One of South Australia’s great strengths is that our business community is predominantly made up of small-to-medium-sized enterprises.
That means that the entrepreneurial spirit is alive and well and we have many people prepared to give it a go.
Close to 70 per cent of all Australian businesses are family-owned. In SA, there are thousands of families who have been working hard for decades and generations, perfecting their products and services, working to boost our economy.
For the past 180 years, Business SA has celebrated and supported large and small family businesses.
Dating back to the early days, some of our longest-standing members have been family-owned, including Coopers where sixth-generation Andrew Cooper is now carrying on the tradition, and Charlesworth Nuts, which is up to its fifth generation. There are also the smaller family businesses which have been working in harmony for decades. They include Bennetts Magill Potteries, which is also up to its fifth generation, and Allin Towbars, a second generation of sisters making headway in the auto industry.
Succession planning and ensuring that there are strategies in place to continue running a business after a chief executive, matriarch or patriarch moves on is essential for any organisation, whether it be family-owned or a small start-up finding its feet.
There are many things to consider, including who is best suited to take the helm, how assets will be divided, are the finances secure, what happens when family or board members clash, combined with future growth strategies and planning.
Land-tax aggregation changes could also throw a spanner in the works, as trust structures and landholdings are potentially affected in the near future.
According to a recent Business SA-William Buck Survey of Business Expectations, only 41 per cent of owners had a succession plan in place. Close to 25 per cent didn’t have a succession strategy, 22 per cent planned to hand it to the next generation, 21.8 per cent would leave it for key staff to take over and 19.3 per cent would sell for a clear exit.
The good news was that 55 per cent were very confident or confident in the next generation developing the business.
Change is in the wind, particularly as 45 per cent of respondents said they would activate succession strategies to either sell or hand down their business within five years.
With such a high number of businesses changing hands, the business ownership landscape in SA could be significantly altered in the short-term.
With an ageing population in SA comes an ageing generation of family business owners. It’s fantastic to see the younger generations stepping up, often when there can be significant pressure to carry on traditions.
However, no business owner should ever underestimate the need for succession and strategic planning to take their operations forward.
Martin Haese is chief executive of Business SA.
This article was originally published in the South Australian Business Journal on Tuesday, 1 October, 2019.