Like many entrepreneurs, clothier Eugene Brown Sr. opened his shop with hopes of leaving a legacy. He says he never tried to force his children to follow him into the family business, but he made sure they understood the joy and passion he brought to the long hours he devoted to it.
“That’s what steers most kids away from their parents’ business: They see how hard their parents are working and are like, ‘I don’t want to do that,’” Brown tells Business Report in a feature from the current issue on succession planning. “You’ve got to be able to show them a side of it that is enticing.”
To accomplish his goal, Brown exposed his children to the glamorous side of the clothing business, meeting interesting people or traveling to New York City, Las Vegas, Miami and abroad. They also saw him rise daily—not always in a chipper mood first thing in the morning—but without complaint, Brown says.
Business owners often assume their children and grandchildren will sustain what they’ve created but, unlike Eugene Brown, don’t do much to ensure a smooth transition. When the first generation steps down, subsequent squabbles among members of the next generation can destroy a business and tear a family apart.
That the Browns have a succession plan puts them ahead of the game. A 2013 survey by the Exit Planning Institute indicates that while 76% of private business owners expect to make some sort of ownership transition over the next 10 years—including 48% in the next five years—83% have no written transition plan and 49% have done no planning at all.
The Family Firm Institute says poor planning isn’t the only reason why only 30% of family-owned businesses survive into the second generation, 12% into the third, and 3% into the fourth and beyond. But it doesn’t help.
Read the full feature to find out how the Browns and three other local family-owned businesses have approached tailoring their succession plans. Send your comments to editors@businessreport.com.
