By Daniel Scott
There are some astounding statistics surrounding family business succession. First, the average lifespan of a family-owned business is only 24 years, or roughly one generation. In addition, nearly 60 percent of family-owned businesses fail to make it to the second generation, while nearly 90 percent fail to make it to the third generation. Nearly half of the family-owned business failures were caused by the founder’s death, while only 16.4 percent of family-owned businesses failed after an orderly transition.
As an entrepreneur, you can spend your lifetime building your business. It is a unique asset that represents a large portion of your legacy. Yet, almost instinctively, you probably treat your business the same as your other assets and ultimately expect your children to inherit it along with the rest of your estate. Doing so, as the statistics show, virtually guarantees your business will fail. While you could labor over trying to solve the riddle of how to properly hand over your business to your children in a way that defies the odds, perhaps the better answer is to not leave your business to your children at all. Statistics aside, there are a number of very good reasons why your children should not inherit your business….