Key Things for Multigenerational Family Business
Did you know that 30% of family businesses make it to their second generation, while only 12% still have the business going in the third generation? According to The Family Firm Institute, about 3% of all family businesses remain into and beyond the fourth generation.
Research further indicates that family company failures usually happen because of unfortunate lack of family business succession planning.
The businesses that survive through three, four, or more generations have three key things in common:
A proper set of values
Clarified hiring and promotional practices
Succession is an ongoing process, not a goal. Too many family businesses fail to see the difference.
Many factors can threat future success. Illnesses, death, and all sorts of unexpected emergencies could happen, and if you don’t have all the plans in place, the business will suffer consequences. Succession is an enormous responsibility, and if you don’t already know who will step into the leading positions once you and your managers retire, you should start prioritizing time to make this goal reachable.
In case you already know which members of the next generation might be fit to take over, it’s never too early to start nurturing their leadership and management skills. Succession planning is much more than just figuring out who the next CEO will be.
Some of the most successful family businesses require next-generation family members to build experience outside the family business. There are two reasons for doing this:
The kids gain amazing experience working for other companies, and they bring new, fresh perspectives when they start working for the family company;
When the kids pursue outside opportunities, they begin to fully appreciate all the options they have back home in the family business.