By , Andrew Keyt
Published May 03, 2016
Research shows that 30 percent of family businesses make it to their second generation and only 12 percent make it to their third. Daunting statistics like these make you wonder what the 12 percent have that the others don’t. Why does one family close up shop while another keeps chugging forward?
I decided to take a look at the patterns and recurring themes found in families with multigenerational success. Was there really a secret set of ingredients? The answer was yes. Those businesses that survived three, four, five generations were powered by four distinct forces.
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Unified families have a much easier time adapting to change and typically put family and business interests ahead of their own self interests. In my experience, families build unity by making communication a priority. Here are a few things they do:
Successful families must be committed to a set of values beyond just financial gain. These values typically manifest in the form of a mission or vision statement.
For example, one family I work closely with defines its mission as creating economic opportunity for its employees and community. Establishing a core set of values gives family members a sense of purpose and the opportunity to commit to something greater than themselves. Families who leverage this force:
Related: How to Ensure Your Business Survives the Next Generation
Investing in the next generation is a must. Unfortunately, “investing” in the next generation is often misconstrued as “finding the next CEO.” It’s a common trap for family businesses to fall into, one that usually leads to pressuring the next generation (implicitly or explicitly) to come into the family business. In my experience, next-gen family members who join the business for the sole purpose to please their parents become poor performing successors with low self-esteem. Under their leadership, the business, more often than not, fails. They become susceptible to what I call the "successor’s curse." The successor’s curse is that they are encouraged to overly emulate their parents, and the people around them don’t think that they can possibly be credible because of their last name. Successful multigenerational families counteract this curse by investing in their next generation by:
While there are considerable challenges when you transition your business to the next generation, there is also considerable reward for those that do it successfully. Beyond financial gains, the successful multi-generational family business creates strong and enduring family relationships, makes significant contributions to their communities and establishes a legacy for future generations to be proud of.
Related: How to Fire a Family Member in a Family-Run Business
https://www.foxnews.com/us/the-4-forces-that-drive-family-business-success