South Dakota is home to a greater percentage of family businesses than any state in the nation.
That’s according to a recent report from OnDeck, a global online small-business lending company.
Using data from earlier this year, it analyzed information from the U.S. Census Bureau’s annual business survey to identify the states with the highest proportion of family- and spouse-owned companies.
More than two-fifths of South Dakota businesses – 43.4 percent – are family owned, it found.
“There’s a lot of talk about how big business has crowded out mom-and-pop shops. Doing a state-by-state comparison reveals trends that get lost on a national level,” said Jim Granat, senior vice president and co-head of OnDeck.
“The Midwest, for instance, has a higher percentage of family-owned businesses than many Eastern states. And the difference can be a big one. South Dakota’s rate of family-owned companies is more than double that of New York.”
The report quickly gained attention of the South Dakota business community.
“South Dakotans are excited and proud of the results of the study. The graphic has gone viral in our world,” said Stephanie Larscheid, executive director of the Prairie Family Business Association.
“We want people to know that family business and South Dakota go hand and hand. Plus, there are tremendous resources available through Prairie Family Business Association that help these businesses remain generational. Not every state has a family business association, let alone one that is as accessible and affordable as Prairie Family Business Association.”
The Prairie Family Business Association counts 237 businesses in 13 states as members – a number that has grown steadily, especially over the past two years.
Most have fewer than 50 employees, and a large majority have fewer than 25.
“Many South Dakota businesses have their family name as part of the business name,” Larscheid added. “You don’t tend to think of large, publicly traded corporations like you would in other Midwest states. Many of the family businesses in South Dakota have a relationship with fellow family businesses. They do business together, and they invest in projects together that are good for the communities.”
Weisser Distributing has experienced that firsthand. Second-generation leader Eric Weisser is board chair of the Prairie Family Business Association.
“We have a really nice backbone in South Dakota with so many family businesses,” he said. “And we have a good community of people that want to support small businesses. They work together to get things done.”
“The friendly business climate in South Dakota helps family businesses survive and thrive,” Larscheid agreed. “Businesses in our region look out for each other and look for opportunities to do business with each other. This is good for everyone involved.”
In looking at the OnDeck research, agriculture operations also helped South Dakota rank first in the nation.
“Agriculture is a big part of the South Dakota economy, and a large percentage of farms in the state are family-owned,” Granat said. “From government initiatives to business associations, there’s a lot of support for that, and it shows.”
That’s also an increased area of emphasis for the Prairie Family Business Association.
“We want to help connect with family farmers. They’re traditionally very private, and too often what happens is Dad literally dies while farming, and all of a sudden the family has a mess.” Weisser said.
“We don’t want you keeling over on the tractor without a plan. And you can replace ‘tractor’ with anything. Don’t keel over at your desk, and leave the kids a mess. People need to know that matters, and it’s a way to show you care about your employees. It’s a way to show you care by working through a succession plan and having a smooth transition. The family farm is a place we think we can tap into.”
Prairie Family Business Association continues to evolve its offerings to reflect the needs of family businesses.
“As we’ve grown, so have our programs,” Larscheid said.
“A focus on the next generation has been rising to the top of our conversations with families. There is a desire for family members to come back to the family business, both through the senior generation and the next generation.”
Prairie Family’s affinity peer groups have grown to 18 active group serving more than 100 individuals. A third fully virtual group is starting soon, and the virtual group offerings will increase.
Next year, the association will start a Board Bootcamp for families who operate with a board, either fiduciary or advisory, or want to explore operating with a board.
“We know that structure and outside advisement can lead to greater opportunities and success for family businesses, so we’re supporting families through board development and creation,” Larscheid said.
Weisser has found membership highly valuable.
“We’re getting world-class information at a family business price tag,” he said. “I’ve sat across the table from business leaders who are unbelievable for a business our size and at my age. And we have an amazing conference that now is in person and virtual, so it brings in people from more than 20 states and multiple countries, which means we’re able to bring in even more high-caliber presenters.”
The resources of the association have been helpful especially as businesses transition through generations, Weisser said.
“Because Prairie Family has been around 30 years, if you’re a family business, you likely have a connection with the association,” he said. “You were active. You made a transition. And we think the value is staying within the association post-transition because of the connections you can make and the help you can get from others.”
The message seems to be resonating – and indicates South Dakota could continue to rank among the top in the nation for family businesses for years to come.
“We’re seeing an openness to innovate in the next generation, especially following the pandemic. Families have a desire for the next generation to develop the skills and leadership they need to succeed, which leads to generational success,” Larscheid said.
“The Next Gen Retreat we’re hosting in October in Deadwood will be the largest Next Gen Retreat we’ve hosted in our 30-year history. That says a lot about the bright future for family businesses in our region.”
To connect with the Prairie Family Business Association, visit fambus.org.