go outside of the firm to get a loan, whereas family businesses are more inclined to invest in their business (even if it's not always the most sound business decision). And family business owners were less concerned about selling the business because it would most likely not be sold; it would be handed down to the next generation or transferred to another family member.
Interestingly, more than one-quarter of the respondents were worried about workplace violence, perhaps less because of its likelihood than because of the high-profile news stories of the occasional employee who "goes postal."
Personal Concerns
There were more pronounced differences in their level of concern, however, on the personal side (Exhibit 2). And, again, they were generally the result of working, or not working, with relatives.
While both groups put taking care of heirs at the top of their list, for instance, it was more of a concern for family business owners. Estate taxes were also a higher priority, because the estate included the business itself and estate taxes were often directly tied to succession issues. Family business owners were almost ten times as concerned about the prospect of family members being sued, as such litigation could very well end up taking a bite out of their business.
The corporate owners, in contrast, were more worried about income and capital gains taxes and, by a still wider margin, about having enough money for their retirement and their children's education. In the case of capital gains, they may have had a higher expectation of selling appreciated shares or simply less familiarity with strategies for doing so without severe tax consequences, whereas fewer family owners are thinking about selling. As for retirement and education, the family business owners weren't worried about retirement; they were planning to hand the business on to a son or daughter. Regarding education, family owners may have had within the framework of their business plans that helped cover the cost of education for their children.
Both family and corporate businesses were more or less equally concerned about being sued and making charitable gifts, which speaks to their need for asset protection plans and advanced planning guidance.
Next month we'll see how small business owners find their advisors and what their selection criteria are.
Hannah Shaw Grove is managing director and chief marketing officer of Merrill Lynch Investment Managers. Russ Alan Prince is president of the consulting firm Prince & Associates.