RetailerNOW Feb/March 2016

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FAMILYMATTERS

kids don't join the family business. By Wayne Rivers

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ou have no doubt seen the statistic about how 70 percent of family-owned businesses fail to make it through the second-generation, and how even fewer make it beyond that. The assumption is that poor management and ownership succession planning is the culprit, and families in business together need to undertake more robust long-term planning in order to survive within the family. While poor planning is epidemic among family firms and more vigorous strategic planning would no doubt make them healthier and wealthier, there are quite a few other reasons why family businesses are not staying in the family these days. Here are 10: 1. Societal and family expectations for offspring have shifted rather dramatically resulting in a decline in the traditional extended family support system. We don’t take care of our parents and grandparents anymore when they’re old and infirm. Think of a family farm from 100 years ago; the family lived together in close proximity, worked side by side, and provided long-term care for one another. Today, families rarely live proximate to one another on the same 40 acres, and the mutually understood “contract” that children would assume responsibility for both the stewardship of the family

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business and parents’ long term care is no longer operable. 2. Patriarchal instruction from parents on career choice is a thing of the past. Parents scrupulously avoid demonstrating any pressure or expectation at all that their children will follow them into the family business—sometimes to the detriment of both generations. Admittedly, some guidance in the past was overly heavy-handed. Today’s family business parents, however, err on the side of providing little direction at all. 3. Many family businesses are in old-economy industries, and today’s young people prefer new economy or IT careers. Similarly, many family businesses are located in small towns, and potential nextgeneration successors are largely attracted to the excitement and opportunity of cities. 4. Education and career choices have exploded in availability, and successful senior generation family business parents have the means to pay for the best. Hence, there are more doctors, engineers and lawyers, and there is a sense of educational over qualification that can preclude an interest in working as a middle manager in the family business.

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