Succession planning for family-owned construction firms is fast becoming the elephant in the room as owners age and the chances of successfully addressing the issue diminish with each generation.
According to the business law firm Jordan Ramis PC, 95% of all construction companies are family-owned or closely held. Many of those owners are 60 and above and that is where the issue lives. Many owners have no idea how to address the issue. Their families are dysfunctional, their kids don’t want to be involved in the business, and many of them have done little or nothing to create a succession plan for the possible leaders in their firms who might take over and continue the company into the future. The chances for success are against them.
According to the Canadian advisory firm BDO, only 30 % of the first generation family owned firms make it to the second generation, and then the odds get even worse when only 30% of those firms successfully make it to the third generation. Restated, if you have a first generation family business, the odds of your grandchildren managing the business are 1 in 10 – not so good.
I am the third generation of a business that lasted through two generations. My mother told me that if I even thought about going into the family business she would “kill me on the spot.” Needless to say that she wasn’t happy with the long hours, hard work that my grandfather and father had endured in order to keep the business going for 65 years. She wanted me to go on to college to become an architect. I wonder how many moms have the same conversation with construction dads over the dinner table when the first child comes along and they dream about his or her future?
What should you do if you want your family owned construction business to be passed on to your kids? Watch this space for some key tips.
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