By Charles H. Green
Todd Smekens offered a good article about family-operated businesses for news website MuncieVoice.com. He cites some interesting family business statistics published by Curchin, a Family Business Advisory service:
Family Business Survival
70% Never get past the 1st generation;
15% Never get past the 2nd generation;
12% Never get past the 3rd generation;
3% Make it to the 4th generation and beyond;
Why? Maybe the answer lies in how well plans are developed for survival.
67% Don’t have a succession plan;
33% Does have a succession plan;
Another key element behind these figures may lie in the plans made by all those other family members.
27% – Non-related key employee
15% – Spouse
13% – Child
8% – Sibling
These dynamics are instructive for small business lenders who frequently encounter business owners that employ other family members and often have aspirations of being succeeded by a younger relative. These ambitions may create an engaging middle management layer to help the business thrive – or may stir up family tensions that can blindside business success.
There are many issues that have the potential to surface in these circumstances beyond the normal litany of small business challenges. The information contained at the Curchin site offers some interesting statistics that may give lenders more tools to manage these situation when encountering family businesses as clients.
Read more at Curchin Family Business Advisory.