Executive Summary. Building a legacy. The fiscal practices of today s African American business owners

Similar documents
MassMutual Business Owner Perspectives Study

Insights from Hispanic Families Executive Summary

Preserve what you spent a lifetime creating

Insights from Asian Indian Families Executive Summary

Preserve what you spent a lifetime creating

Establishing your baseline financial goals. Ideas for those unsure of where to begin their financial journey.

The Successful Business Owner. Strategies for effective business planning. Business Planning. insure invest retire

Why Rent When You Can Own?

Historical dividend studies from Massachusetts Mutual Life Insurance Company

Historical Dividend Studies From Massachusetts Mutual Life Insurance Company (MassMutual)

Choosing the right company for disability income insurance protection. Radius Choice SM

Secure your future with guaranteed lifetime income

Your Guide to Life Insurance for Families

WHOLE LIFE INSURANCE. Ten Payment Whole Life PERSONAL GUIDE INVEST INSURE RETIRE

Variable Annuities. A tax-advantaged way to save for retirement

IV. EXPECTATIONS FOR THE FUTURE

Retirement Check-In survey

Planning for a Good Life. We can help.

Career Opportunities for Career Changers. Unconventional your career.

A meaningful benefit to help increase employee financial wellness. Group Whole Life Insurance FOR EMPLOYER USE ONLY. NOT FOR USE WITH EMPLOYEES.

Historical Dividend Studies from Massachusetts Mutual Life Insurance Company (MassMutual)

The Allianz American Legacies Pulse Survey

MassMutual Whole Life Insurance

Building a bridge to the future

A small business guide to. Income replacement for business owners

REDEFINING WEALTH MANAGEMENT

A Technical Guide for Individuals. The Whole Story. Understanding the features and benefits of whole life insurance. Insurance Strategies

2018 Business Owner Perspectives Study. Insights from America s Economic Engine

Principal Funds. Women and Wealth. Invest in yourself. You deserve it. A step-by-step guide to help you achieve your financial goals.

The 8 wealth management issues

Required Minimum Distributions

The Right Attitude. Preparing for your retirement: Workbook One

Guaranteed to fit your life The value of whole life insurance throughout your lifetime

Consumer Study HEARTS & MINDS. Understanding Long-Term Care Buyers. Mutual of Omaha Insurance Company M28080_0613

Create your own portrait of retirement.

UBS Investor Watch. U.S. insights on investor sentiment / 1Q Who s the boss? Business ownership: Who s in, who s out and who s holding back

Income to live your life in retirement

Your helpful life insurance guide: Retiring

Economic Anxiety and the American Dream:

An Educational Guide for Individuals. Required Minimum Distributions. Now that you re 70½ you need to know these tax facts.

It s time to envision your future.

MassMutual Women s Retirement Risk Study

Client Presentations

The 2011 Consumer Financial Literacy Survey Final Report

LEAVE YOUR BUSINESS? IT S INEVITABLE WHITE PAPER

The Geneva Riverside Group at Morgan Stanley. James White - Cheryl Snook - Holly Cotherman

ABOUT FREEDOM CLUB ABOUT DR. TONY

Asset Protection. A planning, conversation, and resource guide

Charitable Conversations...

An Educational Guide for Individuals. Gift of a Lifetime. A lasting connection to a child you love. Insurance Strategies

Reaching out to renters

The Social Side of Retirement SM

clarifying life s choices Life Insurance Selector Made Easy Producer Guide LIFE INSURANCE

Buy-Sell Planning Strategies For Competitive Business. insure invest retire. Business Planning

LifeBridge MassMutual s free life insurance program

42 % 33 % Many small business owners understand the actions needed to plan for transition (based on transition-focused owners, ratings of importance)

Volunteers Wanted. We Take Our Managers Personally: Dana Fransen

Why Financial Education in the Workplace?

MassMutual LGBTQ Retirement Savings Risk Study

Retirement by the Numbers. Calculating the retirement that s right for you

Citizens Health Care Working Group. Greenville, Mississippi Listening Sessions. April 18, Final Report

HIGH-NET-WORTH BUSINESS OWNERS AND CORPORATE EXECUTIVES

Estate Planning & Administration

Your helpful life insurance guide: Shopping for life insurance

How to Bank and Save In Canada

Wealth Management. All the financial help you need. Life is all about peace of mind. So you need a friend in your corner.

