Report: Majority of family businesses lack succession plans

A new study conducted by regional business advisory firm BlumShapiro, with a Shelton office, in conjunction with Baker Tilly International, of which BlumShapiro is one of 154 member firms, shows the time for family-owned businesses to start planning for succession is immediately.

The report said nearly 80 percent of family-owned businesses are not prepared for what happens when current management steps down. Aging business owners/baby boomers are fueling the conversation.

Carl Johnson, BlumShapiro managing partner and chairman of the North American Regional Advisory Council of Baker Tilly International, said the “Succession Reset: Family Business Succession in the 21st Century” report represents both opportunities and risks ”“ termed “significant” ”“ for family-owned businesses.

“Family business is big business in America, but we are in a new era in which a family business isn”™t necessarily going to pass from one generation to the next,” Johnson said. “This is why businesses need to be prepared with plans for succession now, though the reality is four out of five of them are not yet prepared.

“The study identified numerous advantages of beginning the succession process sooner than later, including continuity of the business, achieving family harmony and sustaining ongoing jobs,” he said.

The report said there is a generational shift among family-owned businesses, “which make up two-thirds of all businesses.” The shift “has never been seen before and is expected to last for the next decade. This is largely due to members of the baby boomer generation reaching retirement age and exiting from management and control of businesses.”

The report said the goal of succession planning today is instilling business competencies and experience in family members who are interested, rather than simply handing over the business.

The full report, along with the company”™s eight guideposts for business succession, is available at Blumshapiro.com.