Family businesses are the backbone of our economy. Globally more than 80% of all businesses are family owned, they employ over 60% of the workforce and contribute to more than 70% of new jobs. While many family businesses are widely successful, the most significant challenge any family business can face is succession. From the most recent survey data, within the next 10 years more than 40% of the current family owned business leaders intend to retire and fewer than 50% have selected a successor.
What is succession anyway? You may have heard of this term from other business owners or perhaps you have read about succession in journals or other articles. While the term ‘succession’ can refer to any kind of leadership transition, it turns out that succession is an incredibly important issue for all business owners, particularly when the business itself is being passed on to the next generation.
Owners, particularly first generation owners of family businesses, have often worked for thirty or forty years to build their business based upon their unique vision of what it could be. As these owners grow older, they begin to wonder whether the next generation will have the same interest or whether they will have ‘what it takes’ to continue ownership inside the family. When there is a second generation heir in place who does have the interest and experience to ‘succeed’ his or her parent as the owner/operator of a business – it is called ‘succession’.
When done well, succession can be a tool to grow and preserve a family and business legacy for future generations. When we say ‘done well’, we mean when it is done thoughtfully and with enough time to carefully prepare the successor to succeed his or her parent in leading the business.
When it is not done well, there can be personal, emotional and financial impacts to you and your family, as well as to your family business. Please take a look at some of the other resources on our website that can help you effect a smooth succession and transition to your next generation.
Have you heard about the importance of succession planning for family owned businesses? Do you know how that applies to your family business? This segment describes how succession often occurs in family owned businesses and why you may want to start thinking about it.
Do you wonder why it is important to begin the succession process in your family even though it won’t happen for many years into the future ? Does it make a difference if I know what is going to happen but your heir and other stakeholders do not? This segment helps lay out the aspects of succession in family owned businesses and how it can affect many, if not all, of the family business stakeholders.
Do you know how your children will react to your ideas/plan for succession? Have you communicated the plan to them? This case study is an example of two heirs (adult children) learning about a possible succession plan of their father’s and their reaction to the information.
Have you begun your succession planning? Do you even know where to begin? This online quiz is a mix of standard succession planning possibilities. We cover what is and what may be a common misperception.
Case studies are descriptive scenarios that help people think through an idea or concept while applying concepts to the example provided. This Reston case study would be great for a sibling partnership or cousin consortium group. This specific case study allows the participants to consider a scenario about family business management succession while considering how […]