Typically, only 12% of family businesses reach the third generation, and as little as 3% make it past the fourth generation. According to PwC’s recent global survey of over 2,800 family businesses in 50 countries, these statistics stem from a lack of succession planning.

Only 15% of family firms have adopted a meaningful plan for their succession process. While family firms are successful at handling the everyday nuts and bolts of running a business and have a great history of setting ambitious long-term goals, they often lack the strategic plan they need to get from where they are today to where they want to be in the future. This “missing middle,” as PwC calls it, stems from a high proportion of family businesses being so absorbed in everyday operations that longer-term planning is neglected.

Succession planning is vital to bridging the gap that is the “missing middle.” For a family business to get beyond the third or fourth generation, it needs to ensure the objectives of the owners and the family are properly aligned over the medium to long term. The business needs to employ a strategic plan that been discussed, agreed upon, documented and communicated, and it needs do so as early as possible before an actual handover occurs.

To learn more about the importance of strategic planning in family businesses, view the PwC 2016 Family Business Survey here.