About Family Business Succession
Studies have shown that more than 70% of the businesses fail to transition to the next generation. Succession planning is deliberately left unattended to, this explains the above scenario. The delicate nature of this issue has resulted to sibling rivalry, tax hurdles and political power plays. A previous preparation for the family business transition will ensure such issues are avoided. Unfortunately, family business Succession fails because of many other reasons.
Fager and McKinney 2007 explain that family business transition planning is ignored due to a couple of reasons. The pleasant times high is the first one. When the times are good, people tend to ignore the difficult and hard times. The business’s success can be easily maintained when a person is still managing it not after they have gone.
The business experiences problems like theft by employees, a broken plant and mistakes in accounting. These problems must be resolved. The company will have minimal chances of being successful as the long term ramification of not planning succession. Immortality complex is the other reason. The meaning of this is that many do not like to face the reality of death or sickness. People who run their businesses are negatively affected by the immortality complex . People neglect planning for business transition earlier on because of employee and family feuds.
When the family members involve their emotions or political views, the business will not be handled properly as it should. Such events causes people to neglect planning for business succession. There are those who are not ready to let go of their businesses. Most entrepreneurs feel they have reached greater heights. All the time and effort put to make the business grow can make the entrepreneur feel like they cannot leave their business. Business people always wonder who … Read More ...