We have all heard the statistics that 90 percent of Family Owned Businesses will not survive past the second generation. Many entrepreneurs are aware of this trend, and are prepared to do something about it. Some have even taken the appropriate first steps, and have a loosely outlined Succession Plan (either on paper or in their head), even though there is no empirical evidence to suggest that a succession plan by itself improves the likelihood of a successful transition.
There is one critical piece missing from many Succession and Estate Plans, including those few that are written. That is, the plan was created primarily by the owner and the professional financial advisors - Not shared or rehearsed with the key stakeholders.
This is the key point:
In over 60% of the cases the surviving family members will become the new owners, yet these same family members have had little to no involvement in the creation of this plan ( let alone rehearsed for this almost inevitable stewardship role)
In the words of Albert Einstein, “Make things as simple as possible, but not simpler.”
Would you fly with a pilot who had never run a simulation?