If you know a family business that is being run by its third or fourth generation (or beyond) tell them congratulations. And then ask, how they did it—because the odds are stacked against them. On average only about 40 percent of family businesses succeed in the second generation and only 13 percent are successful in the third generation, reports Beth Adamson, director of the South Dakota Family Business Association. Businesses that succeed into the fourth, fifth, and sixth generation are in the single digits. Adamson emphasizes that family businesses contribute a great deal of economic vitality to the private enterprise system in America—accounting for 50 percent of our GDP and 78 percent of jobs. Thus, she says it is critically important that family businesses are successful at succession—passing the family business to the next generation.
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