Transition Planning 

Are you thinking about transitioning the ownership of your family-owned business to the next generation?  Unfortunately the statistics for a successful transition are not encouraging.  According to the Harvard Business Review and the Small Business Administration, fully 70% of family businesses fail to successfully make the transition from the original ownership to the next generation.  And 88% of family businesses fail to make the transition to the third generation.

Difficulties in Transitioning Businesses 

 One problem is that business owners can make assumptions about what their successors need and want. Other difficulties arise from business owners underestimating the complexities of a successful transition, legal and financial issues, customer and staff reactions, public perception, and necessary core business knowledge. Bad communication between family members can also be an issue causing disrespect and various misunderstandings. Business owners can also fall into the trap of overestimating the worth of their business or how much money they can take out in retirement. Family history can also interfere with good decision making, due to past slights, hurts, and biases getting in the way. Finally, many business owners aren't willing to give up control, complicating transactions. 

FCE Four Step Plan

Define your goal
Develop action steps
Plan your strategy
Monitor your progress

Risk Management

A variety of business studies show that effective, actively-implemented succession plans are key to successful ownership transitions.  However recent surveys reveal that only 30% of family-owned businesses have established them.  Most business owners understand the importance of succession planning, so why aren’t more people taking these prudent steps?  I believe that the biggest reason is because it is very hard for someone who has devoted a lifetime to building a successful business to admit that it may be time to think about transition. 
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