You d do anything to protect the ones you love. And we re ready to help. New York Life Insurance Company

My SmartIRA Story Remarriage

Create Your Success. A Transamerica Company

Dream Book. Giving voice to your goals. Listen.

Retirement planning YOUR GUIDE

CALM, COOL AND INVESTED

What retirement plan sponsors value most from financial advisors

The Kline Group at Morgan Stanley Smith Barney

Your Core Retirement Decisions

What you know about life insurance

Segmentation Survey. Results of Quantitative Research

How to Weather Life s Storms and Live The Life You Envision

Is Mindset the Greatest Obstacle to Succession Planning?

Women & Investing: Take Control of Your Wealth

SHEDDING LIGHT ON LIFE INSURANCE

Dream Book. Giving voice to your goals. Listen.

Generations Apart. Allianz Life Insurance Company of North America Allianz Life Insurance Company of New York

FINANCIAL EXPERIENCE & BEHAVIORS AMONG WOMEN

From Concerned to Confident. The Guardian Study of Financial and Emotional Confidence TM. Research Summary

KEY FINDING: COUPLES AND DEBT

Financial Planning for Special Needs Families. Financial Planning 101 for Special Needs Families

The Problems With Reverse Mortgages

For many years we were happy to spend too freely, borrow too much and

First Time Home Buyer Guide. Are you ready to learn the steps to homeownership?

GUIDE OTHERS AND LIVE GENEROUSLY TO BE WISE WITH MONEY. Explore a career as a Thrivent Financial representative

WORKPLACE SAVINGS GUIDE

SignatureCare 400. Helping you live life as you choose ṢM. insure invest retire LTC4500CA

Issues For Couples. Preparing for your retirement: Workbook Four

[Retirement Planning Guide]

Why Flagstar Bank for your Retirement Planning Needs?

2/3 81% 67% Millennials and money. Key insights. Millennials are optimistic despite a challenging start to adulthood

Coping with Death and Injury: Financial Considerations in a Time of Need

10 Things to Consider in

Laura's Big Day [students] Page 1 of 5. Laura s big day

Transcription:

Executive Summary Building a legacy The fiscal practices of today s African American business owners

The choices we make about the lives we live determine the kinds of legacies we leave. Tavis Smiley

Aspiring for greatness More and more each day, African Americans are creating new opportunities for themselves, their families and their communities. New opportunities that are helping them live the American Dream and achieve success. As business owners, they are making strides toward building successful companies that will open new doors for their families, give back to their communities and eventually become part of their legacies. But turning those goals into reality in light of the economic downturn and the rising cost of living can become even more challenging without a solid financial strategy. Although the African American business community has shown an increase in entrepreneurship at triple the national rate and doubled its revenue between 2002 and 2007 1, these businesses tend to remain small and have the lowest survival rate of any ethnic group. Just 61% of African Americanowned businesses survive four years. 2 A 2011 study of business owners and entrepreneurs conducted by GfK Custom Research North America for Massachusetts Mutual Life Insurance Company (MassMutual) looked at attitudes and concerns among general population and multicultural business owners. The survey reveals that African American business owners are emotionally invested in their businesses, which they view as a way to get ahead and to access opportunities for themselves and their families. The African American respondents were mostly males, and almost all were first generation businesses (90%), with three-fourths having been in business for more than 10 years. There was a wide range of businesses across industry type and number of employees, along with a wide range of owners across age, with 60% having at least a bachelor s degree. The research shows African Americans started their businesses to follow their dreams, give back to the community and have something tangible to pass on to their children. But the need for financial education and lack of a long-term strategy could compromise the legacy they want to leave. To ensure that the African American businesses that many worked so hard to build continue to thrive and support their families and communities well into the future, African Americans will need to work equally as hard to advance their fiscal practices. 1 U.S. Census Bureau, Survey of Business Owners: Black-Owned Businesses: 2007 2 U.S. Small Business Administration 3

