Business Owners Willing to Work Hard for
Greater Control of Their Destiny;Biggest Concerns Are Unknown
Impact of Presidential Election, Cybersecurity;Less Than Half Have
an Exit Strategy
In its annual survey of high net worth business owners, U.S.
Trust found that business ownership can be challenging, but most
entrepreneurs wouldn’t consider any other line of work and have
personally invested themselves and their families in their
businesses. While there are distinct differences between younger
and older owners, entrepreneurs of all ages share a strong desire
to control their own destiny.
The study of 242 high net worth business owners with at least $3
million in investable assets, part of the 2016 U.S. Trust Insights
on Wealth and Worth® survey, found what worries entrepreneurs most
is what they don’t have control of: the unknown impact of the 2016
presidential election and a breach in cybersecurity, both of which
could have significant implications for their business and personal
financial interests.
Business ownership in their DNA
The majority (95 percent) of business owners surveyed founded or
acquired their companies. While few inherited their business, 70
percent of business owners say their upbringing was very
influential in their success, and family plays a central role in
business ownership.
- Forty-two percent of business owners
have a family member involved in their business in some capacity,
such as a senior manager or employee.
- Involvement of family members can both
complicate decision making, as well as be a competitive
advantage.
- Many business owners have used their
own or family savings to finance their business; however, they have
also raised money from venture capitalists and private equity
firms, in addition to bank financing to support business
expansion.
“Entrepreneurs tend to think of their business as an extension
of themselves and their family, often their greatest source of
motivation and strength so characteristic of successful owners,”
said Keith Banks, president of U.S. Trust. “The hard work and
sacrifices needed to create and build a business make being an
entrepreneur very much a family affair.”
Seventy-four percent of entrepreneurs agree that owning a
business is harder than working for someone else; however, business
owners don’t regret their career choice.
- Three in five say that given an option
in an ideal world, they would choose to own a business.
- One in three surveyed business owners
previously owned at least one other company.
There are many benefits to business ownership. Eighty-three
percent of people say that owning a business can make you wealthier
than working for someone else. However, that doesn’t appear to be a
business owner’s primary motivation. Their top reasons are to
control their own destiny, pursue their passion or because they
simply evolved into ownership.
Top concerns are unknown external impacts
The top concerns on the minds of entrepreneurs today are the
unknown, unquantifiable impacts of events and circumstances largely
beyond their control. The survey found that among all those
surveyed, the top concerns are:
- Outcome of the U.S. presidential
election (66 percent).
- Cybersecurity breach (64 percent).
- Personal income taxes (61
percent).
- Employee health care costs (57
percent).
- Government regulations (55
percent).
Younger entrepreneurs (millennials and Gen X) are far more
concerned than older business owners about external impacts on
their business, particularly government policies and regulations
including U.S. trade policies and corporate tax rates.
Overall, only about 35 percent of entrepreneurs are concerned
about a rise in the minimum wage rate or access to capital.
Always have an exit: Generational shift in planning
U.S. Trust found that the majority of business owners (63
percent) don’t have a formal exit strategy, including plans to sell
or transfer ownership and leadership of their companies. As many as
71 percent of business owners age 52 or older have not put a
succession plan in place.
The findings suggest that many older business owners equate
succession planning with retirement and/or end-of-life planning and
therefore put it off. This is reflected in their reasons for not
developing a formal succession plan: no plans to retire soon (43
percent), and their wishes for their business are outlined in a
will (29 percent).
Conversely, younger business owners (millennials and Gen X) are
more likely to have a succession plan than their older
counterparts, possibly to take advantage of strategic
opportunities. U.S. Trust found that one in three younger
entrepreneurs plans to sell or transfer ownership of their company
within the next three years.
“For many business owners, contemplating retirement and ceding
control of their company isn’t in their nature,” said Karen
Reynolds Sharkey, national business owners strategy executive at
U.S. Trust. “What business owners need to understand is that
creating a succession plan isn’t synonymous with closing up shop.
It’s about ensuring the sustainability of one’s life work and being
prepared for the next chapter.”
A majority of many business owners’ personal assets are tied to
their business and may have risks they are overlooking. The survey
found:
- About two in five entrepreneurs say
they are better at managing their business than at managing their
own personal finances.
- Only 44 percent have discussed
management of liquidity events with a professional advisor.
- Seventy-four percent of entrepreneurs
use different financial firms to manage their business banking and
personal banking needs.
“Building and sustaining personal wealth and building a
successful business go hand in hand, and when managed separately,
it’s easy to drop the ball in one area or the other,” said Banks.
“We know that business owners have diverse financial needs that
don’t fit neatly into the way most financial firms are organized.
Having a dedicated, trusted adviser who shares a vision of the
bigger picture can help connect the dots between an owner’s
personal and business lives so that both reach their full
potential.”
The complete 2016 U.S. Trust Insights on Wealth and Worth survey
findings can be found at www.ustrust.com/survey.
Survey MethodologyThe 2016 U.S. Trust Insights on Wealth and
Worth® survey is based on a nationwide survey of 684 high net worth
and ultra high net worth adults, of which, 242 are business owners,
with at least $3 million in investable assets, not including the
value of their primary residence. Respondents were equally divided
among those who have between $3 million and $5 million, $5 million
and $10 million, and $10 million or more in investable assets. The
survey was conducted online by the independent research firm
Phoenix Marketing International and completed in February 2016.
Asset information was self-reported by the respondent. Verification
for respondent qualification occurred at the panel company, using
algorithms in place to ensure consistency of information provided,
and was confirmed with questions from the survey itself. All data
have been tested for statistical significance at the 95 percent
confidence level.
Phoenix Marketing International is a global research and
marketing services firm providing its clients tailored insights
with expertise in product innovation, customer experience and
communications and brand via a wealth of existing proprietary data,
advanced analytics and statistical modeling techniques. For more
information, visit www.phoenixmi.com.
U.S. TrustU.S. Trust, Bank of America Private Wealth Management
is a leading private wealth management organization providing vast
resources and customized solutions to help meet clients’ wealth
structuring, investment management, banking and credit needs.
Clients are served by teams of experienced advisors offering a
range of financial services, including investment management,
financial and succession planning, philanthropic and specialty
asset management, family office services, custom credit solutions,
financial administration and family trust stewardship.
U.S. Trust is part of the Global Wealth and Investment
Management unit of Bank of America, N.A., which is a global leader
in wealth management, private banking and retail brokerage. U.S.
Trust employs more than 4,000 professionals and maintains 93
offices in 31 states.
As part of Bank of America, U.S. Trust can provide access to a
broad range of banking solutions for individuals and businesses,
and an extensive retail banking platform.
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version on businesswire.com: http://www.businesswire.com/news/home/20160523005121/en/
Reporters May Contact:Julia Ehrenfeld, U.S. Trust,
1.646.855.3267julia.ehrenfeld@bankofamerica.com
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