“Only 30 per cent of all family businesses make it to the second generation and only 3 per cent last for more than four generations or beyond.”
I was not surprised when I saw this. As a commercial litigator advising founders, directors, and shareholders, I was heartened to see that there is a company in existence that has lasted for 46 generations! You can read more about it at the link here: https://lnkd.in/g6U2xjmi
Also of note, “out of the total 5,000 companies in the world that are more than 200 years old more than 60 per cent (approximately 3,000 companies) are in Japan.” This speaks a lot about the influence culture plays in the longevity of a company.
Over the past few years, it has been discouraging to see so many family businesses fail to last more than three generations. The last few matters that I have had conduct of had a similar pattern.
This seems to be the playbook: Strong founder starts from humble beginnings and does well. Children take over, get along with some hiccups. Grandchildren come into the picture and cannot get along.
Not sure why and I am not an expert on the psychology of such failures, but I think it has to do with the fact that the grandchildren grew up privileged. Growing up with a powerful, well-to-do family perhaps is a disadvantage in many senses of the word. Getting along and taking no for an answer does not sit well with privilege.
Succession planning is important in any business. Get an advisor to get your company affairs in order before you retire or leave the business in the hands of others.
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