From Bloomberg:
“For more than a half-century, Mr. Bartley’s Burger Cottage has been a Harvard Square institution. Six days a week, college students line up around the block for creations that include the People’s Republic of Cambridge, a hamburger topped with coleslaw and Russian dressing, and the Chris Christie, which is fortified with marinara sauce and mozzarella. General Manager Bill Bartley was born in 1960, the same year his father, Joe, started the Cambridge, Mass., restaurant. Although all four of his siblings have worked there at some point in their lives, Bill is the only one still there. ‘I was groomed to take over, like a veal calf,’ he jokes. ‘They kept me in that confined area in the kitchen so I didn’t get too big.’
“Mr. Bartley’s is somewhat of a rarity: Only about a third of family-owned businesses survive into the second generation, 12 percent make it into the third, and a mere 3 percent to the fourth, according to the Family Business Institute. ‘Succession planning has become a hot item with every organization we work with,’ says Castle Wealth Advisors’ Gary Pittsford, an Indianapolis-based financial planner. ‘There are more than 27 million closely held businesses, and baby boomers are now in that 65 to 70 age bracket. There’s upwards of 5 million boomer owners trying to figure out what to do.’”
I’ve read similar statistics year in and year out, and yet family business succession planning–including succession on family farms and ranches–remains an issue. I’m guessing those who haven’t done it, but should, have two reasons or excuses: 1. I’m too busy right now, and 2. it costs too much.
In response to the first, I’d remind them, none of us have time; we’re all very busy. And that will never change, so you’re going to have to change your priorities.
In response to the second reason, I’ll repeat what I’ve said before, because it obviously needs saying again: if you think succession planning costs too much, you ought to see what it costs when you don’t do it. Remember this little fact from the quote above:
“Only about a third of family-owned businesses survive into the second generation, 12 percent make it into the third, and a mere 3 percent to the fourth . . .”
I don’t have the facts at hand, but I’ll bet those businesses that make it to the 2nd, 3rd, and 4th generations are successively much better off than the same business in the generation before.
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