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Family Business – Or Not?

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Family Business – Or Not?

By , February 6, 2009

According to some recent research by AXA and Monash University, family business and succession are not always a healthy mix – in Victoria alone of third or forth generation family businesses:

    • 33.7% Have a succession plan for the future ownership of the business
    • 15.6% Have an ownership succession plan in writing
    • 9.4% Have an ownership succession plan implemented

 

  • 18.1% Have a succession plan for the future management of the business
  • 14.2% Have a management succession plan in writing
  • 12.1% Have a management succession plan implemented
  • 91.3% Do NOT have a documented family constitution
  • 26.2% Do NOT have a management structure in writing
  • 31.3% Have a performance appraisal system for family member.

Some amazing numbers when you look at them carefully – but why?

One of the least examined issues around succession planning is the interpersonal and emotional upheaval that can result. For many business owners this is a much bigger decision that moving house or deciding which school to send a child to. Business owners typically spend years of blood sweat and tears at great sacrifice to build up a business – for many their largest asset. The decision of how to best realise that value can be heart wrenching.

Once we understand this is a big aspect of dealing with succession in any business and a great reason for the plan to be implemented early in the business life cycle, we can map out time and resources during the succession process ( over several years ideally ) to provide support to the busienss owner in dealing with the emotional factors. I have seen several technically brilliant succession plans fall apart because this issue has never been properly addressed.

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.