Succession Planning: A Must for Family Businesses in Australia!

Family businesses play a crucial role in Australia’s economy, representing approximately 70% of all businesses and employing around 50% of the workforce. 

 

Small and family enterprises contribute over 32% to Australia’s economy.

Family businesses have a significant impact on the Australian economy. With the current economic landscape tougher than in previous years, preparing for the future is more important than ever. Having a structured succession plan is not just a priority—it’s essential.

As Australia’s population ages, hard questions arise for family businesses still managed by senior custodians. 

Who will take over these businesses?

In 2023, around 40% of Australian family businesses were either undergoing or planning for a generational transition.  Moreover, nearly 50% of small business owners are aged 50 or older, a figure that has steadily increased since 1996.

Currently, 22% of small businesses are owned by individuals over 60 years old. The critical question is: what will happen in the next 3 to 5 years? For these businesses, succession planning is a top concern and vital for maintaining profitability and smooth operations. 

A well-structured succession plan ensures a seamless leadership transition and helps prevent financial instability, employee turnover, and internal disruptions.

Preserving the legacy and future of these companies is paramount. According to the Grant Thornton Family Business Survey 2023, as family businesses extend through multiple generations, a sense of ownership tends to diminish. 

For example, 67% of third-generation family members see themselves as stewards rather than owners. This suggests that third-generation owners may be less committed to sustaining the family business compared to their predecessors.

50% of family business owners are considering preparing their business for sale.

 

The key questions are: who is investing in these businesses, and how can family businesses trust potential buyers or investors?

Younger generations are showing less interest in running traditional small businesses compared to the past. Many view these businesses as less appealing than the modern “tech” or digital media companies. 

For families who own what might be considered a “boring” business, planning for what’s next is an absolute must.

To attract potential investors or buyers, it’s essential to have a clear and structured plan in place, including an information memorandum. Many of these businesses have been in operation for over 30 years, making it crucial to preserve their legacy—not only for the family but also for the Australian economy.

At Venture.ly Direct Investment, we partner with small to medium-sized business owners to help them plan for the future. Whether the goal is to keep the business within the family or find a trusted investor or buyer, planning for an exit or transition should start now.

Without a succession plan, some long-standing businesses may close their doors, missing out on opportunities to capitalise on their assets and contributing to local economic loss. 

Even if your business doesn’t align with current market trends, beginning with a valuation and exploring selling opportunities can be more beneficial than simply closing down.

We are here to help you find the best solution for your family business. Book a free discovery call with us to learn how we can support you with succession planning, business strategy, or direct investment.

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