Recently, while serving as a judge at a business competition, I was chatting with another judge about my work when she smiled and said, “Oh, how nice. You work with family businesses. That must be lovely.”
I knew exactly what she meant. Like many people, she pictured a local bakery, a neighborhood hardware store, or a small third-generation farm where everyone gathers around the kitchen table to make business decisions.
Those businesses certainly exist, and they are an important part of our communities. But the assumption that family businesses are synonymous with small businesses is one of the most persistent misconceptions in the corporate world.
The reality is far more impressive.
Family-owned enterprises generate about 70% of global GDP and account for around 60% of worldwide employment. They range from local startups to multinational corporations with operations spanning continents and revenues measured in billions of dollars. Some of the world’s most recognizable brands—from automotive manufacturers and luxury goods companies to media organizations and food producers—remain family controlled. Perhaps the names Wal-Mart, Mars Bars and Ford, just to mention a few, ring a bell.
Yet despite their enormous economic contribution, family businesses often receive less attention than publicly traded companies or venture-backed startups. They quietly build wealth across generations, create stable employment, and invest in their communities with a long-term perspective that is increasingly rare.
The Family Difference
What makes many family businesses different is not their size. It is their mindset. Public companies are often judged by quarterly earnings and short-term market expectations. Family businesses frequently make decisions with the next generation in mind. They also consider employees every step of the way. They ask different questions: Will this investment strengthen the company for our children and grandchildren? How do we preserve our values while adapting to change? What legacy are we building? What is our culture? How can we make non-family team members be part of all that we are achieving?
That long-term view can be a tremendous competitive advantage. Research consistently shows that family businesses often outperform their peers during economic downturns because they prioritize resilience over rapid expansion and relationships over short-term gains.
However, the same qualities that make family businesses successful can also create their greatest challenge: Succession.
The Succession Challenge
Every family business will eventually face a leadership transition, whether through retirement or unexpected illness. Unfortunately, many organizations spend years strategizing over taxes, operations, and growth while devoting little time to preparing for the moment when leadership changes hands.
Succession planning is often viewed as a single event: choosing the next CEO or transferring ownership. It is, in fact, an ongoing process that should begin long before anyone plans to step away.
Effective succession planning develops future leaders, clarifies governance structures, documents institutional knowledge, and creates opportunities for meaningful conversations about family expectations and business strategy. It addresses not only who will lead but also how decisions will be made, how conflicts will be resolved, and how family values will continue to shape the organization.
The businesses that navigate generational transitions most successfully understand that succession is about continuity rather than replacement. They invest in mentoring, encourage the next generation to gain outside experience, and establish clear roles and responsibilities before a crisis forces difficult decisions.
Equally important, successful families recognize that succession planning is about people as much as process. Every transition involves identity, relationships, and emotion. Founders may struggle to let go. The next generation may feel pressure to live up to expectations or have uncertainty about taking the reins. Open communication and thoughtful planning help transform what could be a source of conflict into an opportunity for renewal.
In working with family enterprises at many different stages of their journey, one lesson stands out above all others: the strongest succession plans are built long before they become necessary.
The conversation starts with a simple question: What do we want this business to look like in 10, 20, or even 50 years?
Answering that question requires more than financial planning. It requires intentional leadership development, shared vision, and the willingness to discuss topics that can feel uncomfortable but are essential for long-term success.
Family businesses are not defined by their size. They are defined by a commitment to stewardship—a belief that today’s leaders are caring for something that will outlast them.
And perhaps that is their greatest strength. Because when succession planning is approached with purpose and foresight, a family business becomes more than a successful company. It becomes a legacy capable of creating opportunity, employment, and impact for generations to come.
Michelline Dufort is executive director of the CEO & Family Enterprise Center at the Peter T. Paul College of Business and Economics at the University of NH in Durham. She can be reached at 603-862-1107 or Michelline.dufort@unh.edu.