Creating their own path Preserving and building upon family histories is important to African Americans, and they view a thriving business as one way to leave their mark. They started their businesses with a passion and drive to follow their dreams and get ahead, take control of their lives and pursue their interests. They have a dream of being able to share their success with and leave a legacy for both loved ones and their community. African Americans are far more likely than general population business owners to attribute following their dreams as a major reason they went into business. Similarly, they are also motivated by passion for their line of work. These two emotional factors may be a basis for the belief that owning a business is the only way to get ahead, which 56% of African Americans cited as a major reason why they own a business versus only about one-third of general population business owners. I m living my dream, and I want my children to live theirs. My business allows me to provide them opportunities that help ensure their future success. Dorothy, cafe owner, St. Louis In addition to being motivated to follow their dreams to get ahead, African Americans want to take charge of their lives and be in control. We find this in their desire to be their own boss (72%) and to have control over their life and time (71%). Instead of taking an easy road or settling for what s available, African Americans are interested in opening a business to live the dream on their own terms, not someone else s. Major reasons for owning business General Population African American Provide financially for family 77% 77% Be own boss 57% 72% Have more control of life, time, etc. 53% 71% To follow your dreams 36% 75% Something tangible to pass on to children 35% 53% Only way to get ahead 32% 56% Give back to community 21% 53% The business aligns with your education 26% 51% 4

While building the dream, African American business owners want to support their families and pass on their success to their communities. In fact, African Americans are far more likely than the general population of business owners to have gone into business to have something tangible to pass on to their children (53% versus 35%), as well as to give back to the community (53% versus 21%). Additionally, many are providing jobs for other family members and, like the general market, are trying to provide financially for their families. Clearly, African Americans are motivated by a number of factors for which they opened their business and why they want to be successful. Theirs is a culmination of their passions, their aspirations and their desire to create their own path and to leave a legacy for their families and communities. 5

Navigating the business of owning a business Views of financial planning 100 90 80 70 60 50 0 General Population African American 67% 82% Financial planning for the business is very important The success of my business will dictate the legacy I leave. It s up to me to make sure it s on the right track. Beverly, boutique owner, New York City Perhaps not surprising given their reasons for owning a business, African American business owners understand the importance of financial planning in protecting what they re working so hard to build. But almost a quarter of African Americans business owners shared that their business finances keep them up at night. Despite knowing what they should and want to be doing, many African American business owners just aren t taking the necessary steps to protect their business. African American business owners spoke of several areas of concern regarding their business, most of which they haven t done anything about. About one quarter want to grow their business but feel they lack the financial knowledge to do so, compared with just 14% of general population business owners. Sixty percent are concerned with keeping employees loyal to the company, but only 26% have special benefits in place for key employees. About half are concerned with how their business would be affected by death or disability of a co-owner or key employee, but less than 20% have a buy-sell agreement in place to ensure the business continues if that person is no longer able to continue working in the business. These gaps in concern and action may be due to a lack of time, information and available resources. We see that African American business owners are less likely than general population business owners to rely on bank loans and more likely to rely on other avenues like personal savings, family and friends and even venture capital. This may support the idea that there is a general lack of resources available and provided to help African American business owners grow, plan for and protect their businesses. 6

Another area where we see a gap between intention and action is in business succession planning planning for the transition of a business from the current owner to the next. An impressive 83% have decided whom they ll pass the business on to or if they ll plan to sell it (only 12% plan to sell). What s positive is that 80% have talked to the person they plan to pass the business to about their intentions. Yet we see that only 30% have a succession plan in place, and of those with a plan in place, 31% created the plan themselves or just with their business partner. If African American business owners want to ensure the business and legacies they re working to build are protected for the next generation, they will need to plan accordingly using help from a team of professionals. Not doing so may put their hard work in jeopardy. On the bright side, African American business owners are more likely than general business owners to understand how important it is to valuate their business. In fact, almost half have done so within the past three years and have often relied on outside help. The importance placed on business valuation may be a result of using their businesses as a source of credit for their personal finances, which we ll learn more about next. For their businesses, African Americans should identify trusted professionals who can listen to their concerns and help them learn about ways to address those areas of concern. Financial concerns & actions taken General Population African American Major Concern Action Taken Major Concern Action Taken Keepings key employees loyal to business 1 53% 30% 60% 26% How business would be affected by possible death of you, 44% 32% 46% 18% another owner, a key employee 2 How business would be affected by possible disability of you, another owner, a key employee 3 40% 25% 53% 19% 1 Special benefits for key employees 2 Buy-sell agreement for death 3 Buy-sell agreement for disability 7

