Nearly 70% of family businesses would like to pass the reigns on to the next generation. Unfortunately, only 30% will succeed, according to recent statistics from Peak Family Business Survey.
Why is it so difficult for families to transition their businesses to the next generation? Here are three common issues that can sabotage success:
- Fear of addressing tough issues. Every family faces challenges in communicating with each other. When those same family members find themselves working together, it can be tough to address difficult workplace issues. Family members often avoid controversy in their business for fear of damaging relationships.
- Lack of a succession plan. Every business must transition to new leadership at some point. One of the biggest reasons that family businesses fail when transitioning to the next generation is lack of planning. Successful transitions must have a designated leader who is trained to take over responsibilities, and a clear timetable for the original leader to step down.
- Fear of letting go. Perhaps the biggest stumbling blocks to a successful transition are unwillingness and uncertainty in delegating authority. The current leader often resists the “letting go” process by micromanaging tasks already delegated to the incoming leader. In some cases, the current leader is unsure how to delegate authority. After all, it can be difficult to pass the torch and adjust to a new role.
Although family businesses present unique challenges, the end goal is the same as in non-family businesses. Success happens when we clearly define each team member’s role and to whom they are accountable. We must have a shared company vision, and have the courage to address company issues with open and honest communication.
To learn about how to transition a successful business and become a successful leader, order your copy of Leading on Purpose here.