Statistics on family-owned and -operated businesses show that although as many as one-third of family businesses transition to second-generation leadership, in the last five years, that number has dropped to only 19%. According to a 2021 Family Business Survey by PWC, in the U.S., “only one-third have a robust, documented, and communicated succession plan in place…[and] globally, only 24% of family businesses are focused on next-gen involvement.”
How to Prepare the Next Generation to Run the Family Business
Start by understanding why they might be reluctant to inherit it.
September 27, 2022
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Summary.
Why don’t more businesses pass down through the generations, and conversely, why aren’t younger generations more interested in taking on significant responsibility in their family businesses? Younger family members may be woefully unprepared to take on leadership roles when the business needs them, or may not wish to take on the burden of responsibility — either for managing the business or for “reporting” to other family shareholders. Several challenging familial conditions may exist, often in combination. And yet so many of these obstacles could be remedied with some forethought and openness. This article covers several approaches that can familiarize younger members of the family with the ins and outs of today’s business, and get them ready to feel comfortable taking the reins in the future.