Did you know? A shift is coming in the leadership and power of family-owned businesses: The leadership of 39.4% of family-owned businesses will change
hands within the next 5 years. This level of change is important because average CEO tenure at a family owned business can be 6 times longer than at a typical public company. Of those CEOS expecting to retire or semi-retire – 58% have chosen a successor, and 42% have not. 13.4% of the CEOS say they will “never retire” – indicative of both a deep commitment to the business and/or the difficulty of transitioning the business to the next generation. New Trends in Leadership: · 9% of CEOs of family-owned business report having two CEOs running the company, and another 3.5% say they have more than two. · 35.1% believe that that more than 1 family member will be running the business in succeeding generations. · This highlights a potentially sensitive issue of how conflicts and stalled decisions will be handled in a multi-leader environment. · 9% of CEOS are women but that will be changing with 34% saying that the next leader will probably be a woman. · Of the 35.1% who said there will be co-CEOs - 47.5 % of them said that one of the team will may be a woman. · Only 13.6 have hired outside CEOs to run the business · But of those that did, 31% rate the experience as extremely successful and 40% rate it as very successful.
Strategic Planning takes on added importance as the leadership shift occurs
· Two in three family-owned businesses do not have a written strategic plan. Over 60% lack this key to business growth. · Companies with written plans tend to do other kinds of necessary planning as well: - Buy/sell agreements
- Formal redemption/liquidity plans
- Formal valuations of company share value
- Hold more frequent BOD’s meetings
- Use board contributions more effectively
- Have more employees
- Tend to have qualification policies for family members
- More likely to have picked a successor
- Post higher sales revenue Source: American Family Business Survey, MassMutual Financial Group/Raymond Institute, January 2003
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