Family-owned and operated businesses account for seventy per cent of the two million-plus small businesses in Australia. However, a recent survey by PWC has found that Australian family-business owners are twice as likely to sell instead of hand over to the next generation compared to their international counterparts.
The reason for this is that the next generation don’t want to take over the Family business. Having grown up seeing mum and dad working long hours, always being stressed and for little reward; they prefer to make their own way – they simply don’t want the same life that their parents have. Increasingly, this means that owners seeking an exit from their business have to consider either a straight sale or a slow winding down.
With an average age of 45+ (according to the Australian Bureau of Statistics) the owners of family businesses are caught up in a daily cycle of long hours, increasing frustration and overwhelm, few rewards and poor lifestyle. They are so trapped that they have to define their identities in terms of their business. And their children want their identity to be defined by more than just the work they do or the business they run.
Family business owners often get caught up in this debilitating grind because they have not mastered the shift from entrepreneur to manager, and have yet to figure out how to scale their own thinking so they can grow their business without taking it backward. Most of all, they don’t know what to do to make taking over the Family business an appealing idea for their children.
But there are steps they can take that will not only improve their lifestyle, make their business more efficient but will make taking over the family business a far more attractive proposition to the next generation.
The lack of desire for the next generation to take over Mum & Dad’s business is increasingly common – but it needn’t be. Most consultants speak about the need for succession planning, and it is important, but before it can take place there has to be a desire for the owner to pass the business on and for the next generation to want to take it up. By improving the mindset of the owners, hiring some relevant staff and improving the systems a Family Business becomes less of a drag and more of an enabler of lifestyle.’
In order to make taking over the business more attractive the first step for the Owners to take is to look at how to increase their profitability, decrease their time at work and find the best way to reduce overwhelm. This usually means dispassionately reviewing where the business is today, where they want it to get to and what resources are needed to bring the two together”
The key to this is systemising the business so it runs more effectively, and add the right type of staff with a net effect of enabling the Owner to increasingly disengage from the daily grind and focus more on the strategic big picture needs of the business. Adding systems and relevant staff will also enable them to have more “me” time, and a better lifestyle – both of which will go a long way towards making taking over the business a more attractive proposition for their children.
Hiring an accountant or even a CFO instead of a bookkeeper; a marketer instead of the office junior, having the relevant staff will allow them to step away and focus more on gaining scale as opposed to the day to day grind.
Geoff Hetherington, Founder, The Elite Business Institute
