Like most family-run enterprises across the globe, only 13% of family businesses survive till the third generation, according to research done which surveyed about 100 firms that are family businesses globally.
Though statistics vary, the fraction of such family businesses in different markets is likely, bolstering the so-called three-generation curse, where the first generation creates the business, the second one maintains it, the third one fritters it away.
The top concern is hiring and maintaining high performing talent, is what 56% of the respondents stated. About 43% of founders and successors cite modernizing and adapting their business model to more modern policies and procedures as a problem, while retaining family control a major concern for 41%.
Also, an important consideration is how to deal with non-family employees, who place a premium on fairness, compensation and advancement.
What I was astonished to learn is that for 80% of the respondents, business trumps family. I know right?
“Continued profitability is more important than family legacy,” is what I have heard time and time again while coaching family businesses into the future. “Family legacy, though important, should not be allowed to get in the way of business growth and profitability.” Is another quote I’ve often heard as well. Mystifying
A family business is still a business, and successors need to be prepared not just as owners but also as managers of the business. If no family member is qualified to take over, half of the respondents say they will turn to professional executives—but only until such time that family members have already been trained to lead.
Meanwhile, 38% say they will force their children to enter the family business, while 13% would rather sell the business if no family member wants to take charge.
How can the younger generation be enticed to do well in the business?
Family business owners can empower successors to make independent decisions, provide challenging assignments and increasing responsibilities while incrementally letting go of control to focus more on mentoring.
If you want to stay in, you have to keep up. Don’t shy away from modernizing. Your family may think it’s not important. Your job, since you’re out there in the world, is to make them understand that to stay a player in the game, you always need a better aim and plan.
IMPLEMENT POLICIES AND PROCEDURES
“The ten commandments in a family business” as I like to call them. No same list applies to all. Your job is to figure what’s important to put on that list. If you need help, call me.
It’s all about branding today. If you’re not on social, more than half of the population doesn’t think your relevant. Even if it goes against your blue blood heritage, doit. You won’t be sorry.
CHANGE OF LEADERSHIP
It’s painful, hard but necessary. And it’s not because you didn’t do a good job, it’s because people want “newness” if they need to be coaxed to praise your company again. Nepotism is boring. The star player, from some a not so obvious pool of choices is your person to put at the helm. You want to shake things up? Well… you got to shake the old out.