Australian Family Firms Surviving
8th September 2013 Paul Andrews
According to RMIT University research family firms in Australia are surviving but not thriving.
Australian family business owners - more than two million of them - are surviving but certainly not thriving, according to RMIT University research.
In 2013 operators are employing fewer people and more ageing owners intend to keep working as fewer have adequately funded retirement programmes.
Selling to fund retirement is becoming less of an option as for many the sale price of their business has also declined. To make matters worse, in the past three years only 24 per cent of family business owners have experienced an increase in profitability and market share. For 76 per cent of family business owners, business conditions have either remained the same or declined.
Professor Kosmas Smyrnios and PhD candidate Lucio Dana from the School of Management undertook the research, based on a survey of 5,000 Australian companies. It is the eighth in a series supported by MGI, a leading international accounting firm specialising in advice to family and privately-owned businesses.
Over the past 19 years the research has tracked the concerns and motivations of Australian family and private business owners. It is the longest running survey of its type in Australia and one of the longest running of its type in the world.
Results reveal a bleak state of affairs in the sector, with fewer than 40 per cent of family business owners expecting market improvement in the next 12 months.
Politically, 91 per cent of family business owners do not believe the Federal Government is offering them enough support to improve their situation. But they do not have confidence in the Opposition either, with 83 per cent feeling that the Coalition will not significantly help them.
Professor Smyrnios said the average age of family business owners had increased from 56 to 58 during the past decade. Owners older than 65 had increased from 20 per cent to 25 per cent during the same period.
More than one third of family business owners - up from 27 per cent in 2003 to 34 per cent in 2013 - do not have an adequately funded retirement programme and as a result will work on under the current tough conditions.
MGI Australasian Chairman Sue Prestney said the survey highlighted that over the past decade family business owners had progressively become more concerned about their financial performance (2003 - 27 per cent; 2013 - 58 per cent) as well as about the industries in which they operate (2003 - 15 per cent; 2013 - 55 per cent).
The same period also showed the number of family businesses involved in manufacturing halving from 40 to 20 per cent.
"Additionally today almost 60 per cent of family business owners feel that their children are not interested in taking over the family business," Ms Prestney said.
"Daughters in particular, while more inclined to stride out on their own as entrepreneurs, are far less likely to be involved in the family business (9 per cent) than their brothers (36 per cent)," Ms Prestney said.
Late last year, based on earlier studies from the series, MGI provided evidence to the Federal Government's landmark inquiry into family and small business.