Succession in a family business is like passing the baton in a relay race. It looks simple from the outside, but in reality it requires timing, trust, and coordination. If the handover is rushed, delayed, or poorly planned, the whole team can stumble.
Despite its importance, many family businesses still don’t have a formal succession plan. Research shows that only about 30% survive into the second generation, and just 12% make it to the third (Ward, 1987).
A major reason is the emotional complexity of the transition, where business priorities, family expectations, and personal identities are deeply intertwined (Handler, 1994).
When there’s no clear plan, the business may face:
Conflicts over leadership roles
Uncertainty around the future
Tension between tradition and innovation
Risk of losing valuable knowledge and relationships (Sharma et al., 2003).
On the other hand, when both generations run "side by side" for a while (just like in a relay) it allows knowledge to be transferred, trust to grow, and leadership to transition smoothly (Le Breton-Miller et al., 2004).
Sources:
Ward, J. L. (1987). Keeping the Family Business Healthy.
Handler, W. C. (1994). Succession in family business: A review of the research. Family Business Review, 7(2), 133–157.
Sharma, P., Chrisman, J. J., & Chua, J. H. (2003). Succession planning as planned behavior. Family Business Review, 16(1), 1–15.
Le Breton-Miller, I., Miller, D., & Steier, L. P. (2004). Toward an integrative model of effective FOB succession. Entrepreneurship Theory and Practice, 28(4), 305-328.