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Family businesses need to act now to secure tomorrow’s legacy
Australian family businesses are emerging from the COVID-19 pandemic in a position of stability. As a result, they are far more optimistic about the prospect of growth over the next 2 years than their global peers.
But, what must they do to deliver on these expectations? We surveyed 120 key decision-makers in family businesses across Australia to delve deeper into the challenges they face and the opportunities that lie ahead.Download results highlights
The COVID-19 pandemic has been a major hit to economies all around the world. But as with the financial crisis of 2009, when it was family businesses who were the first to rebound, they will again lead the recovery in a post-COVID-19 world.
The reasons are twofold: trust and resilience. Family businesses are more trusted than other institutions and leaders and, in most sectors, they are more resilient. In Australia, we have witnessed firsthand the ability of family businesses to quickly pivot in order to adapt in times of crisis. They have also earned a reputation for prioritising their employees and the communities they serve.
But the world is changing, and family businesses must evolve with it.
Now is the time for family businesses to act to ensure their legacy for future generations.
What have we learnt?
Despite the recent downturn, Australian family businesses remain more optimistic about the future. Expansion and diversification are top priorities over the coming two years. However, when it comes to digital capabilities and sustainability, there are challenges ahead.
expect to see growth in 2021 (and 91% in 2022)
feel they do not have strong digital capabilities
expect to see a transition to the next generation within 5 years
do not currently have a sustainability strategy
Only 15% of family businesses in Australia feel that they have strong digital capabilities, showing less confidence than their global peers.
However, they are looking to catch up: improving their digital capabilities is their second highest priority over the next 2 years.
One-third of Australian family businesses expect that the next generation will become the majority shareholders within 5 years time. Yet only 25% of Australian family businesses have a robust, documented and communicated succession plan in place.
With 70% of business and wealth transfers failing when they occur between family generations, getting this right is critical.
We’ve found that issues related to sustainability are lower down the priority order for Australian family businesses. They are less likely to consider sustainability a key priority when compared to the global average.
With only 36% of Australian family businesses believing there is an opportunity for family businesses to lead the way in sustainable business practices (compared to 55% globally), Australian companies need to step up and do more to demonstrate their environmental, social and corporate governance credentials.
An impressive 91% of Australian family businesses expect to see continued growth into 2022, demonstrating more optimism than their pre-COVID-19 responses in 2018.
This confidence isn’t blind, but is instead based on sound planning and risk management: 83% are prioritising expansion into new markets or products and diversification over the next two years.
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