Lack of succession plans mean many small firms may die with their owners
Lack of succession plans mean many small firms may die with their owners
Some industry specific associations could have their members drop to 10% of previous levels, warns one business consultancy, as members retire without replacement. Family Business Consultants Network Chair John Kenfield warns that family SMEs will suffer disproportionality from ageing:
“Surveys, experience and industry reports estimate that the average age of Australia’s SME owners and leaders is 60+ and that an alarming 76% don’t have formal succession plans or transition strategies in place to ensure business continuity. And this is despite the fact that most owners need to transition profitably out of their businesses to fund their retirements – whether through family succession, sale to management and staff, or some other form of disposal”.
Owners often feel that their children are either unwilling to take on the running of their business, or are unable to buy the business and thus provide a nest egg, FBCN claims. Owners often reduce investment into the business, to get cash while they can, causing good employees to leave and causing a domino effect.
Even when the next generation are prepared to take on the business there are a number of potential obstacles, notes Kenfield. “Another serious complication occurs when owners don’t have well-structured asset ownership, a problem that’s often matched with little or no wills and estate planning. In an increasingly litigious society, the old joke has become a sad fact, that: “where there’s a will there’s a relative!”, and all too many families are finding themselves drawn into protracted, costly and destructive disputes that rarely produce any real winners”.
FBCN works with industry associations to run programs for exit-planning, including bringing in those who have successfully handed-down businesses as mentors.
Some industry specific associations could have their members drop to 10% of previous levels, warns one business consultancy, as members retire without replacement. Family Business Consultants Network Chair John Kenfield warns that family SMEs will suffer disproportionality from ageing:
“Surveys, experience and industry reports estimate that the average age of Australia’s SME owners and leaders is 60+ and that an alarming 76% don’t have formal succession plans or transition strategies in place to ensure business continuity. And this is despite the fact that most owners need to transition profitably out of their businesses to fund their retirements – whether through family succession, sale to management and staff, or some other form of disposal”.
Owners often feel that their children are either unwilling to take on the running of their business, or are unable to buy the business and thus provide a nest egg, FBCN claims. Owners often reduce investment into the business, to get cash while they can, causing good employees to leave and causing a domino effect.
Even when the next generation are prepared to take on the business there are a number of potential obstacles, notes Kenfield. “Another serious complication occurs when owners don’t have well-structured asset ownership, a problem that’s often matched with little or no wills and estate planning. In an increasingly litigious society, the old joke has become a sad fact, that: “where there’s a will there’s a relative!”, and all too many families are finding themselves drawn into protracted, costly and destructive disputes that rarely produce any real winners”.
FBCN works with industry associations to run programs for exit-planning, including bringing in those who have successfully handed-down businesses as mentors.
