Small and midsize businesses provide over 90 percent of the jobs and tax support for municipal services
By DR. RONDA SAUGET
For the Illinois Business Journal
Over 150 business owners participated in the 2022 St. Louis Regional Business Owner Summit on Oct. 26 at the Renaissance St. Louis Airport Hotel.
The Business Alliance Masterminds, a professional networking group for business owners throughout the St. Louis and Southwestern Illinois region, hosted its third major regional event.
The Summit is an exclusive event for current and future business owners to educate them on the value acceleration methodology, how to best prepare for transitioning their business in the future, and key information on harmonious family-owned business strategies.
Speakers also discussed the importance of small and midsize businesses as the foundation for strong community economic development and municipal revenue sustainability.
The Owner’s Summit featured the results of the 2022 St. Louis Regional Business Owner Study conducted by Dr. Gloria Sweida, a professor at Southern Illinois University Edwardsville.
“The Business Alliance Masterminds is thrilled to share the results of the St. Louis Regional Business Owner Study. It includes responses from over 200+ business owners throughout the St. Louis Metropolitan region,” said Jim Maher, founding member of Business Alliance Masterminds and CEO and Founder of Archford Capital Strategies, LLC.
Maher further stated, “The Summit provided business owners with tangible tools to position their companies and set their teams up for long-term success and growth. Small and midsize businesses are community heroes that provide over 90 percent of the jobs and tax support for municipal services, such as firefighters, police officers, and teachers. It has been a long-term goal of mine to provide these businesses with a strong voice at the table.”
The Summit keynote speaker was Doug Tatum, author of “No Man’s Land: Where Growing Companies Fail.” Tatum has won four National Best Business book awards. His insights about the economy and business have been cited in hundreds of media outlets including Inc. Magazine, The Financial Times, and The New York Times online. According to Tatum, “Understanding the dynamics of emerging growth companies in a community and in the U. S. is incredibly important to our economy.”
A panel of key experts led by Jim Maher, Archford Capital, Brent McClure, Partner & Leader of Business Transition Services, Anders CPAs, and Mark Goldenberg, Partner, Goldenberg Heller Antongnoli P.C., funded the study to understand the challenges small and midsize business transitions as they emerge into the new post-pandemic business environment.
According to Brent McClure, “While large businesses received most of the attention, financial incentives and other programs; it is the small and midsize businesses who are the economic foundation of our communities. With proper strategic planning aided by experienced advisors, these firms build multi-generational business legacies. Establishing a strong transition team is the key to revenue sustainability and long-term generational success.”
The study findings listed that if an estimated 80 percent of a business owner’s wealth is their business, then it is imperative that the business owner knows how to monetize this asset. According to Dr. Sweida, “Successful monetizing of the company can not only fund the business owner’s retirement; it can provide the confidence to face the “what ifs” life may throw their way without jeopardizing their long-term financial security.”
Family businesses accounted for almost half of the business owners in this study, and 84 percent were wholly owned by the families.
Just a snapshot of some of the critical research findings indicated that 55 percent of family-owned firms stayed in business for just one generation, 28 percent lasted two generations, and only 17 percent lasted three generations or more.
This research further indicated that 97 percent of the second-generation business owners reported being in the decline stage, meaning without further planning, preparation, and innovation, this group of businesses would likely not make it to the third generation.
According to Mark Goldenberg, “Helping clients from the beginning with the right team of professionals is a critical part of any business strategy and especially as a client considers transitioning their business to the next generation or sale to an outside buyer. Preparation and planning are equal parts of a strong and consistent business strategy for all of our clients.”
The study emphasized that family planning meetings benefit family members and non-family member employees.
According to the study findings, family meetings allow family members to develop leadership, management, conflict management, listening, and speaking skills. Family members can acquire strategic, capital, estate, or transition planning knowledge. Further, employees can also benefit when family businesses have family planning meetings. The meetings let employees know the family’s commitment to the business’s future and to helping the employees be successful.
Specifically, 59 percent of the family businesses conduct family planning meetings, and 41 percent report having had a family planning meeting in the last year. However, the study noted that only 23 percent of the firms that conduct family planning meetings have an up-to-date family readiness plan.
Charles Brueggemann, Archford Consulting Family Coach indicated, “From years of family business coaching, I have learned that transitioning a business is sometimes very emotional for the family members directly involved in the business and those who casually participate in business activities. I often suggest that preplanning and intentional communications are critical in developing more harmonious transitions.”
The study highlighted that most business owners will only transition a business once, so doing it right means doing it right the first time. Business owners must understand how to maximize the transferrable business value and position the business to harvest its wealth successfully. However, even if owners have no intention of selling in the near term, a strategic planning process should be in place to increase growth’s longevity, thereby allowing owners to maximize long-term value.
It is the focus of this Summit to bring awareness, knowledge, and resources to help small and midsize business owners to maximize asset value, drive sustainable profitability, and prepare for future transitions. Healthy small and midsize businesses are the heart of strong community economic development and robust job creation for our region.!
For more information and resource help, the 2022 Regional Business Owner Study is available at www.archfordcapital.com or by contacting any of the leading firm representatives.
Ronda Sauget, D.MGT, MBA, is a strategic consultant for Archford Consulting.
(EDITOR’S NOTE: This story also appears in the November 2022 print edition of the Illinois Business Journal.)