A recent survey carried out by an international consultancy firm found that a staggering 84% of family businesses do not have documented succession plans in place; a trend that is echoed in our many conversations with the banks who tell us of their increasing concerns at the number of businesses, notably those under family ownership, that do not have, or have not even considered, their succession plan.
It is often quoted that only 30% of family businesses survive the transition from the first to the second generation, a number that falls to a mere 4% by the time the fourth generation takes control. So, given this is such a fundamental issue for many businesses, just why isn’t the vital matter of succession and planning for the future being addressed?
One of the more common reasons for it so very often being left to chance is that the development (and implementation) of any plan is often too complicated and time-consuming a puzzle to solve. It is a process that may well bring significant but potentially unwelcome change to the status quo despite being good for the business, now and for the future, which only spirals into more problems for the business owner to have to deal with. Added to this, and particularly where the businesses is owned by friends or members of the same family, there may be the complexity of emotionally-charged relationships when need to be handled sensitively. So it really is no wonder business owners are tempted to bury their heads in the sand in the (vain) hope that the problem will simply go away.
If you are ready to challenge the outstanding matter of just who is going to look after your business in the years to come, by asking yourself some fundamental questions, you can start to plan for longevity and stability of your business.