With many family businesses, from small local stores to multimillion-dollar corporations, the goal is for the parents to pass the business on to their children. They want their family to run their own business after they have passed away, and it’s a major inheritance that they’re giving to ensure their children have an excellent standard of living moving forward.
But how often does this work? How many family businesses get passed on to the next generation and continue to operate successfully?
Only one-third of family businesses survive the transfer
When you look at the statistics, you’ll find that only one-third of the family businesses that are passed on to the second generation will make it through that generation and to the grandchildren. Two out of every three businesses will either fail during the second generation or not even make it to the point where they get passed down.
Things even get more daunting by the third generation. The vast majority of family businesses will not make it through this generation and on to the great-grandchildren. That type of longevity is technically possible, but it’s simply something that isn’t seen often. Think of it as the exception and not the norm.
How can you give your business the best chance?
If you’re wondering how you can give your business and your family the best chance to thrive and make it through the third generation, it starts with having a comprehensive business succession plan to set them up for future success. Make sure you know what steps to take, what legal options you have and how you can work with your family in advance to make sure your business remains in good standing for a long time.