Family businesses make up over 70% of the businesses in Australia, but sadly less than 10% of them make it beyond 2 generations.
Family businesses have many strengths because of the bond and willingness to succeed of the key staff. Family businesses generally have shared visions and values, have a solid family support network, and good customer service standards as the ownership of the brand and products is more profound, as family members generally have a deeper connection to the success of the business.
Sources of conflict or tension may include decision-making processes, business strategy, managing growth, shared competencies of family members, financial stress, time commitments, unfair work effort/commitment compared with compensation, and many more. These issues are often heightened because of the emotional ties within the family which make running a family business that more complex.
Planning in family businesses may not be so formal, which in itself can lead to management issues, and we often hear new family business clients avoiding planning because of the confrontation it may bring. In these instances, having a third party mediator can often provide the necessary buffer to help families work through the issues objectively and find a good way forward.
Planning for the future of your family business is a critical step in ensuring its longevity – ensuring your business is one of the 10% that makes it beyond the current generation! This is called Succession Planning, and the majority of family businesses don’t think they need to start this process until the business figurehead is about to step down. This is not the case. In fact, to ensure risk mitigation, succession planning should be an active part of every family business, so each member of the business understands the way forward in any situation.
What would happen if the figurehead in your family business were to pass away unexpectedly? Is there a plan in place?
What if the next generation doesn’t want to inherit the business? Is the business capable of being sold? Who will run it in the meantime?
Do you have the skills within your family to take over the running of the business? If not, is there a mentoring plan in place to develop the next generation?
An experienced family business advisor can help your business work through the succession planning steps, and ensure every member of the family is included and fairly participates in the future planning of the business. This ensures the success of the business is protected, and each generation is protected no matter what the future may hold.
To start the process in your business, book a 1-hour free initial consultation with accredited family business advisor Wayne Patten today.