It was a full house at Newcastle Club last week when one of Australia’s leading experts in business succession planning visited the Hunter.
Dr Richard Shrapnel PhD is a Melbourne-based Executive Director of Pitcher Partners and a Chief Investigator in a recent global research report Succession Reset: Family Business Succession in the 21st Century.
Succession planning is an often overlooked but increasingly important part of running a successful business. This is particularly the case for small and family owned businesses and it is not just a Hunter problem. Richard’s research showed 84 per cent of people survey globally had not completed succession plans.
Richard made the important point that the traditional definition of business succession is no longer relevant. There is greater complexity and uncertainty for baby boomer business owners and the dramatic change in the role of sons and daughters in family businesses. Spouses and partners are playing a critical role in managing family businesses and in ensuring harmony amongst family members in the succession planning process.
Children don’t necessarily want to take over family businesses. More daughters are taking over family businesses than ever. Automatically handing over the business to “the son” is outdated and doesn’t necessarily reflect the best-qualified candidate. Blended families add further complexity.
The critical point from Richard’s speech for businesses was succession planning is something businesses need to work on from the start of their business, not just when they are thinking of selling or retiring. Forward thinking and expert help is critical for planning how and when a business owner will pass a business on.
Succession planning is also about ensuring sustained financial capacity to support a growing family, and the generational transfer of skills that create wealth and passion for business.
Richard’s eight principles of succession sum it up.
- Succession is not retirement
- Start with readiness, preparation is a must
- Set your goals before the journey
- Harmony is a must
- Price is not first
- Plan early, start earlier
- Equality is not equal
- Ask before you get lost, advisers are important.
The research was conducted in association with Swinburne University as part of a four year project canvassing 2,650 people across 56 countries and in nine languages. View the video here.
Greg Farrow is the Managing Partner of Pitcher Partners Newcastle, Maitland and Singleton. He is a Fellow of the Institute of Chartered Accountants, Fellow of the Tax Institute of Australia and Graduate of the Australian Institute of Company Directors.
The Hunter firm (formerly Farrow Wyatt) has been serving Hunter clients for more than 40 years. Its six partners and 50 staff have strong local knowledge, experience and expertise across a range of industries. Pitcher Partners is a national association of accounting, audit and advisory firms.