Passing Your Family Business from One Generation to the Next...

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FAMILY BUSINESS CONSULTING

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Family businesses are often considered incomparable to entrepreneurship. However, family businesses account for nearly 80% of the enterprises in North America. Less than 60% of them survive to the second generation and only 12% survive to the third generation. 

Many question the reason as to why this often occurs. Prof. Matt Allen, an expert in family business, may have some insight for this question. He highlights that many family businesses are characterized by efforts on the part of ownership to balance financial performance with maintenance of family control and benefits for future generations. Focusing on both family and financial performance can seriously complicate the planning and decision making processes on the business side.

He also notes that if family businesses want to survive and grow into the future, they need to pass on the entrepreneurial mindset and capabilities to create new streams of wealth across generations, not just pass the business on from one generation to the next. This tactic is often referred to as “trans-generational entrepreneurship.” 

It is well known that family businesses focus on maintaining ownership across multiple generations and benefit from long term relationships both inside and outside the business. It is often asked how family businesses transfer the knowledge and entrepreneurial mindset from generation to generation? The answer lies within who holds the top positions. Many top leadership positions in family businesses are often filled with family members who have the leadership and organization to access important knowledge and social resources.

Remember, when leadership transitions are occurring in your family business, the new generation should be mindful and conscious to maintain and build on the networks and knowledge the businesses former leaders.

Contact Continuity Family Business Consulting for more information and guidance on passing the family business from one generation to the next!