By Peter LyleDeHaan, PhD
A likely factor is that the second generation, who didn’t sacrifice to launch the business and see it through the lean, early years, lacks the resilience to persevere. Another reason is that problems occur if parents hand the business over too quickly to adult children who still lack experience.
Some entrepreneurial parents attempt to avoid these problems by making their successor children start at an entry-level position and work their way up the organization. But this fast-track status often backfires, causing resentment from non-relative staff who may be more qualified, better educated, or have longer tenure.
To circumvent this, some founders require their children to earn a college degree and put in time at another firm to learn essential skills before joining the family business. Although this approach offers the greatest chance for success, it’s not a sure-fire strategy.
Regardless, if your goal is to pass your TAS to your children, be intentional about it and plan. Don’t leave business succession to chance, or you may end up like the majority of family-owned businesses that fail to successfully pass the baton to the kids.
Peter Lyle DeHaan, PhD, is the publisher and editor-in-chief of TAS Trader. He’s a passionate wordsmith whose goal is to change the world one word at a time.