In this business tv show, Paul George from the Business Families Team at PricewaterhouseCoopers, explains how you can make sure your family business avoids becoming another unfortunate statistic:
“There’s unfortunately a long history of the first generation making the money, the second generation looking after it and the third generation spending it and that’s a saying that there a different versions in different countries but it’s a fairly universal saying around the world. How did, getting it right and avoiding that, I mean there are companies which have, are on their you know 7th or 8th generations and have not fallen into those traps.
Getting it right is a tricky and challenging process that’s got to be planned over a very long time scale. The companies that do this best are particularly where the families is still involved in management are enormously thorough in their preparation.
So you know a family I work with for example has a program where anyone that wants to be in the business would train over a 12 year period and its very clear how that would work but that’s the sort of process you need in place in order to ensure that you get this right.
Succession is a tremendously important part in the planning for any family business. Interestingly we did a global survey we just got the results of about how well this is working in practice and what they showed is that families just are not good at planning this well ahead.
It’s a difficult process. It’s difficult mechanically, it’s also difficult emotionally, it’s the whole human process of letting go and passing on to the next generation and people aren’t good at facing up to these difficult decisions. It’s always easy to put it off for another year and then the issues finally arrived and you’ve left it quite late to plan for it well.
What came out from the survey? I think one of four of the companies that we talked to here in the UK thought they’d be dealing with the succession issue of one sort or the other with in the next 5 years. The other 3 and 4 were completely in denial, they don’t reckon they will ever have to deal with a succession issue, so go work that one out.
Of the ones that are facing up to it a really disappointingly small percentage actually have thought through it in a structured way and that’s something businesses really have to get right in order to onto this and the only way to do that is to quite a structured approach to it over quite a long period.”
See more business news television shows from Paul George, as he gives his top expert business advice at http://www.yourbusinesschannel.com
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Duration : 0:2:54
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Yeh – good advice – …
Yeh – good advice – but didn’t really take it on board as I’m not in a family business myself. Personally, I don’t find the PWC interviews as exciting as the other interviews with Tom Smith or Bob Young..
I know of a few …
I know of a few people within family businesses and most have worked well together…some good advice here for businesses just like my friends.
I have also worked …
I have also worked in a family business with my father, however we never had any problems working together, those years working with him were the best working years of my life so far! But I guess it also includes how close you work together as to how well you need to plan…
Some good stuff …
Some good stuff here for family businesses to think about.
What was that …
What was that figure on the % of businesses which are family businesses again?
Great advice – if …
Great advice – if only more families had heard this first!
My parents ran …
My parents ran their own business consulting business and were planning on including me in the business and planning for my training. What always gets in the way are relationships between family members no matter how much planning you may do. In my case it was better for my parents relationships not to work together and better for ours not for i to be included in their business.
I’ve seen this …
I’ve seen this before and have worked with a family run business. One of the issues that they face is the inter-generational power struggle when it comes to evolving business practices. Elder generations have seen success from what worked for them and are reluctant to change this despite a changing business environment.
Succession planning …
Succession planning is paramount…this video clip outlines the importance of planning for the future in family business – Excellent!
The results to the …
The results to the Global survey were not surprising to me at all. I think it would be extremely difficult working in a family business….
Family business …
Family business would be a very intricate business, I don’t know if I could work with my family!
Family businesses …
Family businesses are always a bit complicated and I agree that it is difficult to deal with succession. However planning ahead, pays off. Also learning the ropes from scratch is a good way of knowing any business, especially if it is your family business.
me too, or though …
me too, or though I’d settle for the 3rd generation. I think you need to work your way through the ranks
i am hoping to be …
i am hoping to be in generation 2!