Two thirds of Australian family businesses do not have a succession plan in place despite the majority of family chief executives being over the age of 50 and nearly 20% being over the age of 65, according to a KPMG and Family Business Australia survey.
Seventy-two per cent of family businesses listed balancing family and business issues as the primary challenge for their family firm, and 67% said maintaining family ownership was a primary concern.
The biennial report, this year titled Performers: resilient, adaptable, sustainable and conducted in collaboration with the University of Adelaide's Family Business Education and Research Group, found 71% of families intend to retain family ownership, but around half would consider a sale if approached. First generation firms were more likely to consider a sale than family firms in their second generation or beyond.
Despite the challenges family firms faced, 83% believed the family business model had helped them mitigate current economic uncertainty, due to factors such as their long-term approach to strategic planning and the shared values and ethos of family members.
Eighty-eight per cent of family firms felt they performed better than their non-family counterparts in product and service quality. Seventy-two per cent believed they performed better in productivity and 69% believed they performed better in innovation.
International sales were the main area in which family firms did not feel they were outperforming their competitors, with only 23% believing themselves to be doing better on this score.
The desire to expand internationally rather than domestically ranked low as a business objective. The report noted, however, that a recent survey found family firms outperform non-family firms when it came to international sales.
Bill Noye, partner in KPMG Australia’s private enterprise division, said family firms have a strong commitment to the businesses and communities in which they operate.
“They are usually heavily invested both financially and emotionally which leads to the impetus for strong innovation and strong customer satisfaction, ultimately resulting in them outperforming their key competitors.”
When it came to governance 44% of family firms surveyed had a formal board of directors, compared to 39% when the survey was last conducted in 2011. In large family firms, with more than 200 employees, 72% had boards, while only 31% of firms with less than 20 employees had boards.
The report noted, however, that firms would be well-advised to establish a formal board of directors before multiple generations and increased numbers of shareholders and made ownership of the business more complex.
Philippa Taylor of Family Business Australia said family firms were often held back by a lack of a formal strategy and accountability.
“While some family members may feel their business is too small to have a board in place, the benefits of taking that step towards professionalisation have been proven beyond doubt,” she said.
The survey was conducted in April this year with 570 respondents.