Why Some Family Businesses Continue While Others Can't Survive Founders Death

There are many examples of family businesses that flourish from generation to generation, while some hugely successful businesses are unable to survive the death of the founder. If both were successful during a founders lifetime, why do some thrive, while others demise.

Certain businesses are tremendously related and attached to the founder, his image, story and reputation. Businesses where that is the case must bring the next generation in "early" in the business cycle, so that there is a seamless transition. Two of the best examples of successfully transitioning a business from onw generation to the next, although the founder had a strong image, is P.C. Richards, the New York metro area electronics chain, and Syms Clothing. In P.C. Richard's case. the emphasis of the advertising has long been on the family, and how the founder passed along his "ethic" from generation to generation. They have always emphasized their reliability and reputation. Sy Syms, founder of SYMS, brought his son and daughter into the business, while he was still running it, and gradually integrated them into their advertising alongside him. Today, Sy Syms is still alive and involved with ads, while his daughter, Marcy is the President of the company and his son is the Vice President. Not only has SYMS been able to maintain itself, last year they purchased the struggling but well-known Filenes Basement chain. Tom Carvel and his gravely voice became almost synonymous with the Carvel Ice Cream brand, and although Tom has long not been involved, and has now passed away, there are often still references to both him, and his promotions.

On the other hand, when Dr. Robert Atkins, the famous low carbohydrate diet advocate and integrative and complementary medicine expert, tragically passed away, and his huge medical practice had to be closed after his demise. His nutritional food company has finally gotten "back on its feet," but for quite a while were unable to thrive because there was no strong identity to take his place and advocate passionately on its behalf.

Loew's Corporation, the giant New York based conglomerate, and New York Stock exchange corporation, was founded by two brothers, Lawrence and Robert Tisch. These men led Loew's with their business accumen, and today their children maintain most of the top positions in the company, and the company has continued successfully. Of course, after Harry and Louise Hemsley had both health and legal difficulties, the value of their once-great empire diminished dramatically.

Family businesses must develop transition plans, and gradually integrate the next generation into the business, as well as continuously give the next generation more and more responsibility, and visibility. The companies that thrive continuously do this, while those that don't often suffer. A great example of a once-great empire that did not adequately plan for its founder's death was the Los Angeles Dodgers sports franchise. When Walter O'Malley died, there was inadequate estate planning in place, and the family was forced to sell the Dodgers to be able to pay substantial estate taxes.

As the adage goes, "Plan ahead. It wasn't raining when Noah built the ark."