Did you know family businesses comprise 80-90% of all businesses in America? Family owned companies are responsible for 60% of total U.S. employment, 78% of all new jobs, and 65% of all wages paid. There are 1.2 million husband and wife teams running a family business. You know I love that. Let’s hear it for the family owned business!
Even though this is all wonderful, the truth is the average lifespan of a family owned business is 24 years. That may seem long to you, but it could be longer if there were certain issues that were taken into consideration earlier on. The truth is only 1/3 of all family businesses successfully make the transition to the second generation. A Pricewaterhous Cooper’s world wide survey of over 1600 family businesses found that 27% expect to change hands in the next five years, but 47% of those had no succession plan. So this begs the question….
What are your plans of succession?
This is definitely a process. Not something you wake up one day and decide, “Okay Junior, it’s all yours now.”
Most people think of transferring the financial portion, but what about the business philosophy, values, ideal clients, target market, and community involvement? Will the next generation be on board with that? And if they aren’t, do you care? What type of person do you want running your family owned company, which more than likely has your name attached to it?
In my coaching, interviewing and research, it has become abundantly clear that most of the family owned companies I talk to have no idea who will run the show when they decide to retire. Are you one of those? If so, take the time to consider getting these things in place:
- Consider who you are wanting to run the show for you – does their style reflect you and your company’s culture?
- Create a Strategic Business Plan – make sure your company has a sustainable business model that can be followed by new leadership?
- Create a Succession Plan
- Create an Estate Plan – not just a will
- How will the management of your company respond to your successor?
And the all important – what are you going to do when you pass the company on?
This of course is only the tip of the iceberg on this topic – but it gets you thinking. You don’t have to be Mrs. Field’s Cookies or any other large family owned company to be thinking of succession planning. Your family owned, couple owned business is just as important than any other company. You are in charge. Start putting the pieces in place to make sure your company goes on and you are properly compensated if you do pass it on.