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A firm director believes there is an untapped succession planning opportunity in which firms with small-to-medium business clients can take advantage.
Speaking to Public Accountant, Hoffman Kelly director Michael Kerwin thinks that, with an ageing population and with many SME owners coming up to retirement age, this is leaving a huge supply of small businesses with the demand perhaps not necessarily there.
He said his firm is really encouraging clients who are business owners and over the age of 50 to really focus on succession planning.
“A lot of the next generation aren't interested in taking over the family business. I do feel there's going to be supply outweighing demand. Particularly some of those ‘traditional’ businesses where perhaps they are not going to be highly sought after as what people might think.”
“I see that as a big problem for that generation, but for accountants I see that as a great opportunity to get on the front foot and prepare your client to either have a business study already and stand out from the crowd or start really focusing on some succession planning.”
A recent survey from KPMG, in collaboration with Family Business Australia, found that only 27 per cent of family businesses have a succession plan in place for its owner/leader.
Further, 64 per cent of the family’s next generation don’t believe they are ready to take over the family business.
KPMG Enterprise partner Bill Noye said optimal outcomes are achieved when a balance is achieved between the business’ financial objectives and the positive relationships the family establishes with each other and their communities.
“The more positive the socio-emotional wealth of the family, the more likely business owners are to pass the business on to a family member,” Mr Noye said.
“Strong governance is also important for growth and family businesses are more likely to have a structure in place to govern the business rather than that for the family.
For example, almost half have a board of directors while just over one-third have a family council. Our survey shows that it’s important to address this discrepancy head-on.”