[ADVISOR VIEW] The chance of a family-owned business surviving the transition from the second generation to the third seems to be around 10%: ChristiaanWessels - FFG_Group. FamilyBusiness GenerationalWealth PersonalFinance
South Africa has a lot of successful family businesses. There are, however, a few factors to consider when thinking about preserving the family business from the second generation onwards. It might sound easy, but the statistics tell a different story.
In the US, about 40% of family-owned businesses transition into second-generation businesses, while 13% are successfully passed down to the third generation. Only 3% survive to a fourth generation and beyond.When starting the business, all the responsibility and decision-making lies with the founder. As the business progresses there are more decision-makers coming into the equation. Structures with regards to shareholding and management start to change.
There must be alignment in the business with regards to what the business ethics are, how do we make certain decisions, how do we bring in other family members from the third generation and beyond into the business? Important to state what the requirements must be to join the business.
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