2013 Conference

Financial Services

Financial Services

Succession planning for family business owners has been widely examined in the literature.  This descriptive study, therefore, was to explore succession planning across four ethnic groups in the U.S.: Black, Korean, Mexican, and White.   In particular, this study examined the effects of ethnicity on succession planning and investigates factors that might be associated with having succession planning in place.  This study employed data from the 2003 and 2005 National Minority Business Owners Surveys (NMBOS). The total sample included 803 small business owners and the sub-samples consisted of 198 Black owners, 200 Korean owners, and 200 Mexican owners. For comparison purposes, 210 White small business owners were included in the analyses. This descriptive study explored succession planning among minority family business owners, while examining the effects of ethnicity on succession planning and investigating factors associated with likelihood of owners having succession planning.  Overall, the evidence suggests that only 17.3 percent of family business owners had an expectation of transferring their businesses to their children, while 7.4 percent expected to transfer their family businesses to other family members.  However, 21.1 percent reported that they would sell it before they retire, and 8.3 percent reported they would close their businesses prior to retirement.  It is noteworthy that only about 25 percent of family business owners would transfer their businesses to their children or other family members. The finding suggests that many minority family business owners might not be aware of the significance of successful transfers of their businesses or they might not know how such planning is developed and implemented for the future. It is, therefore, important for financial planners and small business consultants to provide better guidance with succession planning because there is a greater prospect of succession failure without such planning.