Most Small Businesses Lack Succession Plans
There's a threat to local family businesses looming out there, and it's called succession-planning procrastination, according to a new study.
A survey of 100 privately held businesses in the Philadelphia region, including South Jersey and northern Delaware, found that 62 percent of senior-generation owners plan to retire or transition out of their leadership positions in the next 10 years, while 65 percent of respondents said they do not have clear retirement plans.
And while 55 percent said they intend to transfer their businesses to family members, only 37 percent have plans to develop the skills of next-generation leaders, according to the 2016 Family Business Survey by Kreischer Miller, an accounting, tax and business-advisory firm in Horsham, Pennsylvania.
"The biggest finding was just the culmination of events," said Steve Staugaitis, a director and family-business specialist at Kreischer Miller. "This large group ready to exit in the next 10 years, they don't have clarity on retirement, most don't have a succession plan, most of them expect it will be family, yet most have not done anything to develop that next generation."
"The perfect storm," Staugaitis called it.
Very risky is how Meghan Juday, director of the Initiative for Family Business and Entrepreneurship at St. Joseph's University, sees it.
Failure to plan and execute transitions is among the biggest factors affecting a family's ability to pass a company down from one generation to the next, she said.
"I think for a lot of people that start a company, it's hard to let go, it's their baby," said Thomas Furia Jr., 60, president and COO of Penn Jersey Paper Co., who was among the survey participants. "My father didn't have that problem."
Though founder Thomas Furia Sr., who turns 90 later this month, still holds the CEO title and comes into the office daily, he has turned over day-to-day operations of the 53-year-old business to his son.
"It has always been that I was going to be his successor . . . as long as I could handle it," said Furia Jr., who has four sisters. The children are all stockholders in the company, a full-service distributor to the food-service industry that recently rebranded as PJP to remove the misconception that it still only sells paper products.
His advice to family businesses?
"Have a plan, because you never know.” Source: CPA Practice Advisor.