EDITORIAL FEATURE
Handing Down
the Family Business
By Randy Boss
I
n a recent survey by the Family Business
Institute, when family business owners
were asked if the family business was
meant to be handed down within the
family, 80 percent responded, “Yes.”
So why is it that only 30 percent of
family owned businesses survive into the
second generation, 12 percent are still viable into the third generation, and only
3 percent of all family owned businesses
operate into the fourth generation or beyond?
The reason could very well be that of
the 80 percent of business owners who
said they had the desire to pass off the
company to their children when they
decide to retire from the company, only
20 percent stated they had a succession
plan in place if their ownership or ability
to run the company comes to an abrupt
end due to death or a severe disability.
According to the Family Business Institute, when business owners were asked
why they don’t have succession plans,
their response was:
• No time to deal with the issue
• Too early to plan for succession
• Can’t find adequate advice/tools to
start
• Too complex
• Don’t want to think about leaving
• Conflict with family or employees
We work with a client in the Midwest
who oversees 100 employees in the
tool industry. As the company’s owner
and its top salesperson, the client is approaching 70 years old. What he needs
to do is answer the question aimed at all
business owners - “What do I want to do
with the business when I step down?”
Let’s look again at the last
statistic. 88 percent of business
owners believe someone in their
family will take over the
business. Now stack it up against
what we previously said about
succeeding generations, that only
30 percent of those handed the business will pass on the legacy.
Why is that?
The answer is one of three options:
ing generations, that only 30 p