Few challenges demand more of a business owner than passing on the family business to the next generation. Family members’ lifelong hopes, dreams, ambitions, relationships, even personal struggles with mortality – all figure into managing succession.
Yet managing succession is the task that is most critical to securing the future of private enterprise in the United States. Rising competition, government regulation, taxes, and other problems notwithstanding, the failure to plan and manage succession well is the greatest threat to the survival of family business.
Hundreds of thousands of businesses across the nation are approaching the retirement or death of their founders or chief executives with no plans for succession or inadequate plans that will fail to produce the desired results.
For those family firms with plans, many will fail because they mismanaged the succession planning process. No wonder less than one-third of family businesses survive into the second generation, and only about 13 percent make it into the third.
Business owners know the stakes are high. Ask any group of family business people at seminars around the country to name their number one concern and the answer almost certainly will be succession.
“I don’t think Dad is ever going to retire. What kind of a future does this leave for me?
-The son of a family business owner
“I don’t think I’m ever going to own any stock in the family business. Why should I continue to participate in it?”
-The daughter of a family business CEO
“I don’t know how I am ever going to get along with my brothers and sisters in the business.”
-One of several children in a family business
As professional advisors often say, “Family businesses have only three problems: succession, succession, and succession.” Aronoff, Craig, et al. Family Business Succession: The Final Test of Greatness. New York: Palgrave Macmillan, 2011. Print.
Letting go of a business can be challenging for a founder after they’ve spent a lifetime building their company. Starting the succession plan often is an incredibly painful experience for them to initiate.
How do we get clients to take action as we raise difficult questions and topics to prepare them to transition their business? We will position you as a trusted, knowledgeable and professional advisor, with a robust suite of advanced planning tools.
Please call your Life Sales Rep to set up a consultation – we will help you understand and implement insurance strategies for your business owner clients.