The statistics are a wake-up call for any family legacy. According to the Family Firm Institute, only 30% of family businesses successfully transition to the second generation, and a mere 12% survive to the third.
While many assume these failures are due to poor financial planning or market shifts, the reality is far more personal. Research by Williams & Preisser reveals that 60% of these failures are caused by a breakdown in communication and trust within the family unit. In short: the survival of your business isn't just about what’s on the balance sheet; it’s about what’s being said—and what isn't. To beat these odds, leaders must move beyond casual dialogue and treat communication as a high-stakes professional discipline.
Articulate a Vision That Sticks
In a family-owned business, a vision often dies because it is not stated clearly or is not understood clearly. We like to use the Expectations Framework as a basis for understanding whether our message is loud and clear for all parties involved. Leaders frequently assume that because the family is close, the vision is shared. This assumption is where the breakdown begins.
- Ensure Your Vision is "Expressed & Understood": To secure the future, your vision must be explicitly stated. This means moving it out of your head and into formal professional settings.
- The Clarity Test: Don't just announce a goal; use a "Check for Understanding" loop. Ask your stakeholders—both family and non-family—to mirror the vision back to you. If their version doesn't match yours, you are operating in the Misunderstood quadrant, which is a primary driver of that 60% failure rate.
Drive Ownership Through Strategic Buy-In
Sustainable change is impossible without ownership. If your team feels that a new direction is being "done to them" rather than "with them," resistance is inevitable.
- Empowered Language: Create ownership by shifting how you delegate. Instead of giving directives, provide the "Expected Outcome" and ask, "How would you use your expertise to get us there?"
- The Feedback Loop: Ownership requires a constant pulse check. Establish a communication rhythm—weekly or monthly—where the only goal is to identify gaps between current reality and the expressed vision. This keeps the vision front and center rather than letting it fade into the background of daily operations.
Drive for Accountability Using the SBI Model for Growth
Holding family members accountable is arguably the hardest task a leader faces. To protect both the business and the relationship, you must remove the "personality" from the "performance."
- Use the SBI Model: Focus your feedback on Situation, Behavior, and Impact. * “In yesterday’s meeting (S), you didn't provide the requested data (B). The impact was that we couldn't make an informed decision, which moved our project into the Misunderstood quadrant (I).”
- Normalize "Fast Failure": Build a culture where mistakes are treated as data. By communicating that "Fast Failure" is an acceptable growth tool, you reduce the fear-based silence that often leads to long-term trust issues.
The Path Forward
The 60% failure rate due to communication is not an inevitability; it is a choice. By clarifying your vision and validating understanding, gaining buy-in and ownership, and utilizing the SBI model to hold people accountable, you are doing more than just "talking." You are building a professionalized structure that allows your legacy to defy the statistics.
"The art of communication is the language of leadership." — James Humes
Are you ready to beat the odds and ensure your family business thrives for generations to come? Don't let unexpressed expectations or communication breakdowns stall your progress.
Reach out to Tami Chapek at WeInspireWe to bring the "Communication Mastery" training directly to your team or to engage in 1:1 leadership coaching. Whether you need to align your executive board or professionalize your internal feedback loops, Tami provides the roadmap to ensure you are leading with clarity, authenticity, and effectiveness.
Tami Chapek, PCC
CEO and Founder | Executive Leadership Coach
WeInspireWe
If you are interested in topics that address leadership roles in your family-owned business, please join us at our Leadership Development monthly sessions that Tami facilitates. Contact Lorna at lflint@familybusinesscenter.com if you have any questions about this group.