Family businesses are those where '... two or more family members work in the business and share or expect to share ownership, and want to pass ownership on to the next generation' - Dr. Dennis Jaffe, Adelaide Thinker in Residence 2007.
Family businesses are a vital part of South Australia's economy and culture. They comprise about 60% of all businesses and employ more than half of the state's private sector workforce.
On this page:
Family business issuesFamily succession planningAssistance and programsFamily business issues
As well as the normal challenges of running a business, family businesses face specific issues around managing the complex relationship between family and business.
- Work-life balance - business infiltrates all aspects of family life.
- Conflicting expectations and work ethics of different generations.
- Rivalries - family members who don't work well together.
- Succession planning - older generations not planning for succession or not willing to let go and transfer power or control.
- The younger generation not wanting to join the family business.
- Internal or external succession - succession within the family or recruitment of a professional manager?
- How to diversify as a family into another business.
- The future direction of the business.
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Succession planning
There are succession and transition planning issues specific to family businesses.
First is the question of whether succession by a family member is the right option for the business. Commercial implications need to be balanced against the desire to keep ownership or control in the family.
Second is the possible need to consider management and ownership transitions separately.
Well before retirement family business owners need to answer these key questions:
- Does your preferred successor really want to take over?
- Does he or she possess the necessary skills and qualifications?
- Is there someone else within or outside the business who would be a better choice?
- Will nominating your preferred successor create conflict - eg sibling rivalry or conflict with other employees?
- Will family succession provide sufficiently for your future?
- If there are ownership issues to resolve and is the current business structure appropriate for the future?
The best way to hand over management of your business to your family is to nominate a single successor from your children or other relatives involved in the business. However, this won't always be a practical or realistic option.
If nominating more than one successor is your only option, you need to at least ensure that the co-successors have a similar vision for the business and a commitment to it. To minimise the potential for conflict it may help if you:
- allocate separate responsibilities to each successor
- appoint a board of directors, including independent members
- establish a formal dispute resolution process.
Other exit options you may need to consider include:
- a trade sale
- management or staff buyout
- public float via the stock market
- winding up the business.
Your accountant, lawyer and other professional advisers can help with these matters.
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Assistance and programs
Find out about two key support networks that can help you with your business - including specific family business issues - through guidance, information and programs.
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More information
On this site
Succession and transition planning
Other websites
Help for family businesses - Family Business Australia
The Future of Family Business in South Australia - report by Dr Dennis Jaffe, Adelaide Thinkers in Residence, Department of Premier and Cabinet
Downloads
Family business (PDF 240KB) - BizFacts