About Family Business Succession
More than 70% of the businesses do not get transitioned to the next generation. Succession planning is deliberately left unattended to, this explains the above scenario. The delicate nature of this issue has resulted to sibling rivalry, tax hurdles and political power plays. A previous preparation for the family business transition will ensure such issues are avoided. Unfortunately, family business Succession fails because of many other reasons.
There are a number of categories that explain the reasons for neglecting family business transition according to Fager and McKinney 2007. The pleasant times high is the first one. Good times make people not to pay attention to the difficult and trying times. Running the business is deemed to be much better when the person is still present no when they have left.
The business experiences problems like theft by employees, a broken plant and mistakes in accounting. These problems need to be tackled. Not planning the business transition will decrease the chances of a business prospering in the long term. The other category is immortality complex. The meaning of this is that many do not like to face the reality of death or sickness. People who run their businesses are negatively affected by the immortality complex . People neglect planning for business transition earlier on because of employee and family feuds.
When the family members involve their emotions or political views, the business will not be handled properly as it should. The preparation for business transition is ignored by people due to these factors. There are those who are not ready to let go of their businesses. Most business people have achieved their dreams. All the time and effort put to make the business grow can make the entrepreneur feel like they cannot leave their business. Business people always wonder who will be in charge of the company if they left.
It is hard to understand tax hurdles during the event of selling or transitioning the business to the incumbents. The tax problems are then swept under the rug so that more pressing issues are dealt with. Another thing that leads to the ignorance of succession planning is the wavering faith in the successor. The business can experience more growth when it is run by a great successor. However, people normally tend to have uncertainties about the successor. People do not want to experience such situations so they neglect succession planning. Business succession failure is as a result of lack of succession planning. Ignoring these issues will be comfortable on the short term, the long terms effects are adverse.