In over 45 years of assisting family-owned businesses in passing the business from one generation to the next, the statistical data has not changed much. Only 30 percent survive when passing from the first generation to the second and only 12 percent survive to the third generation. The study that produced these statistics only looked at significant sized businesses so this is indeed a dismal view of family business succession planning.
Given the depth of our experience, we believe that one of the major factors for those that fail is they approach succession planning as a project. For much if not most of the businesses life, not much thought or energy has been devoted to succession planning. The current owner/managers of the business are too busy operating the business to deal with the issues of what happens to the business as they age. Only when they approach their late 50’s or 60’s is any thought given to what is going to happen to their business. Developing a plan at this point becomes a project- in many cases a rush project. The options by that point are limited because the one essential element is in short supply – time. Choices that were available in earlier times or no longer viable. It takes time in the form of years or often decades, to properly plan and implement passing the baton to the next generation.
Our experience is that this is the wrong approach. Over the years we have developed a process that is designed to improve success rates dramatically by steady continuous effort that allows for time to be on your side and not your enemy as in the project approach. It is meant to be effective regardless of where your family business is currently from a generational standpoint.
This process is one of the unique things we bring to our clients at Family Business Centers.
A sage once said “How can we find our goal if we never think of it?” Let us help you crystalize your thinking about succession planning for your family business by sharing our ideas with you.