Welcome to The Pulse of Family Business! Family Business Magazine and Brightstar Capital Partners have developed “The Pulse of Family Business”, a series of four surveys that provide brand new findings and dig deeply into the challenges and opportunities facing family businesses.
For more than 15 years, Family Business Magazine has asked the members of multi-generational family-owned businesses what key family and business issues they face, and in the several thousand responses we have received, these “Big Three” issues emerged most often:
- The need to improve family and NextGen engagement
- Succession challenges and planning
- Developing or strengthening family and business governance
How can we best engage family members in the business and protecting its legacy? How can we attract our NextGens to join the business, or at least value and include the business in their thinking as they plan for their futures? How do we plan for succession, and how do we deal with the challenges that succession planning can create? And how do we create business and family governance that helps us communicate with one another and reach critical decisions that affect the family and the business?
While there are other issues that family members face, these three recur the most, in many variations. And they each ultimately raise questions around what it means to be a good owner.
Are there tools that members of a multi-generational family business can use to put a “finger on the scale” to improve the odds of success?
Our first survey explores Family Engagement and NextGen Expectations and shows more than half of families don't know if the next generation is ready, willing, or able to take over. Families also feel that family engagement is vital for the long-term success and stability of multigenerational family businesses.
- Uncertainty Around NextGen Engagement and Succession
- A significant challenge for family businesses is the uncertainty regarding whether the next generation will join the business. According to the survey, 57% of respondents are unsure if their next generation intends to join the family business, while only 19% confirmed that the next generation has already joined
- Improving the Odds Through Engagement and Governance
- Family councils play a crucial role in improving family engagement. The survey shows that businesses with family councils report a 10% higher engagement rate compared to those without one. However, only 47% of family businesses currently have a family council
- Families with higher engagement levels report better alignment on both family and business goals. In fact, 71% of highly engaged families say they are aligned “all of the time,” compared to only 43% of less engaged families
- Setting Clear Expectations for NextGen Involvement
- 78% of respondents require next-gen members to work outside the business first, while 50% require them to report to non-family members and 43% mandate specific educational qualifications such as certifications or an MBA