Ready for some crazy statistics?
95% of businesses in the US today are family-owned or closely held. 80% of those businesses have 20 or fewer employees. However, these businesses are responsible for contributing more than 45% of our GNP (Gross National Product)!
Family businesses are important to our economy for so many reasons. These vital members of our communities generate more new products, create more new jobs, and contribute more to your local communities than their corporate counterparts.
However, and here’s some bad news… almost 35% sell or liquidate, often failing to realize their intended value. 85% of American Business Owners want to pass their businesses on to the next generation, but sadly, fewer than half have the opportunity to do so. Many recent studies indicate that as many as 65% of business owners will transition out of their current positions within the next 5 years and most have no formal plan to do so because they have no successors, no financial plan, and no solid options for considerations. Because of this, there is a potential crisis for family and closely held businesses and our economy.
So, what can family businesses do to prepare for the future?
- Develop a well-integrated, comprehensive exit planning strategy.
- Determine the current and desired future value of your business.
- Develop a strategic plan that acknowledges the issues of both the family and the business.
- Develop a succession plan – that identifies the necessary leaders for the future.
- Hire the right fit for the organizational culture and the strategic potential.
- Create a leadership development strategy.
- Consider working with an advisory board.
- Consider working with a family business advisor.
A successful, well-planned transition will provide opportunities for enrichment and joy and the chance to change the course of one’s life with dignity.
What do Family Business Advisors Do?
- Help family businesses protect their assets and secure their ROI.
- Coordinate services – bring integrated solutions to family businesses.
- Help match the expert who is the best ‘fit’ for their needs.
- Bring practical, customized solutions that meet needs rather than push products that provide returns.
Family and closely held businesses will endure or wither, depending upon how effectively they plan for the future. With the help of their communities and family business advisors, those who survive often manage to re-create the energy and wonder that fueled the original entrepreneurial spirit. The key to a successful sale is a combination of preparation, planning, and assembling the correct team.
See also:
Preparing for a Family Business Transition
The Keys to Effective Succession in Family Businesses
Don’t Keep Family Business Successors in the Dark
