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Finally, Lake Season is here! The kids are home from school. Suits, ties, and work clothes have been replaced with shorts and sandals (with or without socks). For many of us, the weekend now means a glorious escape from the city to the family cottage. At least, that is how the family cottage is supposed to feel. When not managed properly, however, the cottage can just as easily become a source of stress and friction for family members.
There are many stereotypes about “millennials.” The rumour is that we’re narcissistic, irresponsible, and entitled. It can be a difficult pill to swallow. At the age of 31, with a solid job, two university degrees, and a miniscule number of photos that I’ve taken of my own food, I feel like the label just doesn’t fit with how I view myself. However, I do think millennials may have specific challenges around estate planning: we’re too busy and disorganized, death is a long-term problem, and who really cares what happens to our “stuff?”
The challenges of transitioning a family business between generations.
I’m sure we’ve all seen the statistics about transitioning family businesses between generations. Spoiler alert, the stats are pretty grim! According to the Family Business Institute, fewer than 30% of family businesses will successfully transition from G1-G2, and of the ones that did successfully transition to G2, less than 13% of those will successfully transition to G3. For those of you doing the math at home (0.3 x 0.13), this means that fewer than 4% of companies started in G1 will remain under family ownership into G3 (www.familybusinessinstitute.com/consulting/succession-planning/).
Celebrating the success of family-controlled businesses.
In a 2010 study of 4,000 family and non-family controlled companies, Harvard Business School found that family-held companies outperformed their counterparts by 6% in market returns, and 10% in profits. This is a significant difference. The researchers attributed these superior results to three distinct competitive advantages found within the family-controlled companies in the study:
Introducing formalized governance processes can help enterprising families to sustain these competitive advantages over the long-term, particularly when multiple generations and/or non-active family shareholders are involved.
As a planning firm, Blackwood Family Enterprise Services strives to deliver innovative and meaningful results for our clients. That means we are always searching for and working to develop tools that improve the planning process and make it more authentic and user friendly. The “Starting From the End” Planning Exercise came out of a personal planning experience with my husband Patrick.