The Huge Disconnect Between Succession and Legacy
When families think about the future of their company and their legacy there is often a fundamental disconnect.
The Family Business Institute reports that 88% of families believe that their same family or families will control the family business 5 years into the future. Stated plainly, most families believe that they have the necessary capacity within their own family for succession to occur properly.
However, the Family Business Institute notes the contradiction: “According to The Family Firm Institute, only about 30% of family and businesses survive into the second generation, 12% are still viable into the third generation, and only about 3% of all family businesses operate into the fourth generation or beyond.”
We are optimistic that our children and heirs can run the business. But the facts tell us that the majority can’t?
What fuels this optimism in light of the statistics? Is it the belief that our family is somehow different? In truth, I believe that families can have a greater success rate if they prepare sooner, properly and with outside help. Most families have some kind of blindspot about themselves and their heirs.
Perhaps in the coming years we can better address these troubling statistics, but it will take a healthy dose of reality.