How work comes home Much of what we understand about African Americans as business owners is reflected in their views, actions and concerns about personal finances. We see again that they re looking for control over their finances, but tend to have fewer products and services in place to help. And perhaps due to all of their current worries, not much time or attention has been spent thinking about planning for retirement. Nevertheless, many African Americans have a strong desire to be actively involved and in control of their personal finances. Eighty-eight percent want to be actively involved in all decisions regarding their personal finances. Just over half tend to do their own research and make their own decisions about insurance and investments. Yet 28% wish they were in more control of their finances, and about one in five report they don t know where to go for sound financial advice. Perhaps not surprisingly, then, we see generally lower levels of ownership of financial products and services among African Americans. Though they want to be in control, and many are doing much of their personal financial planning on their own, personal financial concerns are heightened among African Americans compared to the general population. This again points Personal financial products owned General Population African American Individual life insurance that is purchased on your own 85% 81% A will 79% 69% A qualified retirement savings plan, such as a 401 (k), or an IRA 76% 60% An estate plan 47% 37% Group life insurance from work 45% 33% Group disability insurance from work 36% 27% 8

to the value that trusted professionals can have in helping them with their financial plan and determine potential solutions for their many financial concerns. African Americans will need to become prepared for retirement. One in three does not know when they ll retire, and, in general, African Americans tend to expect to retire earlier than the general population. They are more likely to say they will retire at age 65 or earlier. We also see that African Americans are more likely to believe that Social Security will be their primary source of income in retirement and less likely to believe that the proceeds from the sale of their business the legacy they ve worked so hard to create will be a primary source of retirement planning. About half are concerned with funding their retirement. This illustrates how a lack of business planning may directly affect personal finances. As was true for their business finances, African Americans express a desire to be involved and do well with regard to their personal finances but need help in doing so. Perhaps a lack of financial education and time to dedicate to finances is the cause. In order to create a legacy for their families, communities and even themselves in their own retirement, African Americans need access to the information they want and need to navigate their finances. Finding someone they can trust to help them may be an important step in preparing for their futures. I admit I worry a lot. Owning a business comes with a lot of added responsibility and considerations, especially when you re counting on it to position yourself and your family for success. Working with a financial professional has helped ease many of my concerns. She showed me the solutions that are out there for my specific needs and helped me put together a plan that s realistic and will help me reach my goals at work and at home. Will, construction company owner, Detroit Financial topics of concern Protecting your assets and remaining as independent as possible if you would require long-term care General Population African American 47% 69% Protecting your family in the event of an untimely death 45% 62% Protecting your family in the event of your disability even for a short while 40% 57% Paying down debt 39% 66% Funding your retirement 37% 54% Creating a long-term financial plan 28% 52% Developing a college savings plan 10% 20% 9

10

Leave your legacy A sound financial strategy can get African Americans one step closer to leaving the legacy they want to leave. Working with a trusted financial professional can help them build thriving businesses, make informed financial decisions and attain greater overall fiscal knowledge. Most importantly, it can help them leave an imprint on their family history and community. A successful business begins with planning for and building a strong financial foundation. The financial professionals at MassMutual work closely with business owners to help focus on what they value most, clarifying what they want to achieve, then identifying solutions to help them work through the obstacles that may stand in their way to building a strong financial future. MassMutual has been helping customers with their financial needs for more than 160 years and has financial strength ratings that are among the highest of any company in the industry 1. As a mutual company, we focus on providing long-term value for our policyholders and have proudly paid dividends consistently to them since the 1860s. 2 We have always believed that good decisions are the foundation of every sound and secure financial future. We also believe when choosing a company to work with, ownership, strength and stability matter. Visit massmutual.com/africanamerican today to contact a MassMutual financial professional in your area and learn how to take the next step in creating a solid business strategy so that you can leave the legacy you want to leave. I m building a legacy I have a successful business doing what I enjoy, along with a healthy family and supportive community. Now, I need to make sure I m protecting it all. I ve put my blood, sweat and tears into my business, and I m not willing to risk losing everything. Josephine, bakery owner, Chicago * Quotes are hypothetical and for illustrative purposes only. 1 Financial strength ratings: A.M. Best Company: A++; Fitch Ratings: AA+; Moody s Investors Service: Aa2; Standard & Poor s: AA+. Ratings apply to Massachusetts Mutual Life Insurance Company (Springfield, MA 01111) and its subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company (Enfield, CT 06082). Ratings are as of 10/1/2011 and are subject to change. 2 Dividends are determined annually, subject to change, and not guaranteed.

MassMutual. We ll help you get there. 2011 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001. All rights reserved. www.massmutual.com. MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives. MC1060 1111 CRN201311-153744