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The business succession planning issue in Australia is not about to go away - in this year’s Family Business survey the age of owners managers shows 29 % of owner / managers of family owned SME’s are over 60 years and a massive 70 % are over 50 years old.
SYDNEY, NSW, Australia (prbd.net) 07/10/2010

"The business succession planning issue in Australia is not about to go away - in this year’s Family Business survey the age of owners managers shows 29 % of owner / managers of family owned SME’s are over 60 years and a massive 70 % are over 50 years"

The business succession planning issue in Australia is not about to go away - in this year’s Family Business survey the age of owners managers shows 29 % of owner / managers of family owned SME’s are over 60 years and a massive 70 % are over 50 years old.

Further analysis of the data provided in the recent 2010 MGI family and private business survey highlights an interesting challenge for business owners – like the remainder of the population the age of the actual businesses is also increasing and approaching “retirement:”

Age of businesses %

1-24 yrs 49.1
25-49 yrs 34.5
50-74 yrs 9.1
75-99 yrs 3.0
100 and over yrs 4.3

Interestingly though retirement planning for businesses (and not just their owners) is not on the horizon, in our work with clients overwhelmingly business owners primary outcome is for the business to continue on after them (and therefore not retire). Yet when the survey is analysed in more depth - the most critical issues facing family businesses – the vast majority are succession related – as would be expected as the age of the businesses and their owners is approaching “retirement:”

Communication between family members 39.7

Letting go of leadership/ownership control 39.7

Providing liquidity for family owners to exit 36.7

Securing adequate capital for growth and retirement 34.2

Choosing a suitable ownership structure for next generation 29.1

Selecting a leadership successor 25.3

Family conflict management and resolution 21.9

Developing effective processes for shared family control 13.9

Expectations of family owners not active in the business 7.6

Controlling factional orientation of family branches 2.1

This data clearly shows the lack of focus on business succession, exit planning, ownership transition planning and retirement planning has led to a large number of challenges – which combined with a rapidly approaching retirement / exit can lead to significant frustration and often an exit strategy that does not maximise business or retirement value.

This has been highlighted just this week in an announcement from the SEC in the US - In the past the SEC has supported the exclusion of shareholder proposals calling for succession planning transparency. Corporate Boards have been able to Rely on Rule 14a-8(i)(7) to exclude this type of information in the proxy. (Rule 14a-8(i)(7) allows corporations to exclude information relating to the day to day management of the workforce.)

Shareholder proposals for strategic succession planning are now getting support from the SEC. The SEC has changed its stance of classifying succession planning as part of the day to day operations. Succession Planning is now considered a risk item that needs to be addressed.

ABOUT THE AUTHOR - CRAIG WEST

M.Tax Law, M. Bus (Acct/Fin), B.Bus (Mgmt), CPA

Craig West is a strategic accountant who has built a specialised advisory practice focused on BUSINESS SUCCESSION PLANNING – www.successionplus.com.au Craig is a CPA and has been advising businesses in management, taxation and accounting issues for over 15 years. He specialises in business structuring and succession planning and has had extensive experience working with clients to improve their financial performance –with proven results.

Craig has conducted numerous seminars and presentations throughout Australia for Department of Industry, Tourism and Resources, MLC, L J Hooker, the NSW Department of State & Regional Development, NSW Chamber of Commerce and CPA Australia. He has appeared as an expert adviser with a weekly segment on the Alan Jones breakfast radio program in Sydney and was a founding member of Thought Leaders

Craig acts as a strategic business and financial mentor for business owners and has written three critically acclaimed books educating business owners on employee incentives, succession planning and asset protection and has recently been invited to complete a PhD in Business Succession Planning at Deakin University in Melbourne

About

http://www.successionplus.com.au

Contact

CRAIG WEST

Succession Plus Pty Limited Level 3, 50, York Street
Zipcode : 20000
1 3006 6547
1 3006 6547
succe01@yahoo.com
http://www.successionplus.com.au

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