The global financial crisis has messed with retirement timelines in family businesses, according to research out of the US, as Baby Boomers have focused on keeping their businesses afloat rather than succession planning.
Despite the fact that 62% of senior-generation owners plan to pass on their business within the next decade only 35% have a clear succession plan, the Kreischer Miller report said. Over half (51%) do not have a succession plan at all.
The report, The impending perfect storm facing family businesses, said there is a gap between the desire of Baby Boomers to retire, and the readiness of the next generation to take over the business.
“In 2010, the first of the Baby Boomers turned 65. At that time, our country was two years into the Great Recession and most family business owners were not even contemplating retirement; they were focused on keeping their companies afloat,” the report said.
A fifth of respondents that lacked a succession plan said they were in the process of “figuring it out”, while 15% said the age or ability of the next generation was delaying succession planning. Twelve per cent said they were planning to sell.
While almost two-thirds of family businesses do not have a succession plan, 85% of respondents believed that either family members, non-family members or a mixture of the two would step up to the plate if an unforeseen circumstance required sudden leadership change. The report pointed out that this makes a big assumption about the willingness or ability of those people to transition into leadership roles.
Thirty-seven per cent of respondents had a development programme in place for the next generation, with educational seminars (52 percent), mentoring programs (48 percent), and peer groups (48 percent) topping the list, followed by paying for an advanced degree (22 percent) and online training (18 percent).
The majority of families (56 percent) believe family members should be required to work in the business in order to be given ownership, with 41% requiring them to work outside the family business first. Most respondents (77 percent) do not allow non-family executives to have ownership in the family business.
The report surveyed family businesses in Philadelphia, Pennsylvania, New Jersey and Delaware, with a third from firms with revenues of $50 million plus.