Family Business Blog
May 11, 2017
Recent Developments in the Family Business Market Place
Having worked with family owned and managed businesses throughout my working life; probably the one report that inspired me to focus exclusively in this space was the 1997 Australian Family and Private Business Survey.
The report identified that –
• The median age of owners of Family Owned and Managed Businesses was 52• 60% of the FOMB owners planned to retire in the next 10 years yet• Only 12% had a documented succession plan
It looked like an opportunity for a good succession planner to me!
More than a commercial opportunity, given that 3 out of every 4 non-government jobs is created by the family business sector, my concern was that if this transfer was not handled well, there would be a significant impact, not only on the wealth of individual families, but the Australian economy at large.
The statistic that frightened me though was the almost complete lack of planning. I believed then, as I do now, that there is a direct link between effective planning and a successful outcome.
However I found out quickly that succession planning is not a sexy topic. In fact it initially proved very difficult to get decision makers to take any interest in it at all. After all it involves addressing some very difficult issues and thinking about an uncertain future.It seems to have taken an inordinate length of time but over the past year or so I’ve noticed that the tide seems to be finally turning. My anecdotal observations were confirmed at the recent FBA Victoria State Conference where social researcher Michael McQueen of the Nexgen Group (www.thenexgengroup.com) pinpointed mid 2009 as the time when succession became a reality for baby boomers.
So if the recognition of the inevitability of business transfer has finally been acknowledged, the challenge now is to plan for the future. The sad fact is that in almost a decade and a half since that 1997 survey, the number of family firms who have documented their succession plan is now only approaching one in five firms. There’s a long way to go.
The report identified that –
• The median age of owners of Family Owned and Managed Businesses was 52• 60% of the FOMB owners planned to retire in the next 10 years yet• Only 12% had a documented succession plan
It looked like an opportunity for a good succession planner to me!
More than a commercial opportunity, given that 3 out of every 4 non-government jobs is created by the family business sector, my concern was that if this transfer was not handled well, there would be a significant impact, not only on the wealth of individual families, but the Australian economy at large.
The statistic that frightened me though was the almost complete lack of planning. I believed then, as I do now, that there is a direct link between effective planning and a successful outcome.
However I found out quickly that succession planning is not a sexy topic. In fact it initially proved very difficult to get decision makers to take any interest in it at all. After all it involves addressing some very difficult issues and thinking about an uncertain future.It seems to have taken an inordinate length of time but over the past year or so I’ve noticed that the tide seems to be finally turning. My anecdotal observations were confirmed at the recent FBA Victoria State Conference where social researcher Michael McQueen of the Nexgen Group (www.thenexgengroup.com) pinpointed mid 2009 as the time when succession became a reality for baby boomers.
So if the recognition of the inevitability of business transfer has finally been acknowledged, the challenge now is to plan for the future. The sad fact is that in almost a decade and a half since that 1997 survey, the number of family firms who have documented their succession plan is now only approaching one in five firms. There’s a long way to go.
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