“the night before closing the deal. My brother and I sat in a car in the parking lot outside the office building and reflected about whether we failed in carrying on the legacy”
Many family businesses are caught in the dilemma of whether to pass along the business to the next generation or sell the business. The senior generation needs to plan for retirement and feel confident that the younger generation can run the business, and the younger generation has to decide whether they want to stay involved or move on to a different career . Unfortunately, most of the time the family legacy affects the decision. This legacy can become a burden and lead to a demise of the business if the succession plan includes a younger generation who is continuing on for the sake of the legacy of the founders rather than following their true ambitions.
In our family business, our parents removed the legacy issue as an issue, by More…
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