Family run companies are in many respects the backbone of American business. They are typically the most stable of small businesses, with a much lower failure rate than other small business models. Some of the largest and most successful companies in America are family owned and operated, yet 70 percent of family run businesses don’t make it to the second generation; a full 90 percent never make it to the third generation. These statistics are not new, but appalling just the same.
So why the high failure rate? Most experts chalk it up to poor succession planning, as if a plan would somehow make it all better. No plan will correct fundamental weaknesses in a business unless its managers recognize and address those weaknesses. These weaknesses prevent many family owned businesses from realizing much of their real potential. [Read more…] about The Family Run Business: The Good, the Bad and the Ugly of Succession Planning