The American Family Business Institute survey predicts there will be an unprecedented shift in leadership in family businesses over the next five years.
A large number of family businesses were started in the years following World War II, as GIs returned home and set up shop. Based on the survey, nearly 40% of family business CEOS are expected to retire within five years.
Naturally, most family business owners want to keep the business in the family. Nearly 88% say the business will still be in the family in five years.
But according to an article on family businesses by Andy Birol, the odds are against a family business lasting past the third generation. In fact, he says, less than 20% survive the third generation.
The reasons? Businesses can change radically by the third generation. Markets change, customers change, products and services change. But in a family business, loyalty and tradition tend to keep management from changing itself and its approaches enough to keep the business vibrant and successful.
(Thanks to Steve at Small Business CEO for the tip.)
— All of which suggests we should expect substantial upheaval in the family business landscape over the next five years. It also sounds like a field day for consultants, accountants and attorneys who advise family businesses. Family businesses are going to need their help.