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(530) 676-4445

Family Business:
The Best of Times and The Worst of Times

Part II

Family business is most of the business in the US and perhaps the rest of the world as well.  What is often a dream of a couple or a sibling or other family member becomes a successful business with employees, a market, and a revenue stream.  While about half of all new start ups don’t succeed, plenty do as the result of the picture of that dream that was painted and shared by family and key employees and their commitment to making it a reality.

In generations past, most children knew that if dad was a baker and they lived above the bake shop, that someday they would inherit the whole thing.  It was just understood and accepted that it would happen and it represented a secure future for the successors.  Many times that succession plan worked and it still does.  About 80% of the first generation businesses now succeed to the next generation but fewer than 30% of them succeed to the third generation.  There are many explanations for this decline in the third generation’s success.  However, failure to plan for succession is one of the clearest reasons.

It is not necessary that a family business is passed on just to family, but it requires working on the business not just in the business to do that. In most businesses there are employees or others who have the vision of that painted picture of a lasting business who can take it in even more successful directions.  Why worry about that now?  Probably the best reason is the security of your own lifestyle after employment and the security of employment for those you care about.

Oh, you don’t have time to do it?  And, you don’t know how to do it?   The checklist below will get you started.  It is free for your use, just be sure to follow the directions and once you and your spouse or S.O. or other business partner have completed it and talked some about each other’s ranking, give us a call.  We can help you pace yourself through a reasonable process that won’t break the bank or completely monopolize all of your time.

Checklist for Founder and Spouse:

Goals or Desires for Succession Planning

Without consulting with each other, rank order (1-15) each of the following statements in terms of its importance to you, in view of how you perceive your needs for the future:

F S  


_____ _____ 1. Installing a son or daughter as your successor
_____ _____ 2. Continuation of the business after you have left (either in the hands of new
owners, through an ESOP, or through family succession)

_____ _____


Future financial security for you and your spouse
_____ _____ 4.

Peaceful family relations at all costs (e.g. your spouse may want you to sell
the business and you do so to please her; or, you want to sell the business,
but your son wants to succeed you)

_____ _____


Providing financial security for offspring not in the business
_____ _____ 6. Growing the business as large as possible and feasible
_____ _____


Staying active in the business as long as possible
_____ _____ 8.

 Selling the business in order to secure one’s financial stake.
_____ _____


Retiring at some specified time, one of your own choosing

_____ _____ 10. 

Protecting the financial future of your employees and management

_____ _____ 11. 

After retirement, acting as an advisor or consultant to your successors,
be they family or new business owners
_____ _____


Avoiding retirement altogether.
_____ _____ 13.

 Avoiding spending any more time with your spouse than you are now.
_____ _____ 14.

Drawing out of the business now as much income as you can to secure
your present and future financial needs.

_____ _____ 15.

Other __________________________________________________
Adapted by Barbara E. Thompson and John E. Roe from “Succession Planning (Part 1)” by Bernard Liebowitz, Ph.D. printed from

By John E. Roe, Ph.D. and Barbara E. Thompson, M.A.
The Discovery Group