By Jonathon Parkinson, UK managing partner at Marktlink
The big players may get the headlines, but family-owned businesses make up a huge slice of the global economy. In the UK, a staggering 86% businesses are family-run, so are 70% to 90% of all firms in the European Union, and 75% of businesses in the United States (source: Global Entrepreneurship Monitor).
With so many private sector companies operating within family structures, emotional ties can get in the way of selling a company and finding the right successor. That’s entirely understandable. But a variety of other factors can undermine effective succession planning, and are less easily excused.
In some cases, the whole issue gets pushed to one side. The daily pressures of managing clients, customers and employees takes priority. The years go by, and the day of reckoning quietly creeps up on owners who don’t ‘have time’ to pick a successor or mentally appoint a replacement without actually consulting the intended individual – resulting in sub-optimal decisions if that person is unable or unwilling to take on the role.
Whatever the reasons, the lack of a thorough succession plan is a problem for a large proportion of family-owned businesses. Shockingly, fewer than one in four private company boards have a formal succession plan in place.