Only about 10% of family businesses survive into the third generation. There is no one universal answer to why this happens. The fault is neither wholly with the individual leadership, nor with the management of the business as an organization. Rather, success has to do with the way individual family leadership interacts with the organization of the family business as a system.
Since success or failure depends on how individuals interact with the specific family business, it is essential to understand how the particular family business as an organization works and find the specific core problem facing the business and the family. Once identified, you can focus on the specific deficiencies in the family and the business and take actions that enable you to avoid future threats. Discovering the core driver of the family business succession problem is not that simple, as it can be concealed under more urgent, though less important, daily management emergencies. To recognize the succession planning problems before the crisis hits, you need to look for the symptoms of probable plan failure.
Here are the top fourteen symptoms of a business succession plan that will likely fail.
Matthew Erskine is the managing partner at Erskine & Erskine.