There’s nothing like a crisis for creating a higher sense of urgency in succession planning
In January, a 7-year old girl was the miraculous lone survivor in a tragic plane crash that took the lives of both of her parents and her cousin. The parents were the owners of a second generation, 50-year old family business, Gutzler’s Furniture in Nashville, TN.
The Chicago Tribune reported, “Employee Troy Dunbar said a steady stream of people “from all over” was stopping by to offer condolences. Dunbar said store employees are doing OK in the aftermath of the crash, saying “the show must go on.”
Read the whole story here.
If Tragedy Strikes – Are You Ready?
With the majority of family businesses not having succession plans in place, these stories are becoming more common. If you don’t have a succession plan, you’re not alone. Less than 30% of family businesses have prepared a formal succession plan.
How does a family business become a dynasty?
It’s all about the “S” word.
Succession. Not to sound like Captain Obvious, but the key to family business longevity and creating a dynasty is succession planning. If it’s so obvious, why do only 12% of family firms make it into the third generation?
The first generation is the founder and works much like a sole proprietorship. The second generation often gets the handoff while the business is still on a growth curve and there are only a few family members involved. The third generation is more complex because the founder is often not present, there are more family members involved and the business may be reaching the maturity stage.
12 Reasons Family Businesses Fail to Become Dynasties:
- Senior generation failing to “let go”
- No formal timetable and planning for transition
- Lack of confidence in younger generation
- Senior generation sense of immortality – “I’ll Never Die”
- Taboo subject – too sensitive to discuss
- Failure getting family members on same page with strategic direction
- Late planning too close to transition event
- Reluctance to choose next leader between children
- Family members in business because of legacy not genuine interest
- Family conflicts left unresolved
- Inadequate training and coaching of next generation
- Business model fails due to lack of innovation in later generations