Succession planning a glaring omission among many family businesses

New research from the PricewaterhouseCoopers (PwC) Irish Family Business 2016 survey indicates that half of family-run businesses currently have no succession plan in place, with just one-in-seven said to have a robust plan to hand over the business reins when the time comes.

Almost three-quarters of family-run businesses grew last year; faster than the global average of 64 per cent. However, PwC believes a lack of necessary planning and skills may stunt future growth in the sector.

Around 25 per cent of family-run business owners anticipate passing on ownership to the next generation of their family, whilst bringing in professional managers from outside of the family to run the business day-to-day.

Half of Irish family businesses think they have a strategy fit for the digital age, with almost half (45 per cent) believing their business is prepared for dealing with a data breach or cyber attack.

However, only a quarter of firms have procedures in place to deal with conflict within the family household. Paul Hennessey, family business leader, PwC Ireland, believes more needs to be done to futureproof family businesses.

“There has been some progress on succession planning, but less so on strategic planning,” said Hennessey.

“Having ambitions to grow, without a strategic plan of how to get there, is just an aspiration.

“Not only is it limiting their ambition to expand and grow, it could also expose them to additional risks for which they have not effectively planned.”

At the launch of PwC’s Irish survey, Kevin O’Connor, managing director, Colourtrend, said: “It’s important that the business is run according to the needs of the business, rather than the needs of the family. Running the business should be like running a PLC.

“We have non-family members on the Board and continually look to best practice. The important thing is that the business continues and that you have the passion to take it forward.”

Date published 12 Dec 2016 | Last updated 12 Dec 2016