It’s actually very uncommon for family businesses to have any type of sustained success. Generally, they don’t make it past the third generation. Many of them don’t even make it past the second generation.
But if you’re a business owner and founder, and you’re looking to pass that business on to your children, you’re probably wondering exactly why this happens. You know that your family and your business do not have to follow these trends. You just have to identify why these businesses tend to fail, and then you may be able to take steps to avoid that with your own company. While there can be unique reasons in every case, here are three common ones to consider.
There isn’t a succession plan
If you simply hand your business to your children without giving them any sort of succession plan, it is highly likely to lead to disputes and conflicts between them. Additionally, this would mean that you did not bring the children who are inheriting on beforehand so that you could train them on the job. Even if they are able to take over the business without any dispute, they may not be ready to run it in a way that is going to be sustainable.
Speaking of disputes, rivalries between siblings can often cause a lot of problems with the business. Two siblings may both feel that they should get to make the same decisions or perform the same tasks. In some cases, the rivalries that they still feel from when they were children will impact their decisions and disagreements, even though they may be decades in the past.
They have a different vision
It’s no secret that different generations are going to have different visions for what a company should be and how it should be run. In some cases, the way that you see things may be vastly different than the way that your heirs see them, and this can impact how they run the business and try to guide it in accordance with their vision. But that doesn’t mean that the company is going to run nearly as well as it did when you were in charge. Major changes are a risk.
All told, the best way to put your business in position for success is to plan well in advance. Be sure you know what steps to take to do so.