ECONOMY

Only 30 pct of family businesses survive to the second generation

Family enterprises across the globe have an average life cycle of 24 years, virtually equal to the business activity span of their founder, most available surveys show. Despite differences from country to country, only three out of 10 family firms survive and are passed on to the second generation. Even fewer (16 percent) make it to the third generation. In Greece, for every successful shipowner or ouzo producer there are hundreds of other entrepreneurs, possibly successful in the past, who have not managed to pass the fruit of their labor on to their children. In the United States, too, a survey of 200 successful trade enterprises has shown that eight out of 10 did not survive while just two of them (1 percent) managed to survive under the same name. The above data were presented this week by Asterios Kefalas, management professor at the Terry College of Business of the University of Georgia in the United States, during the course of one-day events which held in the cities of Ioannina, Arta and Igoumenitsa by the Federation of Industries of Northern Greece (SEVE) in cooperation with the Center for Entrepreneurial and Technological Development in Epirus. Professor Kefalas proposed eight key steps for family enterprises to ensure their viability through succession: – The creation of a sense of emergency among important company officials so that they are always alert. – The selection of a guidance team, consisting of able officials who will get significant posts in the company. – The setup of a rational and clear business vision with the essential targets and strategies. – The spread of this vision of targets and strategies throughout the enterprise by means of examples and speeches. – The elimination of obstacles hampering the realization of the vision and its targets and strategies. – The «creation» of short-term successes: «Short-term successes offer positive messages to people and the vital funding for their efforts to continue,» Kefalas noted. – Persistence: «Change leaders do not rest. Every short-term success becomes a cause for a new effort,» he stressed. – The development of a new culture: New values and customs and new symbols, created by a series of short-term successes.