Among listings of a family business’s primary goals is often a successful transition of ownership to future generations, as 88% of family business owners believe the same family or families will control their business in five years. Unfortunately, they’re most often wrong.
- 30% of family and businesses survive into the second generation
- 12% are still viable into the third generation
- 3% operate into the fourth generation or beyond
Research shows the leading factor for these low numbers is a lack of succession planning. Here are five fundamental questions families business owners should ask themselves to see if succession planning is needed right now.
Do you want the business to continue providing income for families—yours and your employees?
If your answer is yes, then keep ownership in the family and develop business leadership and practices designed to maintain business success.
Do you want the business to prosper and grow in the future?
If your answer is yes, assemble a board that can help you develop and monitor a business a business strategy that promotes growth.
Do you want to your family to be satisfied with the succession?
If your answer is yes, then find appropriate ways involve family members as you develop plans for owner and leadership transitions.
Do you want family members to be future owners or leaders?
If your answer is yes, then you need to develop family members for ownership and leadership roles.
Who should be involved in developing plans for and managing succession?
Usually three groups help plan for succession—the board, the family council and family business advisors.
The short answers to these questions will help determine whether and how to plan for succession. If your answer to these questions is yes, then you will need to learn more about planning for succession.
Whether you’ve been planning for succession in your business for years or are just starting to consider passing it to the next generation, the list of decisions you need to make can feel overwhelming. Join the University of St. Thomas Family Business Center us for a full-day Succession Conference on Friday, February 6, that will include a keynote speaker, lectures and workshops focused on how to have a successful transition for your business and family.
Remember the numbers above. Owners are optimistic, but the reality is that more than two out of three companies won’t survive a transition. Take the steps to secure your and your family’s legacy.