What I have found over the years is that one of the major challenge in most family businesses is the lack of true open communication between all those involved especially inter-generation.
Interestingly when viewed from the outside there often exists the proverbial ‘Elephant in the Room’.
There is an obvious problem or risk that no one wants to discuss and therefore is ignored. The interesting thing about the elephant is everyone can see and smell its results (I leave that to your imagination!) but then everyone just gets used to its pollution. The elephant has become invisible but it’s pollution continues to pile up.
Now, I’m not saying this is exclusively a family business issue as there is plenty of scope for elephants to take residence in all types of companies, however, in family businesses there is the additional fear that the naming of the elephant will cause a major rift in the family and so the problem or risk is not confronted. There is no straight talking to bring the issue out into the open. So it does not go away, it just festers and grows.
The first step in clearing up the mess is to name the elephant. As soon as it is named the problem is highlighted and the pollution stops.
Then the clear up can start! (N.B. I need to put a major health warning here: naming of the elephant should only be considered with professional help. A bright light suddenly shone on an elephant can result in catastrophic results so needs to be handled with care. No one wants a rampaging elephant!).
When questioned, it is no surprise that 73% of families want to keep the business in the family. What is more surprising is that only 33% make it to the second generation and only 9% make it to the third generation.
Interestingly, studies also show that 57% of family businesses have no defined plan for succession! Which perhaps is a direct result of not confronting the ‘Elephant in the Room.’