On the occasion of today’s Australia’s National Family Business Day, global assurance, tax, and advisory firm Grant Thornton has released its 2023 Family Business Survey which reveals the key challenges and focus areas for Australian family businesses.
With family businesses accounting for around 70 per cent of all Australian businesses and employing approximately half of the country’s workforce, the goal of the research was to highlight the challenges and opportunities for the sector.
The survey listed down the top five challenges for Australian family businesses, namely:
- Improving cashflow (91 per cent).
- Recruiting, retaining and upskilling family members and employees (86 per cent).
- Succession planning (72 per cent).
- Developing/launching new products (70 per cent).
- Expanding into new markets (69 per cent).
Despite these challenges and predictions that Australia could be heading into a recession, the research reveals that 67 per cent of family businesses are very optimistic about the current economic outlook, particularly in relation to the development of new products and expansion into different markets showing their resilience and adaptability.
The survey also shows that Australian family businesses have a clear focus on growth, given their focus on improving cashflow, developing new products, and expanding into new markets. However, it is also finds that family businesses are underutilising research and development grants and other government assistance, with majority of family businesses surveyed (between 50 per cent and 72 per cent) saying that accessing government support was deemed generally not important.
Succession also remains a key priority for family businesses with 72 per cent of family businesses rating this as important for their business in the next 24 months. Only 15 per cent of family businesses have no plans in place for succession, with 43 per cent currently formulating a succession plan, and 38 per cent already implementing a plan.
“The top two challenges are interesting as they can be linked to the current economic climate where the majority of Australian family businesses are looking to improve cashflow, while also attracting and retaining the best staff,” Kirsten Taylor-Martin, Partner & National Head of Family Business Consulting at Grant Thornton, said. “Succession planning comes in at number three and is still such an important issue for family businesses as it can be extremely challenging to balance maintaining family relationships and fairness while encouraging business growth.”
“Government grants appear to be an untapped resource for family businesses indicating there is a need for education, simplification and support for understanding available benefits, particularly for innovative family businesses, like the R&D Tax Incentive and Government Grant programs,” Taylor-Martin added.
Analysis of the 2023 Family Business Survey results illustrated four key themes for family businesses:
- Leaving your legacy – there is a mindset change between generations and whether they see themselves as owners or stewards of the family business. From the 2nd to 3rd generation, there is an opportunity for the family to discuss their involvement in the community and the impact they wish to make. As the family moves from third to fourth generation, the focus shifts to the family legacy.
- Succession planning – this continues to be one of the major concerns for family businesses in 2023. The challenges include maintaining family harmony, fairness and ensuring the business prospers.
- Future growth – sustainability and ESG might not yet be fully resonating with family businesses. It is clear family businesses are guided by their family values not terminology and mandatory standards.
- Embracing diversity – the potential for growth when it comes to diversity in family business is currently untapped. Similar to sustainability and ESG, there is a disconnect with many family businesses not fully realising the power of diversity and how it can contribute to expansion and longevity of the family business.