Many family businesses are businesses in name only, says Caroline Berry, a family-business consultant from Dinuba, Calif. Several years ago, a large insurance company found that:

  • More than one-half of family businesses don’t have a succession plan.
  • Less than one-half have business plans or hold regular meetings.
  • Almost one-third do not have any trusted advisers outside of the family.
  • Almost one-third have not appointed a successor.

Berry shared these results at a World Ag Expo seminar this spring.

So, why is this the case? Berry points to some of the obstacles that family businesses face, including:

  • Lack of communication.
  • Confusion between succession planning and estate planning. Estate planning involves the business assets and what happens to them when someone dies. Succession planning involves who will take over the business ownership and management. It specifically answers the question “Who will lead the business in the future?”
  • Confusion of roles. For instance, moms and dads are both parent and boss. But the business aspects need to be spelled out more clearly. Berry suggests tapping into resources such as family-business consultants, books and magazines on business management, as well as the Family Firm Institute Web site at www.ffi.org to find the answers you need.