Do You Have a Family Business Succession Plan in Place?
If you are currently playing an integral role in the American economy, it is very likely that you are part of a family-owned business. Why that presumption? Because family businesses have long dominated the United States business landscape and that fact shows no signs of changing soon.
Unfortunately, if you do not have a well-planned, well-thought-out family business succession plan in place, you are also not a rarity. Too many businesses focus strictly on today. That all too often becomes a very serious issue like health, age, and other critical factors come into play, often far sooner than expected.
The stats tell a story even you as a proud family business member might find extraordinary.
- There are 5.5 million family-owned businesses in the United States.
- Family enterprises generate 57% of the nation’s GDP.
- Family businesses employ 63% of the U.S. workforce.
- 75% of all new jobs are generated by family businesses.
Why do less than 4 in 10 have a family business succession plan in place? Every business is faced with its own “personality,” its own priorities, its own challenges, and its own family dynamic.
- Many first-generation businesses have never taken the time to ‘button up’ their corporate/organizational structure in the first place, especially in the form of legal documents.
- A good many family enterprises are run by family members who don’t see changes of any sort on the immediate horizon.
- Some family businesses choose to avoid the controversy they believe developing a family business succession plan would bring about.
- Many family businesses would explain their lack of a plan strictly on the overwhelming schedule they lead just to keep their enterprise successful.
- Many are unaware of the legal or tax-related consequences associated with the transition of ownership in a family-owned business.
- Many simply feel that type of planning is way too “corporate” and contradicts what makes their enterprise special.
- And yes, some actually explain that their superstitions hamper their ability to “mess with” how things are currently going.
Imagine what it is like if more than one of these factors is influencing your lack of a family business succession plan. For many of the 6 in 10 businesses likely to get blindsided by an unexpected or unplanned transition, that is exactly the case. Stack two or three of these sentiments together and you’ve got the makings of what happens all too often in America…chaos and possibly the unanticipated need to sell or worse yet, close down, a business that took years, even generations, to build.
It does not have to be that way. There are a number of respected family business advisory firms that can ensure a smooth transition. Most businesses seek out the right suppliers, insurance companies, and third-party providers and yet never seek the services of family business succession experts.
No matter the goals you have going forward, it’s time to start the conversation regarding what comes next. That’s true even if all you are wanting is a family business exit strategy. You’d never run your business simply wishing and hoping for success. Never let yourself or your fellow family members be nonchalant about tomorrow. Proper planning will help ensure that whatever comes next with your family business will be exactly as you wanted it.