If you’re a family business leader like I am, there’s a good chance this statistic will resonate with you: only about a third of family businesses successfully make the transition to the second generation.
Sure, that seems pretty low. But there are all sorts of things that can make it challenging—or, in many cases, downright impossible—to pass down a family business. A younger generation might want to make drastic changes that cause conflict. Or, after growing up around the family business, your kids might just want to branch out.
But take it from me, when you try to pass down a family business to a third generation (like my dad did), things can get even more complicated.
How do I know? Well, let me tell you a story.
I’d worked for my dad at Jelmar for several years, building my career, working my way up the ranks, and gaining valuable knowledge from all my Jelmar colleagues. As they know, the happiness of those years was accompanied by sadness, as my mom suffered a long illness that finally took her from us a few years ago.
Near the end, my mom urged my dad to step back from the company and let me lead. I was ready, she told him. It was time. So my dad had to let go of someone he loved, while also letting go of the company he’d spent his whole career nurturing (after watching his dad do the same.)
In a way, my mom asking my dad to let go—and his promise to her that he would—was their way of unburdening one another. It couldn’t have been easy for him, but handing over the company to me became my dad’s way of honoring my mom’s memory.
At most companies, the board would’ve just voted on it.
So it’s easy to see the ways in which family businesses can complicate things, turning what could be objective, rational situations into subjective, emotional ones.
Plus, families are a lot more complex than they used to be. A few generations ago, for example, a business probably wouldn’t have been handed over to a daughter. And with many parents postponing having children until later in life, it’s increasingly common for family businesses to require interim management to bridge the gap between parents’ retirement and children’s coming of age. And that, of course, brings new concerns about whether the non-family manager will maintain the family’s traditions and standards.
That probably means today’s family businesses face more hurdles than ever before—so there’s a good chance that they’re even more emotionally fraught.
What’s a family business leader to do? In my opinion, it’s important to recognize that some of the challenges family businesses face are broader, cultural challenges that reach far beyond the business. I’m a great example of what’s been termed the “sandwich generation”—people who have responsibilities to both young children and older parents, usually on top of a demanding career. If that sounds like you, I guarantee that the society in which you live is primarily to blame, not your leadership skills!
And sure, you have to have a certain kind of outlook to deal with the ups and downs that come from working with family. Watching your promotion at work become inextricably tied to one of your most profoundly emotional family memories isn’t for everyone.
But in my case, the dialogue between my parents that resulted from my role in the family business imbued that difficult time with even greater meaning. In the end, it provided a sort of catharsis for all of us, and I wouldn’t trade it for anything.