It is the dream of many Americans to start their own business. Like some of you, my great-grandfather fulfilled that dream in 1928 when he started Gardner Publications, which publishes Products Finishing. I am now one of four cousins in the fourth generation of my family to work at Gardner. This is quite an accomplishment when you consider that only 30% of family-owned businesses continue into the second generation, 10% continue into the third and less than 5% continue into the fourth.
So, why is it that the majority of family-owned businesses fail after the first generation? Many business experts will tell you that it is due to the lack of succession planning. For one reason or another, the generation running the business fails to look at what will happen when they are no longer involved on a day-to-day basis.
How do you plan for succession? No matter how you do it, it won’t be easy. However, one thing that my family has done to facilitate succession planning is form a Family Council.
The Family Council is made up of all members of the family, whether they work for the company or not. We try to get everyone together two to three times a year to discuss any issue that pertains to the fourth generation taking over for the third. These issues include employee/owner compensation, non-employee/owner compensation, estate planning, ownership succession, management succession, career planning and more.
During Family Council meetings, we never come to a set conclusion on an issue or develop a concrete plan for succession. That's been difficult for some family members to handle, since they feel that we are not accomplishing anything. But, according to Thomas Davidow and Richard Narva of Genus Resources, Inc., succession planning "is an organized process that involves discussion, information gathering, evaluation, research, asking necessary questions and much more. If you address the issue of succession as a process that includes all family members, the power and the tension associated with the decision will be significantly reduced."
Succession planning might be the most difficult assignment of your career, but it can be the most rewarding as well. Anytime it begins to get difficult I think about how proud I will be when my generation keeps the business "All in the Family."