According to statistics, the success rate for family-owned businesses isn’t good. In fact, transitioning from first generation to second generation owners, your automotive business has around a 30% rate of continuing successfully. From the second to the third generation, it plummets to a dismal 10%.
Despite the numbers, there are successful family-owned businesses out there, including Wal-Mart, Ford, and Carlo’s Bakery from the hit TLC show Cake Boss, to name a few. So what makes these family businesses stand out above the rest?
They care about succession planning.
Business owners who want their company to live on in their families take the time to make sure the next generation knows the ins and outs of running a successful business. From business cycles to financials to day-to-day operations, they make sure their successors know their job better than they do.
Succession planning has a few benefits, but the two most important are centered on your business’s future and the importance of your family.
Succession planning lets you look at the big picture of what you want for your business because it takes time. Transitions can be difficult, but given time, they can become easier. By making sure you’re training your next generation to the best of your ability, you’re not only one preparing them for success with your knowledge – you’re also opening up doors for their future. Throughout the process of training, you’ll be able to see your successor’s (and your automotive business’s) weaknesses and strengths, thus making a plan to move forward together.
Leaving Emotions Behind
Working with family can be tricky business, so doing what you can to make that relationship easier is a must. The last thing you want is to be accused of nepotism because you’re choosing your son over your niece because of stronger emotional ties. In the process of transition training, you could discover that your planned successor isn’t quite equipped to take the reins, making it apparent to everyone involved that the decision needs to be reconsidered. Because of this succession planning helps you make a successor decision absent of any emotional turmoil.
No matter what, if your family runs your automotive business, you’ll more than likely share some of the wealth even after you pass management over to the next generation, so choose wisely!
If you need help getting your succession plan started, we have expert advisors who are here to help. Reach out to us today so you can get started on a plan that ensures your automotive business’s success.