The Plain Facts
The terms “family business” or “small business” can be misleading, especially when you consider the impact these businesses have on the U.S. economy. According to a recent estimate by Conway Center for Family Business, there are around 24 million family-owned businesses in the United States. These businesses generate 64% of the gross national product (GNP) and employ approximately 82 million people (62% of the workforce).
It is natural to assume that many business owners would like to keep this kind of influence in the family. However, in reality, the situation is much different—only a fraction of business owners who want their family business to remain in the family take active steps to devise a formal succession plan.
Why is it that only a small number of business owners act on their intentions? Because business continuation is often a difficult subject for family business owners to confront. In many cases, succession is often avoided, rather than planned. It is often a taboo topic.
Business owners may be reluctant to hand over a business they spent much of their lives building. They may be forced to confront and resolve sibling rivalry and other unpleasant family disagreements. Sometimes, an owner will have greater difficulty grooming a family member for succession because of the overlap of family and business boundaries. Additionally, if the owners plan to rely on the family business for retirement income, they may worry about the business’s success under new owners.