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Family businesses are optimistic about the success of their businesses in the short run, but not the long run, according to a new survey.
The majority of family businesses in The Alternative Board’s study of the first quarter of 2014 reported company growth and expect even more growth during the next year.
But nearly two-thirds of those surveyed don’t think their businesses will remain in the family after the current generation.
Many of those businesses don’t have a plan for the future – 29 percent do not have a succession plan, and another 26 percent aren’t happy with the succession plan they have.
They also don’t feel confident that their children will have the interest or ability to run the business. Less than half have children who are involved in the business, and 40 percent of those say non-family employees are better qualified to keep the business running.
The Alternative Board, a consulting group for family businesses, recommends three steps to help family businesses survive through future generations:
1. Develop a succession plan. Even if succession is years away, the plan acts as a backup system should anything happen to the owner. The plan can also motivate other family members to improve their leadership and management skills so they will be ready when the time comes. It can also act as a wake-up call to family members who are not currently involved in the business.
2. Get your younger children involved in your business. Children in a family that runs its own business should be exposed to the business at an early age. Having them do a little work around the company to learn how the business world works could build an interest that lasts a lifetime. When they’re older, you might have them shadow employees or work with a mentor to learn more. Even if they decide against going into the family business, at least you’ll know that they made an informed decision.
3. Provide developmental opportunities. If your children do decide to work for the family business, be sure they are well prepared by providing them with the professional training and leadership development opportunities they will need to move the business into the next generation.