30%
The survival rate of 2nd generation family-owned business.
10%
Family businesses that remain privately held to a 3rd generation.
Alarming statistics. Small business is hard on families. Most families have tough relationship challenges, add a family enterprise to the mix and you have a recipe for serious dysfunction.
We have worked with dozens of family businesses that we helped successfully transition to 2nd generation ownership. We have worked with a handful that are being prepared for the 3rd generation. And believe it or not, one construction company we worked with was being led by the 5th generation.
Will your great-great-great grandson want to lead your family business?
Our clients that have made a successful transition have a few things in common:
- They made a plan for the transition.
(Download our 1-page transition planner here.)
- They intentionally, or accidentally, prepared their children to lead the business.
- The 2nd generation asked for the torch. Some have had huge visions to build higher, others have done it out of obligation. Our work most exciting work is with the former.
- The founder left the business for new adventures.
The biggest pitfalls we see are similar. The founder keeps hanging around the business. One client described it as ‘pumping oxygen around the new systems and creating fog and confusion in the process. The parent and child dynamic adds to this dysfunction.
The second pitfall is that leaders in the organizations haven’t been prepared for the founder’s departure. One founder Mom was replaced by 4 different employees, she was a workaholic and struggled developing talent. It was a tough transition.
Bottom line, if a generational transition is on the horizon for your family business GET HELP! No amount of financial reward is worth the destruction of your family.
Schedule a free 1-hour session with us so we can share wisdom to help your family make the 30% list of survivors.
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