67% are at Risk of Succession Failure
If you are an owner in a family enterprise, the chances of your business transitioning successfully to the next generations is not very good. This has not changed over the years. Statistics show a failure rate of:
- 67% of businesses fail to succeed into the second generation
- 90% fail by the third generation
With 80% to 90% of all enterprises in North America being family owned, it is important to address the reasons why transition is difficult. Read more
Focusing on growth is harder when your co-owners are your relatives
by Fred Pidsadny for ProfitGuide.com
Family-run businesses are like elastic bands—they can be stretched only so far, in different directions, before tensions cause them to snap. Those who run family businesses know that stress can often be elevated by forces that don’t exist in non-family firms, from hiring obligations and bloodline silos to next-generation financial demands to under-performing family members. It’s one thing to discipline or even fire a stranger, quite another to turf a brother or daughter. For such businesses, finding a successful balance is an ongoing challenge.
So how can family-owned businesses avoid conflict and focus on growth? For a number of years I’ve been working with a company run by three brothers, each with their own family and their own unique take on strategy and succession planning. They have benefited tremendously by learning and practicing what I call the four Cs of strategy execution for owner-managed businesses:
The contract is signed. The cheque is cashed. Your business has been sold or you’ve been given a golden handshake. Now what?
It’s a question many former company owners have a tough time answering. Whether you’re looking to sail around the world, start a new enterprise, or spend time with your family, you must now figure out what to do with your money—and with your life.
Here are 13 things business owners should do after leaving.
Shifting gears in a rush increases the likelihood of missteps, financial and otherwise. Take some time to reflect on what’s happened, and what’s to come. You don’t need to accomplish everything at once.
- Define your goals
Do you want to spend time with family? Travel? Get involved in a charity or a community cause? Start a new business? Write it down.
One of Ottawa’s famed developer’s family is in court fighting over an estate and you can be sure this will break up family relationships which is very unfortunate . I am sure Mr. Tomas C . Assaly would have never imagined when he was alive that his family would get into this kind of a situation . Mrs . Assaly was quoted in The Ottawa Citizen saying ” I really have no interest in discussing it and making it public . We’re very private people ” . Unfortunately , cows have left the enclosure as gate is open . Estate Planning is much more then counting your dollars or having a computer program telling you that there is a need for more more RRSP’s or life insurance . Estate Planning is much more then accounting , legal , investments , insurance and banking . Family business do not survive in this country most of the time past a second generation in my opinion due to lack of a proper estate plan which encompasses many aspects . Why do people avoid Estate Planning ? They think they are not rich enough , they do not want to face morbidity or mortality , they do not want to deal with uncomfortable family discussions about estate planning and they do not know who to work with . Advanced Family Planning advisors are out there but you need to do your homework as a brand new financial advisor presents himself or herself as a Estate Planner .. We at TK Financial provide Estate Planning service to professionals as well as family businesses . Make sure your family does not end up in court , in newspaper or overpay taxes because you are negligent with your planning !