Research has proven that over 70% of the businesses do not get handed over to the next generation. Succession planning is deliberately left unattended to, this explains the above scenario. It has become a very sensitive issue that has caused sibling rivalry, political power plays and tax hurdles. To avoid such occurrences, it is good to plan for the succession of the family business. Family business succession failure is linked to may other reasons.
According to Fager and McKinney’s 2007 family business planning book the main reasons for neglecting family business transition planning are categorised severally. The pleasant times high is the first one. Good times make people not to pay attention to the difficult and trying times. The business’s success can be easily maintained when a person is still managing it not after they have gone.
Businesses go through tough times such as theft by employees, accounting and a broken plant. These problems must be resolved. The company will have minimal chances of being successful as the long term ramification of not planning succession. The other succession planning failure is immortality complex. This means that most business people do not want to come to terms with death or sickness. People who run their businesses are negatively affected by the immortality complex . Employee and family wrangles fears can make people avoid planning for succession.
When the family members involve their emotions or political views, the business will not be handled properly as it should. Such events causes people to neglect planning for business succession. Sone people are not ready to leave behind their businesses. Most business people have achieved their dreams. All the time and effort put to make the business grow can make the entrepreneur feel like they cannot leave their business. People also ask themselves who will manage the business if they have left.
Tax hurdles are complex and when the business is being sold or transitioned to the next generation. The tax problems are then swept under the rug so that more pressing issues are dealt with. People tend to lack faith in the successor and this is one of the reasons why succession planning is neglected. The business can get a good successor who can move the business to greater heights. Despite the above, the successor is normally faced with skepticism. This is one of the reasons why people ignore succession planning because this scenario is not pleasant. Business succession failure is as a result of lack of succession planning. The effects of not attending to these issues in the short term will escalate in the long term.