Despite the number of mergers and acquisitions that have taken place in distribution the past few years, INDUSTRIAL DISTRIBUTION's 61st Annual Survey of Distributor Operations (p. 24) shows that 68 percent of distributorships are still family-owned enterprises.

For many people, this may be a surprising statistic. But it shows that distribution continues to be a highly fragmented business, with many small distributorships dotting the landscape in North America.

Yet, in order for these family-owned companies to continue, a proper succession plan needs to be in place. That is not happening in distribution, or in many other industries.

Laird Norton Tyee and its partners, the Austin Family Business Program at Oregon State University and the Albers School of Business and Economics, recently conducted an in-depth study of family-owned businesses and unveiled some stunning statistics: Fewer than 30 percent of the respondents have succession plans and fewer than 40 percent have a successor in line and are prepared for a transition.

This is especially significant because nearly 60 percent of the majority shareowners in family businesses are 55 or older and nearly 30 percent are 65 or older.

“Succession of the leadership will likely be the biggest challenge for most family businesses,” the study points out. “With today's longer life expectancies, there are often multiple generations of a family involved in the business at the same time. This adds another layer of complexity to the succession process.”

We've visited with and talked to many family-business owners over the years and have often been told they have no such succession plans in place. Some have said they're waiting to see how their kids “work out” first; others have said they would go outside the family “when the time is right.”

Succession planning can't be put off.

“A succession plan is critical to the future of a family business and should be established as soon as possible. A sudden loss of leadership, even at small and mid-sized businesses, can have profound repercussions,” the study reports.

That is something to remember.

jkeough@reedbusiness.com