Most family business owners are trying to keep their relatives interested in running the company after they die, a recent study has found,
A joint report by compiled by international advisory service provider KPMG and peak body organisation Family Business Australia (FBA) has found that 60 per cent of people in charge of a family business feel that maintaining control of the company should be a key concern.
The survey involved the heads of nearly 700 firms in Australia and covered a variety of topics related to estate planning, succession and stewardship.
88 per cent of respondents believed that the promotion of strong family values had the ability to improve the way a business was run, with many believing that it gave their company a sustainable competitive advantage.
Chief executive officer at FBA Philippa Taylor said that the survey also demonstrated the ability of small, family-run businesses to endure longer periods of poor performance in order to execute long-term strategies.
Taylor asserted: "This grows from a personalisation of relationship, financial flexibility and resilience and superior service quality and innovation."
Of the companies surveyed, 46 per cent had some sort of directorship or board in place, indicating that long-term planning was definitely a worry to the owners.
The head of KPMG’s family business practice Bill Noye has said that these firms are also concerned with the the idea of maintaining an ongoing sense of stewardship - a benevolent friendly persona for the public to encounter.
Noye asserted: "A sense of stewardship does not disappear simply because an incumbent reaches an acceptable retirement age, or the next generation is ready to take control.
"This survey, exploring current thinking of family entrepreneurs, is highlighting that the motivations for succession are often impacted by the ambiguous nature of relationship[s] with children and other family members."
It is this potential for estate disputes between relatives and close friends that has the people running these small firms worried about the future of their companies, with 59 per cent showed a balance between family interests and business concerns to be a high priority in their daily routine.
However, a number of options are available to the owners of family businesses.
For example, when it comes to estates a person's ownership of a company is treated in a manner similar to land or shares under Australian law.
This means that privately-owned businesses can be classified as assets and, as such, can be passed on to loved ones through a valid will.