When you run a family business, you must start planning for your eventual exit as soon as possible. It is too late for an effective transition once you realize you are tired of the day-to-day grind and are ready to transition. 

Positioning a company for future succession fosters trust and communication among family members. Separating work and family life will always be difficult. 

Guccio Gucci established the Gucci Empire in Florence, Italy, in the early 1900s. The Italian luxury fashion house is well-known around the world for its handbags, footwear, accessories, makeup, fragrances, and home décor. 

While their fashion is widely recognized, the story of family feuds and power struggles has become a footnote in their history. Revisiting the near-collapse of an iconic brand teaches family owned businesses what not to do.

When Cuccio died in 1953, his eldest son, Aldo, took over the business and expanded it internationally. Gucci rose to prominence under his leadership.

When the third generation took over, problems began to emerge. The company’s previous two generations were defined by a unilateral vision. A family feud was brewing by the late 1960s. A power struggle between Aldo’s sons resulted in separate Gucci business ventures, sparking a legal battle within the family. 

Gucci had a negative net worth of more than $17 million by the early 1990s. 

One of the most debilitating threats to a family owned business can come from within the family. The Gucci family is a well-known example, but their difficulties highlight the importance of succession planning even in small businesses.

Families should actively seek out and plan for leadership and management succession. This is a fundamental requirement for effective risk management and governance. Here are three common scenarios and what you must consider in each to properly address leadership and management succession.