Many family businesses suffer challenges that simply can't be overcome, even if the intent was to keep the business closely held going forward. And unfortunately, some 40% of family businesses failed to transition to the next generation. Let's explore some of these reasons so you can be prepared if they turned up. Misalignment, we all can imagine what that can look like. One family member sees no need to expand, while another sees expansion as the only way to remain competitive.

One member wants to sell the business to the highest bidder, while the other believes that the business should be passed on to the next generation. Lack of Planning the been there, done that mentality within some family businesses often translates to the lack of a well thought and substantiated strategic, operational, marketing, or growth plan. That development can be the direct result of the lack of alignment referenced earlier. Leadership Issues some family businesses operate like a monarchy, where the oldest child is next in line to assume responsibilities they may not yet be prepared for or that simply don't align with their personality and or skillset. That obviously can result in a myriad of issues.

Lack of governance family business succession planning should not begin on the verge of a necessary transition, yet all too often it does. It should take the shape of a formal, ongoing process that includes the guidance and input of family business specialists whose knowledge will then help them to avoid the pitfalls and speed bumps that too many closely held companies looking to transition simply never can overcome. Lack of board directors the most forward thinking family businesses establish a formal or informal board that includes experienced professionals who bring an important impartial perspective to the challenges related to operational success, long term growth, and smooth generational transition. Unaligned companies often can't agree on the importance of such a board or on its makeup. Marriage in law Issues parents and their offspring commonly differ on the way the family business should operate or the way salaries and or profits should be disseminated.

Now imagine the introduction of spouses and grandchildren into the mix. The probability of maintaining aligned values and perspectives drastically diminish. Entitlement. Many of the challenges previously outlined become exacerbated completely when the topic du jour turns to salaries, profit distribution, and the importance of cost control and reinvestment. Lack of preparation the hope, and often the expectation in many cases is that one generation will smoothly hand the business down to the next.

What happens when the next generation is willing to take over the company but has not been willing to put in the time in advance to develop the skills and acumen needs to ensure a successful tomorrow? Financial Issues every time company cars, real estate costs, travel and other quasi personal expenditures are paid out of the company coffers, the challenges of alignment and risk again take center stage with the help of family business succession planning consultants. That is not only possible, but it also remains extremely doable. If you're thinking about succession planning for your family business, we can help. Because contact us today to learn more about our services.

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