“Shirt sleeves to shirt sleeves in three generations.”
- American saying
“The father buys, the son builds, the grandchild sells, and his son begs.”
- Scottish proverb
“Clogs to clogs.”
- A Lancashire proverb from the 1600s
“Rice patty to rice patty.”
- Asian proverb
“Father, founder of the company, son rich, and grandson poor.”
- Mexican saying (translated)
Across generations and across cultures, the sentiment is the same: family businesses and family wealth don’t make it into the third and fourth generations. Statistics on family business only reinforce the adages: only 12% of family businesses will continue operating into the third generation and only 3% of family businesses will continue into the fourth generation. It doesn’t need to be that way.
Every business faces challenges to successful, long term operations. For the countless strengths and opportunities giving family businesses a competitive advantage, business families face unique challenges in setting up the business and the family to be successful for generations to come. There is no magic checklist or fill-in-the blank formula, but there are things business families can do:
· All family members participate in defining the core values for the family and the business
· Create an environment of open, clear, and direct communication
· Develop clear policies and business norms for family members
· Clearly define the roles and responsibilities in the business
· Have a plan, in writing, for the transition of the business to the next generation
· Establish a fair and equitable exit strategy for those not interested in the business
· Help each family member internalize the vision for the family and the business
Involving all family members in addressing these issues can help improve the odds of success for future generations and nurturing the family legacy.
It’s not too late to get started.
advising and supporting Families in Business as they build their legacy
235 Yoder Road • Harleysville, PA 19438 • 215-256-5997