“Three Generations from shirtsleeves to shirtsleeves”

As the business is passed from one generation to the next often: transfer costs are incurred, power struggles amongst siblings could arise, equitable distribution to family outside the business are concerns, and knowing how to operate the business disappears.

Initially, these businesses support a single household; as time passes, the second and third generations start families. This increase in households often dilutes the earnings if the business doesn’t grow. 

Often to compensate the family fairly, members must be a part of the business. Placing family members in roles, they don’t desire or aren’t knowledgeable about could create tension and failure. Often the best person for the job is replaced with a family member who is just capable.

Segmentation of family begins. Each generation has a different level of experience and challenge. Often the older generations remember struggles associated with starting a business. The younger generations have the pressure and obligation to keep the business operating while supporting retired family members. The challenges associated with generational dissention can cause resentment and jealousy.

Often family unit silos are also created. The second generation has children. Each member of the second generation, like most parents, looks out for his or her immediate children and grandchildren. Its often that the third generation will voice his or her concerns to his or her second-generation parent, who needs to handle his or her generation (Siblings). This process could create individual separate family silos within the family unit.