Succession Planning & Conflict Resolution for Family Businesses

Family businesses can be incredibly rewarding, but they can also lead to conflict. Succession is a common source of conflict, but proper planning can minimize the issue. 


The Potential for Problems with Succession

There are a few potential problems when it comes to succession in a family business:

  1. Would the business leave the family at some point and someone else would run it?
  2. Could there be multiple people who want to head-up the business?


Ultimately, the next leader or president is not the only concern. Family businesses also need to ensure that the next generation of leadership understands the vision for the future. Without proper planning, your children may not know your business goals. Or they may feel that you steamrolled them into following your plan.


Common Reasons for Second and Third Generation Failure

Family businesses often tend to fail or be sold outside of the family. Just 30% of family businesses last more than a generation, and only 15% last at least two generations. One percent lasts at least three generations.


There are several reasons for this, including:

  • Unresolved discord and differences within the family
  • Bad management
  • Lack of leadership
  • Lack of training
  • Lack of business succession planning
  • Lack of wealth transfer planning
  • Unforeseen problems and catastrophes
  • High taxes, including income and death taxes


How to Set Up Your Family Business for Success

While few family businesses last several generations, you can increase your chances of being one of the few that does.


Keep the following pieces of advice in mind:

  • Balance control and collaboration between current and future generations of leadership
  • Embrace the perspectives of the next generation(s)
  • Develop trust in the ability of future generations to run the business
  • Develop standards to decide when succession occurs
  • Build intergenerational solidarity
  • Get an unbiased opinion, perhaps from an advisor


When it comes down to it, a formal succession plan is crucial to the success of the family business in future generations. Without a formal plan, family members may fight for control or the new leadership may not be well-prepared to run the company. Proper planning can also avoid having to pay excessive death taxes.



All family businesses should have a clear plan for succession and strategies to resolve conflict. Planning will prevent conflicts among family members and ensure that everyone is prepared to step into their new roles. With proper planning, you dramatically increase your business’s chance of surviving for future generations.