When it comes to the preservation of family businesses, the numbers are not encouraging. Only one-third make it to the second generation, and less than 10% of that one-third survive into the third generation.

That means company founders have only a 3% chance of their grandchildren owning the family business. These are among the statistics that prompted Thomas Deans to write Every Family’s Business: A blueprint for protecting family business wealth, published this year, and to create a professional practice teaching family business wealth strategy. Deans also draws on personal experience: he was the head of his family’s large business for about a decade. Described as a cross between The Wealthy Barber, the 1989 best-seller by David Chilton, and The Secret, the 2006 motivational book and DVD — this book tells the story of two families who went through the process of exiting a family-owned business: one with great success and harmony; the other with destructive consequences.

Set against the background of a flight to Barbados to invest the proceeds from the sale of their respective businesses, William (the “beneficial son of a wise father”) and John (the “taciturn patriarch of an unfortunate son”) share their respective experiences, with William extolling the virtues of the “12 Questions” his father insisted they review annually in preparation for the parent’s eventual exit from the business. We don’t actually get specifically to the 12 questions until the end of the book, but the lessons to be learned from them begin right away.

The book explores whether or not children should be involved in a family business and in what capa-city. Too often, company founders inject unqualified or disinterested offspring into their firms, believing that they are doing them a favour. The probable outcomes, however, are lack of commitment, under-performance and a vacuum created by the absence of the founder’s passion for the business.

More important, a sense of entitlement can develop: in this situation, a child comes to believe they should inherit the business on terms that bear little resemblance to those the founder could get for the company in the marketplace. In many instances, in fact, they expect to assume control with little or no personal investment and many parents encourage that notion by putting in place a program that grants increasing ownership over time in return for the mediocre performance of an uninspired progeny.

“If there was only one key message I could stress,” Deans told me in an interview, “it would be how important it is for succeeding generations to risk their own capital in the business. This resonates very loudly with the business owners who have attended my presentations. Aggressive gifting of shares destroys many companies. When a child risks their own capital, it authenticates the transfer of wealth.”

Another theme of the book centres on the relationship between families and a family-owned business. Some consultants suggest it is imperative to separate the two.Deans argues, however, that it is impossible and likely destructive to do so. Anecdotally, a number of situations emphasize the difficulty and potential for conflict that arises when there is a failure to recognize that the family and the business are inevitably intertwined, even when it does not appear to be so on the surface.

So, what are the “12 Questions”? As I mentioned already, they aren’t formally presented until the very end of the book and, in fact, as I kept reading, I began to wonder if we were ever going to get to them. (I had to fight the temptation to flip through the rest of the pages to see if they were there.) The experience was a bit like waiting for the final plot of a movie to unfold, and I confess I almost feared I was being set up for a sequel book wherein the wisdom of the 12 Questions would finally be revealed.

Kindly, they do appear, with commentary, in the last chapter, along with a handy fill-in-the-blank version for easy reference. Space does not permit me to list them for you here; besides, I’d like you to enjoy the same suspense I did.

More important, however, I want to encourage you to read this book. It has an obvious application for clients who are involved in a family business, and you may want to get copies for them. You’ll also want to study the potential pitfalls and lessons so you can provide good counsel in this area.

@page_break@And, finally, you may just find that this book’s lessons apply to your own business — whether you are in the process of or contemplating having your child join you in your practice. It will work for partnerships as well. IE