Family-owned businesses make major impact on state
By Lynn Ritter
When you think of Delaware businesses, some of the big corporations probably come to mind first. Reflect on it for a minute, get past the huge names, and the next businesses that come to mind probably include many local, family-owned businesses. Chances are high that you know someone who either owns a family business or works for one. Have you ever thought about the contributions that family-owned businesses make to Delaware’s overall economic picture?
The first is obvious – they are employers. Statistics indicate that family-owned businesses account for 60 percent of total U.S. employment, 78 percent of all new jobs, and 65 percent of wages paid. For many employees, the benefits of working at a family-run business are more than just a paycheck, though. The owners often treat their employees as family, even nonfamily members. They invest in training their employees and promote from within whenever possible. Most family-run businesses do a great job of keeping their expenses under control because they believe the company’s money is the family’s money. Because of this attitude, the owners are less likely to lay people off during economic downturns. Retention is generally higher at a family-run business because the employees trust the owners to be committed and loyal.
Not only do owners of family businesses bring jobs to Delaware but they also consider Delaware “home.” They have a desire to succeed since they have a personal financial stake here. Strong values and commitment to their beliefs contribute to the long-term stability of the company. Owners teach these values to their children and show them the importance of family, hard work, and earning a living. Since long-term growth is important to family succession of the business, the owners encourage entrepreneurship by guiding the next generation of family members to develop skills and research new products and services to offer. They see diversification as a way to protect the family’s wealth.
Because of their vested interest in Delaware, owners of family businesses are more likely to use a local banker, accountant, and lawyer for their business and personal needs. They are also more likely to patronize Delaware restaurants, stores, gas stations, and other businesses. In addition, the owners tend to be actively involved in community activities and serve on the boards and as officers of civic, charitable, and other not-for-profit organizations. They also volunteer their time and funds to support the local Delaware chapters of the charities they care most about.
Clearly, Delaware’s tax base reaps many rewards because of family-owned businesses. The businesses and their owners contribute to Delaware’s tax base at the state and local levels. Not only do they pay income taxes but they may also pay real estate taxes and local taxes. The people they employ generally pay Delaware income taxes, and the Delaware businesses they patronize may also pay Delaware taxes.
Employment, new products and services, support of charities and other businesses, and payment of taxes are just some of the contributions that family-owned businesses make to Delaware’s economy. Because they focus on stability and long-term growth instead of short-term performance, family-owned businesses will continue to contribute to Delaware’s economy for many years to come.
Lynn B. Ritter, CPA, MST is a tax manager at Gunnip & Company, a full-service CPA firm serving Delaware and the surrounding area since 1947. www.gunnip.com