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In this business tv show, Paul George from the Business Families Team at PricewaterhouseCoopers, explains how you can make sure your family business avoids becoming another unfortunate statistic:

“There’s unfortunately a long history of the first generation making the money, the second generation looking after it and the third generation spending it and that’s a saying that there a different versions in different countries but it’s a fairly universal saying around the world. How did, getting it right and avoiding that, I mean there are companies which have, are on their you know 7th or 8th generations and have not fallen into those traps.
Getting it right is a tricky and challenging process that’s got to be planned over a very long time scale. The companies that do this best are particularly where the families is still involved in management are enormously thorough in their preparation.
So you know a family I work with for example has a program where anyone that wants to be in the business would train over a 12 year period and its very clear how that would work but that’s the sort of process you need in place in order to ensure that you get this right.
Succession is a tremendously important part in the planning for any family business. Interestingly we did a global survey we just got the results of about how well this is working in practice and what they showed is that families just are not good at planning this well ahead.
It’s a difficult process. It’s difficult mechanically, it’s also difficult emotionally, it’s the whole human process of letting go and passing on to the next generation and people aren’t good at facing up to these difficult decisions. It’s always easy to put it off for another year and then the issues finally arrived and you’ve left it quite late to plan for it well.
What came out from the survey? I think one of four of the companies that we talked to here in the UK thought they’d be dealing with the succession issue of one sort or the other with in the next 5 years. The other 3 and 4 were completely in denial, they don’t reckon they will ever have to deal with a succession issue, so go work that one out.
Of the ones that are facing up to it a really disappointingly small percentage actually have thought through it in a structured way and that’s something businesses really have to get right in order to onto this and the only way to do that is to quite a structured approach to it over quite a long period.”

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