Having come from a family construction business, my own environmental management business working with the marina industry, having worked with numerous businesses in developing team leadership and organizational strategies, and now teaching a course on family business management I am learning a lot about what makes family businesses successful and those that do not.
Family businesses have a lot of competitive advantages, many referenced by others who have responded to your recent article “Family is Everything,” such as a consumers perception of trustworthiness, deep understanding of the business developed across generations, shared values, a long-term perspective and an appreciation for patient money. But rarely do we hear about the 70% of businesses that fail in the transition from founder to second generation.
The lack of planning for succession, of “starting with the end in mind,” from early-on, is probably the number one killer of a family business.
It has to be the head – of the family and the business – to lead the succession planning process. Often, though, the focus of the founding entrepreneur is to achieve viability for the business; and most likely they have never gone through a succession process before, which means it often does not get thought about until opportunities have been past.
The founder of the business may also be delaying any succession planning because of an emotional attachment to the business they created, not having trust in their offspring capabilities, or lack interests in other things besides the business.
A stewardship perspective – of being responsible for the business from one generation to the next – will help preserve the management of the business and the family wealth.