Family businesses are unique. They’re built on a foundation of legacy, relationships & shared purpose. But despite these strengths, many family businesses struggle when it comes time to hand over the reins to the next generation.
Statistics paint a sobering picture: while around 70% of family businesses aspire to pass ownership to the next generation, only 30% succeed in doing so. And by the third generation? That number drops to less than 15%. So why does something as natural as passing a business to family members often fail?
The Real Challenges Behind Family Business Succession
Succession isn’t just about picking the next leader. It’s about managing the complex interplay of family, ownership & business – and getting alignment across all three. This is where the Harvard 3 Circle Family Business Model becomes an invaluable tool.
The model highlights the three overlapping circles that exist in every family business:
1. Family – The people connected by blood or marriage.
2. Ownership – The individuals who hold financial stakes in the business.
3. Business – The company itself, its employees, and day-to-day operations.
Issues arise when these circles aren’t properly defined. Here’s how they commonly play out:
- Lack of Clarity Around Roles – Is the eldest child automatically the next CEO? Should all family members have a say in business decisions just because they’re family? When these questions aren’t answered clearly, confusion & conflict arise.
- Emotional Decision-Making – Unlike corporate businesses, family businesses are deeply personal. This can lead to decisions based on feelings rather than what’s best for the business.
- Resistance to Change – The founding generation may struggle to let go, fearing the next generation won’t run things ‘the right way’ (aka, their way!).
- No Clear Path to Leadership – Successors often aren’t properly prepared for leadership. Without training, mentorship & real business experience, they’re set up to fail.
How EOS Helps Smooth the Transition
This is where EOS (the Entrepreneurial Operating System) provides clarity & structure. EOS isn’t just a business framework; it’s a toolset that helps family businesses create a seamless, drama-free transition from one generation to the next. Here’s how:
1. Vision: Aligning the Family & the Business
- The EOS Vision/Traction Organiser (V/TO) helps families clearly define their core values, core focus & long-term vision.
- It ensures that both the outgoing & incoming generations agree on the direction of the business.
2. Structure First, People Second
- The Accountability Chart ensures the right people are in the right seats – based on capability, not family ties.
- This removes entitlement & forces businesses to ask, ‘Who is actually best for this role?’
3. Healthy Conflict & Open Communication
- EOS teaches family businesses how to have open, honest & healthy discussions through tools like the L10 Meeting.
- This prevents small tensions from becoming major family feuds.
4. Disciplined Execution
- Rocks (90-day priorities) help the business stay on track, even during a leadership transition.
- Scorecards ensure key measurables are in place so performance is based on results, not emotions.
Making Succession Work: A Case Study
A second-generation family business I worked with faced all the classic succession challenges: an unclear leadership handover, conflicting family expectations & a lack of structure. The founder was reluctant to step back, and the children weren’t fully prepared to lead. Using the 3 Circle Model & EOS, we:
· Defined clear Family Governance rules.
· Built an Accountability Chart that placed people based on skills, not birthright.
· Set up L10 Meetings to create a structured communication flow between generations.
· Implemented a transition timeline, allowing the founder to gradually step away while mentoring the next leaders.
The result? A smooth transition, clear roles, and a thriving business that’s still in family hands today.
The Bottom Line
Family business succession doesn’t have to be a messy, emotional battle. By recognising the complexity of the 3 Circle Model & using the EOS tools to provide structure, clarity & accountability, family businesses can set themselves up for long-term success – across generations.
If your family business is facing succession challenges, now is the time to get clear on your vision, roles & structure. Don’t wait until tensions rise – take action today.
Download the EOS tools for FREE here - FREE EOS Toolbox
Need help? Let’s talk about how EOS can bring clarity & structure to your family business transition. Email me on debra.chantry-taylor@eosworldwide.com
About the Author
Debra Chantry-Taylor is a Certified EOS Implementer, Family Business Advisor & Family 3-Circle Solution Guide. With decades of experience working with family businesses, she helps leadership teams gain clarity, resolve conflict & build sustainable, scalable businesses. Having worked within large family businesses & coached hundreds of entrepreneurs, Debra understands the unique challenges family businesses face – and how to overcome them. Passionate about helping business owners lead better lives, she brings energy, insight & practical tools to every engagement.
Business Action offers structured business coaching programmes, leadership coaching, business masterminds & EOS Implementation by accredited EOS Implementers.
