When you think about the potential succession of your family business, do you find the process insurmountable? Don’t let uncomfortable decisions stop you from planning for this very important transfer.
As of September 2016, family-owned businesses generated 62 percent of the country’s employment and created approximately 78 percent of new jobs. Yet only 30 percent will remain in the family into the second generation. That’s a staggering statistic. Only 12 percent will operate into the third generation, and a minuscule three percent will be viable into the fourth generation.
CEOs often get stuck and avoid action when it comes to succession planning because of the uncomfortable decisions they need to make and the various issues they must confront in this impending process. Who will take over the leadership? Will he or she continue to run the company well? On the other side, the potential successor fears who he/she needs to become in order to step fully into the new role.
But it’s not just fear that causes family business succession failure. I have identified two additional key reasons: avoidance and a lack of vision and value alignment.