Innovation. Governance. Succession planning. Absolutely key to long-term family business success, and all getting a big red X in PwC’s latest survey of the sector.
The survey shows the blame lies not with interest rates, the competition or government policy. The obstacles are internal: poor governance, risk aversion, under-investment in digital tools.
Seventy percent of surveyed businesses rated themselves as highly agile, and 93% said they could fund their own investment in growth strategies. If outside capital is needed, the big banks are actually doing more than twice as much business lending as they were in June 2023.
But only 30% of Australian family businesses got into double digit growth last year, and only 30% prioritise digital investment.
Where’s the disconnect? Here’s a clue. Eight in ten have no director under 40; 70% have one female director or none. A third have no succession plan, but 73% say upskilling the next generation is their biggest barrier.
The gap we see is between words and deeds, between aspiration and action. If you want profitable growth, and you want to set up success for the next generation of leaders, you need:
- Cognitive and life-experience diversity on your board – boards that look backwards don’t invest forwards;
- A formal succession plan that includes the path to leadership skills for the next generation;
- A risk approach that sets you up for investment in what will work tomorrow, not just today.
As PwC Australia private markets lead Samantha Vidler points out, a sector that employs half the workforce is not a marginal matter. This should worry all of us; we all need family businesses to succeed.
And you: is your company investing enough in the leadership and governance that will be needed for tomorrow’s growth?
If your board has been meaning to refresh its thinking on this, is it time to get that conversation onto the agenda? I’m always happy to have a confidential chat about where to start. I work with family businesses across the South West region, seeing these questions come up a lot.
NOTE: the PwC 12th annual family business survey findings are available here:
https://www.pwc.com.au/pwc-private/family-business-survey.html