Family businesses throughout Australia could be facing a crisis when it comes to succession planning, as a new report finds many college students haven't considered taking over the reins.
The study, carried out by the University of St Gallen Center for Family Business and Ernst & Young (EY), showed just one in five college students have aspirations to take on their family's enterprise. Compared to four years ago, study authors revealed succession intentions have declined by as much as 30 per cent.
Oceania Family Business Leader at EY Ian Burgess explained many young people have career ambitions that lie beyond the family business. As a result, this creates some serious decision-making situations for the nation's firms.
"External experience can be invaluable, but the challenge for family businesses is how to ensure potential successors are willing to come back into the fold once they have gained it," noted Mr Burgess.
He urged companies to come up with a sound business succession planning strategy – something that commercial lawyers will be able to lend a hand with. This way, the current owners can outline the various career options, as well as which direction they see the business heading in further down the line.
The Queensland government advises there are various advantages to putting a formal business succession plan in place. Not only can it help maximise returns on investment, but ensure the company can smoothly be passed on to the next owner.
Perhaps most importantly, it may reduce disruption to a business. Periods of change can be difficult for some firms to go through, so it's reassuring to have a formal strategy to fall back on.
For assistance with business succession planning or any other aspect of commercial law, get in touch with McCarthy Durie Lawyers.