There is a 70% failure rate of UK family firms successfully transitioning from the first to second generation! That means only 30% make it. Even worse only 12% succeed to the third generation and 4% beyond that.
What’s going on? What could be more wonderful than working with your mum, dad and siblings? From my point of view, it is a dream.
Trust is at the heart of everything we do. We work hard but laugh a lot. We look out for each other and as well as our other non-family colleagues. And of course, it’s exciting building a business together in a niche that really does need our services.
But … fundamental to the success of any family business is how it is governed and for the family to discuss difficult things in the open. Whether it be who runs the show, make decisions, decides on where the business is going, family issues such as sibling rivalry or the senior generation letting go and and ….
By getting together is a brave move, perhaps emotionally tense or littered with family baggage. It has to be done nevertheless if the business is to thrive or indeed survive. Getting organized and professionalizing the business is essential but no easy task. The journey needs 100% commitment with all shareholders and family members outside of the business. One way that has proved very successful is by working towards and creating a family charter or family Constitution the family can properly and collectively agree with a policy that brings understanding and togetherness. It will address everything from ownership and employment of family members, to share transfer and succession. Difficulties that may arise as a business grows in size and complexity, can be pre-empted, addressed, agreed and recorded in a ‘living document’ that acts as a point of reference and Concord.
Structure. Consensus. Purpose. External advice. Family and shareholder responsibility. Commitment. Learning and development of next generation. Discussion. Counsel. Share values. All are vital.