A recent report from PricewaterhouseCoopers (PwC) has revealed the significant challenge that family businesses face when it comes to succession planning and the commercial agreements that accompany this process.
Among the more than 2,000 family businesses that were surveyed as part of the report, only 16 per cent reported having a robust succession plan in place. What's more, only 53 per cent have a succession plan for some senior positions, highlighting the gap in capabilities that affects many workers in this space.
Very few companies have also taken the time to write down these plans, with only 30 per cent of companies having drawn up a succession plan for these positions.
Henrik Steinbrecher, Network Middle Market Leader at PwC, suggested this imbalance was a significant obstacle to a successful succession for family companies.
"A plan that is not written down is not a plan; it's just an idea. And this is an issue family firms must address with the same commitment and energy as they are devoting to professionalising other aspects of the business," said Mr Steinbrecher.
PwC went on to warn about the importance of professionalising a family business, by introducing formal communication channels and decision-making tools. By combining a family focus with a professional internal structure, PwC suggest that firms can effectively prepare themselves for future growth.
While the survey pointed to a number of challenges that small businesses are facing, there were some good signs to come out of the survey. Among those surveyed, 72 per cent are looking for ways to introduce digital technologies into their internal and external operations, while 68 per cent are exporting overseas.
For any business that is looking to professionalise its commercial agreements, especially its succession planning, it is important to consult with a commercial lawyer. They will be able to advise on the best way to structure your business so it is prepared for long-term growth.