How family businesses can plan for the future

Strategy and succession are critical for survival for many family owned businesses, and CPAs can play a key role. Family-owned businesses often struggle with strategic planning, beyond establishing yearly budgets. Less than half (45%) of family businesses participating in PwC’s 2017 U.S. family business survey said they have a strategy fit for the digital age. Meanwhile, just 23% of family companies participating in the survey have a robust, documented succession plan in place, and 46% of family business leaders said they are reluctant to pass on leadership to the next generation.

It shouldn’t be a surprise that planning for strategy and succession is one of the biggest problems encountered by family businesses. Jonathan Flack, CPA, PwC’s U.S. family business services leader, said first-generation family business founders often have succeeded because they trusted their instincts and decisions. That belief in their own abilities can cause them to resist the multiple points of view required for a comprehensive strategic-planning process, and it may cause reluctance to plan for the time when they will have to turn over the leadership to others.

CPAs advising family business owners—and CPAs who serve in finance and other capacities at family businesses—may have opportunities to nudge leadership toward planning for strategy and succession that can address these shortcomings and lead to a more successful, sustainable business.


Flack suggests that a strategic-planning process for a family-owned business should include a careful discussion and evaluation of:

  • The changing landscape of the current business environment.
  • Changes in consumer habits and needs.
  • The products and services that they currently offer.
  • Capabilities they possess that may be underutilized.

Family-owned businesses tend to get tunnel vision about their products and services and may not take time to step back and evaluate the real strengths and capabilities they have developed. The PwC survey showed that 87% of family businesses expect to achieve revenue growth over the next five years by doing what they’re already good at, and just 21% of family companies rank “being more innovative” as a very important business goal. Family businesses typically prepare budgets a year or two ahead of time, and they may evaluate potential investments and acquisitions, so they are thinking about some of the elements that are involved in strategic planning.

While failure to plan strategically can result in lost business opportunities, neglecting succession planning can cause a family-owned business to suffer either sudden interruption upon the unexpected death of a key leader, or a more gradual loss of the talent needed to sustain success. Problems with commingling of family and business resources, cash flow, equity, and debt can complicate succession planning in family businesses. Succession issues can be particularly challenging when multiple family members share ownership and responsibilities for the business without parameters that are clearly written out. If one cousin contributed most of the seed capital for the company, the second provided the big ideas that the company incorporated to succeed, and a third ran the operations successfully for 40 years, finding an equitable way for the next generation to continue the business may be difficult if succession hasn’t been mapped out well in advance.
It’s not as though most family-owned businesses don’t think about succession at all. More than two-thirds (68%) have a succession plan in place for at least some senior roles (see the graphic, “Family-Company Succession Plans”), and just 29% have no succession plan at all, according to the PwC survey. But in many cases, the succession plan is not fully developed or sustained over time, so it does not provide the security the business needs.


With the appropriate decision-making structure in place, a family-owned business can focus on strategic initiatives that are in everyone’s best interests. PwC’s survey report suggests that for effective strategic planning, family-owned companies should:

  • Focus on goals, not tactics. A strategic plan establishes the company’s goals and direction, while a business plan lays out the tactics needed to pursue the goals.
  • Invite input. People are more motivated to achieve goals that they helped create.
  • Be prepared for change. After examining the goals for the future and the present situation, you will create a business plan to execute the strategic plan. And you may discover that different approaches are needed to roles and the way the business operates.
  • Set a timeline and assign responsibilities. Although the CEO and board own the plan, other managers will drive specific elements of it, and they will need resources to accomplish objectives.
  • Measure and adapt. Key performance indicators help in evaluating progress.
  • Communicate. Share both the plan and the progress you are making toward accomplishing it. This can help build momentum toward your goals.


Family-owned businesses should consult experts, when necessary, to assist them as they strive to build their plans for strategy and succession. CPAs can play an important role for family-owned organizations as they attempt to create a successful structure. A successful company always is looking for the next talented leaders to emerge, and eyeing never truly end. They also provide opportunities to develop their next leaders for high-profile roles.