If you asked many entrepreneurs about their succession plans for their businesses, too many would respond with, “I don’t understand the question.” There are few topics loaded with more emotional energy than when you combine family and money. Family dynamics can be difficult on their own, but when you add money, family security and ego to the mix, things can get interesting quickly.
Very few family businesses survive multiple generations. Many of those don’t survive for a variety of reasons that have nothing to do with the owner or the family. Business markets evolve and some even dissolve – just ask the people at Kodak. Consumers’ tastes can change, to say nothing of technology changing at the speed of light. So for a business to survive over generations is difficult in the best of circumstances.
Research shows one of the reasons some family businesses don’t survive the second generation is the entrepreneur himself. If you think about it, the reasoning adds up. One of the most valuable assets of the entrepreneur is the drive to do what others said we could not do, to create a money-making opportunity where there was none. We tend to act instinctively and disregard the voices around us, be those family voices or otherwise.
Entrepreneurs tend to be workaholics. At our core we are doers; delegation does not come naturally to us. Over the years, I have heard multiple entrepreneurs refer to their businesses as “my baby.”
It is as though we see ourselves and the business as the same, one defines the other. We don’t think anybody else can run the business as well as we can.
When it truth, the next generation might run the business as well as we did, maybe even better, they just run it differently.
If you know someone that owns a family business that has survived multiple generations, they are the exception. Survival of the business itself is testament to many things, one of which is multiple family members along the way having the insight to take a longer term view, a willingness to navigate some treacherous and emotionally charged territory and to make some hard decisions.
Trust me, for a business to survive multiple generations does not happen without a deliberate effort on somebody’s part along with a few extra sleepless nights and several difficult meetings.
If you are the founder and owner of a family business with younger family members coming into the business, I hope you will step back and think about the topic, then initiate a discussion. Discussions about succession planning are so easy to put off, but in the long run, you, your family and your business will be better prepared for the future with a well thought out and documented succession plan.
Get help and start some dialogue. I could think of no greater honor than to have this article serve as the catalyst for that discussion. If that does happen, let me know.