Written by Roger Jowett, Brainiact Mascot business coach
For many small to medium family business owners, the daily grind of keeping the business running can feel all-consuming. You’re juggling clients, managing staff, and ensuring the numbers stack up. It’s hard enough to focus on the immediate challenges, let alone think years into the future. Yet, as a Brainiact business coach, I’ve seen first-hand how succession planning can make or break a family business.
Family businesses are unique. They’re built on legacy, values, and relationships. Family businesses also contribute over 70% of all businesses in Australia and employ approximately 50% of the workforce, making their longevity critical to the economy. But here’s the hard truth: despite their economic importance, research shows that failure to plan often leads to disruption, with 70% of business transfers failing between generations and only 5% surviving to a fourth generation.
Why? Because most owners either don’t consider succession planning early enough or don’t know where to begin.
If you’re a family business owner, succession planning isn’t about preparing for today. It’s about ensuring your business – your legacy – thrives for years to come.
What is succession planning, and why does it matter?
Succession planning is the process of identifying and developing future leaders within your business to ensure a smooth transition when the time comes. It’s about:
- Setting a clear vision for the future of the business.
- Identifying potential successors within or outside the family.
- Preparing both the business and its leaders for the transition.
- Safeguarding the financial and operational health of the company.
For family businesses, succession planning carries emotional weight. It’s not just a question of who will take over, but how family dynamics, relationships, and roles will shift. When done right, it can unify families, preserve wealth, and ensure the business continues to grow.
When done poorly? It can lead to infighting, operational chaos, and the collapse of something you’ve worked your entire life to build.
The family dynamic: Why it’s so complex
In large corporations, succession planning is built into the leadership structure. CEOs identify potential successors, and there are systems in place for grooming future leaders. But in family businesses, succession planning is far less formal and far more personal.
I’ve coached families where parents, siblings, and even in-laws work side by side. The challenge lies in managing these relationships while making critical business decisions. Here are a few key dynamics that often come into play:
- The reluctance to let go: Many business owners struggle to step back. The business has been their life’s work, and letting go can feel like losing a part of themselves.
- Unclear roles: Family members often step into roles without clear expectations or accountability. This can create tension and inefficiency.
- The next generation’s readiness: Just because someone is part of the family doesn’t mean they’re ready (or willing) to take the reins. Some families insist that their children work outside the business first to gain experience before returning to take on leadership roles.
- Emotional baggage: Families are complicated. Long-standing rivalries, parental expectations, and differing visions for the future can cloud decision-making.
For example, I worked with one family business that had multiple active family members. At first, they struggled to align on their goals, and every coaching session felt uncomfortable, slow, and painstaking. However, as we steadily worked through their dynamics in a safe and non-judgmental way, things began to shift. They established clear roles, opened up communication, and built a plan for the next chapter. Today, they’re not just a stronger family – they’re a stronger business.
When should you start succession planning?
The short answer: earlier than you think.
Many owners believe succession planning is something to worry about in their 60s or 70s. But by then, it can be too late. Life is unpredictable. Health issues, family emergencies, or unexpected events can derail even the best businesses.
Ideally, succession planning starts in your 40s or 50s, when you’re still actively growing the business. At this stage, you can:
- Begin identifying potential successors.
- Provide mentorship and training.
- Establish a clear roadmap for leadership transition.
- Create contingency plans for unforeseen circumstances.
If you’re in your 50s or 60s and haven’t started yet, don’t panic. It’s never too late to lay the groundwork. The key is to start the conversation and commit to the process.
The key steps to succession planning
Succession planning isn’t a one-size-fits-all process. Every business and family is different, but there are common steps that every owner should follow:
1. Set the vision
What do you want for the future of your business? Do you plan to pass it on to family, sell it, or appoint external leadership? Start by clarifying your long-term goals.
2. Engage the family
Hold open discussions about succession. Does your family share your vision? Do they want to be involved in the business? Set regular meetings to ensure everyone’s voice is heard and aligned.
3. Identify potential successors
Who has the skills, passion, and leadership qualities to take over? Don’t assume the most obvious choice (e.g. the eldest child) is the right one. Sometimes, the best leaders come from unexpected places.
4. Develop the successors
Provide the training, mentorship, and opportunities they need to grow. Encourage them to work outside the business for a few years to gain fresh perspectives.
5. Plan for a smooth transition
A successful handover doesn’t happen overnight. Gradually step back and let successors take on more responsibility. Be prepared to support them, but resist the urge to micromanage.
6. Address the technical details
While the emotional and relational aspects are critical, don’t ignore the technical side. Work with accountants and legal advisors to ensure shareholdings, wills, and tax structures are in order.
The cost of not planning
I once worked with a business where succession planning was ignored for decades. The founder, now in his late 60s, had no clear successor, and tensions within the family were at an all-time high. The business was profitable but fragile, held together by the founder’s sheer determination.
When a health scare struck, panic set in. There was no plan for who would take over, no systems in place to keep operations running, and no alignment among the family. What could have been a legacy turned into a source of conflict and uncertainty.
This is the cost of not planning. Without a roadmap, even the strongest businesses can unravel.
Building a legacy
Succession planning isn’t just about protecting the business. It’s about building a legacy. Imagine looking back in 20 years and seeing your business not just surviving but thriving. Imagine knowing that your hard work continues to feed families, serve customers, and create opportunities for generations to come.
That’s the dream. And it’s achievable – with the right planning and commitment.
If you’ve built a successful family business, you owe it to yourself, your family, and your employees to ensure its future. Don’t leave it to chance. Start the conversation, invest the time, and lay the foundations for a smooth transition.
Your legacy deserves nothing less.
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Roger Jowett is a Brainiact business coach with over 35 years of international leadership experience. As a former CEO, he has helped businesses across the globe drive performance, growth, and sustainable success. Today, Roger specialises in helping small to medium business owners achieve their goals and prepare for the future.
