Succession Plans Important for Family Businesses

The Family Business Institute has found that 97% of family businesses do not survive past the third generation. Wealth professionals attribute this statistic mainly to inability to transfer the knowledge of how to create and keep wealth. Many founders do not teach their children to become resourceful leaders; Instead they want to control the money while they’re alive, but when they die, the business passes to children who have no experience with controlling such wealth.

Problems often occur because younger generations become used to lavish spending, do not understand how to save money, and have no incentive to make more money because they are used to having more than enough. Wealth professionals say that succession planning is important in family businesses.

See Caren Chesler, Why Wealth Disappears, Private Wealth Magazine, Sept. 2011. 

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention