Parents wary of handing business over to kids

FAMILY business owners are keen to hand the baton to the next generation but are concerned about their kids' abilities and motives, a survey shows.

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FAMILY business owners are keen to hand the baton to the next generation but are concerned about their offspring's abilities, a survey shows.

KPMG and Family Business Australia surveyed almost 700 of the nation's family businesses and found 57 per cent were concerned about the motives of their potential successor.

The ability of their successor was also a concern for 63 per cent of respondents.

KPMG family business practice head Bill Noye said many family business owners clearly had a strong sense of ongoing stewardship.

"A sense of stewardship does not disappear simply because an incumbent reaches an acceptable retirement age, or the next generation is ready to take control,'' he said.

"This survey, exploring the current thinking of family entrepreneurs, is highlighting that the motivations for succession are often impacted by the ambiguous nature of relationships with children and other family members.''

The survey also found more than 60 per cent of respondents believed maintaining control of the family business was a key priority, while 88 per cent thought family values improved the way a company operated.

Family Business Australia chief executive Philippa Taylor said control in a family business was often aligned with a sustained competitive advantage.

"This grows from a personalisation of relationships, financial flexibility and resilience and superior service, quality and innovation,'' she said.

"The typical family business is more likely to accept a prolonged period of low or negative returns in order to execute their strategies.''

The survey also found:

• THE future strategy of the business was ranked as the most likely cause of conflict in the family business.
• A FAMILY council was in place at 31 per cent of firms, while 20 per cent had established a family constitution.
• MALES had the title of chief executive in 86 per cent of companies.
• WITHIN the next five years, 24 per cent expected to pass on their business to the next generation.

Mrs Taylor said another interesting finding was that 61 per cent of respondents paid family members the same as non-family and 14 per cent said they paid family less.

"The contribution of family businesses to the Australian economy is enormous, yet for all their importance, our knowledge and understanding of this sector is relatively limited,'' she said.

"This survey provides a bigger picture on the challenges facing a family business and how we can better help them to professionalise.''