Family Business Succession

Essay by petebrewtonUniversity, Bachelor'sA, July 2009

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Family businesses are not run like any other businesses. They have something extra to worry about besides profits when dealing with succession within the business. What is this? It is the emotions of the family. This aspect is what makes family business succession so difficult.

Succession in the family business is not like any other succession plan for businesses. Some owners have plans. Some have plans that will definitely make someone somewhere within the family unhappy. "Forty percent of owners do not have a succession plan because it is too early in the businesses development to have one. More recent owners, however see the value in having a formal plan in place earlier in the business cycle." (Boggs, 2008)I think that some owners do not even have plans, because it causes so many problems with the family. Some of the problems caused would be among the next generation members, while some would be among the currently in power generation.

The problems with the next generation members include jealousy, sibling rivalry, and just plain disdain. The current generation members could have power struggles over who they feel is the best candidate, or maybe they want their son or daughter to take over business.

The classical way for succession to happen in a family business is well behind us. This classical way was easy; the oldest son would get everything. This is easy, and perhaps that's why it was like that. However there were some problems. What if the family had no son? What if the family's first-born son is not capable of running the business? Succession in family businesses has changed dramatically from the classical way.

There are many issues that succession brings in to play. Some issues that decide whether the family business succession will be successful include: "the preparation...