Succession Planning and Management Blog

The latest annual survey prepared by FBA and KPMG has been released and has some interesting findings on Family Business and succession issues :
Just a little over 60% of all survey respondents highlighted retaining family control of the business is either a high or very high priority for them at the present time. Several other succession related issues also rated highly including preparing and training successors before succession actually takes place, selecting a successor, selecting family members for positions in the business and dealing with rivalry among potential successors in the family.

In terms of major reported causes of conflict in family businesses – future strategy, competence of family members working in the business and succession issues accounted for 44% of all reported conflict causes. Over 31% of respondents reported they had no formal mechanisms in place to resolve family business conflicts.

One area of considerable concern were the arrangements in place to manage the family/business interface – 65% of respondents said they had no succession plan for the CEO, 72% also said they had no succession plan for other senior positions held by family members and almost exactly half had no estate plan (wills ) for other family members with a stake in the business.
In terms of a possible exit strategy for the business a moderate number of respondents intended passing the business on to the next generation, interestingly this prospect became twice as likely in the long-term. Some form of sale of the business outside the family was the overwhelmingly popular exit strategy and implementation of any exit strategy at all was also three times more likely in the long term at 55% in the short term at just 16%.

Consideration of exit strategies Short term Medium term Long Term
(12 months ) ( 3 years ) 5+ years

Sale of business to a competitor/trade sale 50.5 42.0 33.5
Passing the business to the next generation 12.5 17.0 23.5
Appointment of a nonfamily CEO 12.0 11.5 10.0
Sale to a private equity consortium 9.0 8.5 7.5
Sale to current employees 7.5 8.5 10.0
Venture capital 3.0 4.5 4.0
Sale to another family member 3.0 5.5 6.0
Initial public offering (listing) 2.5 2.0 5.0
Other – 0.5 0.5

When Commercialisation Australia was launched in January last year, many entrepreneurs, frustrated by previous government-backed funding schemes such as Comet, were sceptical of its impact.
However, the organisation, which offers up to $2 million in matched funding to help start-ups’ skills, executive hires, commercialisation and proof of concept, is steadily building itself a favourable image among small businesses.

With more than $50 million dished out to innovative entrepreneurs since its creation, Commercialisation Australia still has cash to play with, after being given a $278 million war chest until 2014. It will get $82 million a year from then on.

Doron Ben-Meir was appointed CEO of Commercialisation Australia last April. He has personally founded several start-ups, as well as working for a number of leading VC firms, including a stint as CEO of Prescient Venture Capital.

StartupSmart spoke to Ben-Meir about the challenges faced by start-ups attempting to get government funding, as well as get his tips on how to land a grant

Click to read the full interview from Smart Company here

The global sharemarket rout is likely to have a heavy impact on SMEs.

Small enterprises should brace for even weaker trading conditions this quarter as the global sharemarket rout batters consumer confidence, hampers credit availability and threatens cash flow.

MySmallBusiness asked credit collection, insolvency and small business experts for their assessment of the rout’s effect on small and medium-size enterprises (SMEs), and for early warnings signs about likely business conditions.

The views were grim.

Colin Benjamin, chairman of Marshall Place Associates, and a prominent strategic planning consultant, believes small enterprises face four key threats.

“The key issue is the availability of credit. Many SMEs are desperately concerned that the banks are increasingly being bastards about calling in their loans as the global economy weakens,” he says.
“One business I know recently received a letter from a bank demanding their loan be repaid in seven days. I expect to see more of this as banks move to limit bad-debt risk and improve their funding liquidity.

“The second issue is companies putting off forward orders due to all this uncertainty. The factory order that is normally made in August is now being deferred until October. That has a huge flow-on effect through the supply chains as people delay production.”

Dr Benjamin says the third issue is more SMEs laying off casual staff because of concern about business conditions, regulatory uncertainty and the impact of unfair dismissal costs.

“The final SME issue is a sense that no one is out there to buy their business. Baby boomers exiting the workforce are finding it increasingly harder to sell their enterprise at a decent price,” he says.