The failure rate is enormous. 70% of first generation family businesses will not successfully transition to the next generation. Of the survivors, 90% will not transition to the third and of the very few remaining, 96% will not reach the fourth generation operations. As a family business owner, you know the statistics. You may even be able to recite the reasons most family business owners fail – 1) Inadequate Estate Planning, 2) Insufficient Capitalization, and 3) Failure to prepare the next generation for a leadership role.
Leadership may be the single biggest gap in any succession intention. It may sound trite, but after all the legal work is complete, the buy/sell agreements are in place, the life insurance is paid for and the teams of advisors are back at their respective offices, someone still has to run the operation. Today that opportunity and obligation falls on you, the controlling generation. Tomorrow it may be your sons, daughters, managers and key employees. Are they ready to lead?
Use these questions to check your operation's leadership readiness.