With the aging of the Australian population, one of the biggest problems facing many Australian retailers and other small businesses is the need for the original owner to plan for retirement and to ensure an orderly succession of the business to the next generation.

History tells us that family owned businesses fail more often than they succeed with the average life-cycle of a family business being 27 years, which means that all too many family orientated businesses never make it past the first generation.

Many Australian small businesses tend to put succession planning on the back burner and this is probably the reason why 70% of small family businesses never make it to the second generation.  Only 13% are run by grandchildren and less than 3% are run by great grandchildren.

These statistics show that that much of the family wealth created in the first generation is frequently lost by the third generation.

There are many reasons put forward for this phenomenon:

• There is often a perceived conflict in values and beliefs about leadership styles;

• Succeeding generations may experience family problems like divorce or the death of a spouse which become business problems and these new managers often opt out of taking leadership and management roles, while still maintaining a sense of entitlement through their ownership.

The only way for a sustainable cross generation family business to succeed is to have continuity.

This must be consciously led and managed by:

• Maximising effective communication through shared values and building a sense of community;

• Growing the family’s human and intellectual capital;

• Mentoring the existing family members to eliminate management weaknesses.

Excerpt from Time to Go - Planning for Succession