SBTM Jul 2015 - Page 34

EDITORIAL FEATURE Handing Down                     the Family Business By Randy Boss I n a recent survey by the Family Business Institute, when family business owners were asked if the family business was meant to be handed down within the family, 80 percent responded, “Yes.”   So why is it that only 30 percent of family owned businesses survive into the second generation, 12 percent are still viable into the third generation, and only 3 percent of all family owned businesses operate into the fourth generation or beyond?   The reason could very well be that of the 80 percent of business owners who said they had the desire to pass off the company to their children when they decide to retire from the company, only 20 percent stated they had a succession plan in place if their ownership or ability to run the company comes to an abrupt end due to death or a severe disability.   According to the Family Business Institute, when business owners were asked why they don’t have succession plans, their response was: • No time to deal with the issue          • Too early to plan for succession • Can’t find adequate advice/tools to start • Too complex • Don’t want to think about leaving • Conflict with family or employees   We work with a client in the Midwest who oversees 100 employees in the tool industry.   As the company’s owner and its top salesperson, the client is approaching 70 years old.  What he needs to do is answer the question aimed at all business owners - “What do I want to do with the business when I step down?” Let’s look again at the last statistic.  88 percent of business owners believe someone in their family will take over the business.  Now stack it up against what we previously said about succeeding generations, that only 30 percent of those handed the business will pass on the legacy. Why is that? The answer is one of three options: ing generations, that only 30 p