From Succession Planning To Succession Execution

The Next Challenge for Australian Family Businesses

So what progress is being made?

According to a recent Australian Financial Review article, 1.4 million business owners are expected to retire by 2036, yet 33% have no succession plan in place. At the same time, PwC's latest Family Business Survey highlights that many family businesses continue to delay leadership transitions, despite growing awareness of the risks.

The succession challenge is not unique to Australia. Family businesses around the world are grappling with similar issues. However, when compared with global peers, Australia's progress has been slower than many business owners may realise.

The good news is that succession planning awareness has improved significantly over the past 15 years. The bad news is that planning alone is no longer enough.

The next challenge is execution.

Australia Has Improved, But It Still Trails Global Leaders.

PwC's Family Business Surveys show a clear trend. In 2014, only 8% of Australian family businesses had what PwC described as a robust and comprehensive succession plan. By 2021, that figure had increased to 25%.

This represents meaningful progress, but it still places Australia behind many international peers.

Other studies paint a similar picture. Research from KPMG, STEP Project Global Consortium, Family Business Australia and EY consistently shows that succession remains one of the most significant risks facing privately owned and family-controlled businesses. Across most developed economies, only a minority of family businesses have a documented succession plan, and even fewer have begun implementing it.

What distinguishes the highest-performing family businesses is not the existence of a plan. It is the ability to execute it.

The Real Risk Is Not Ownership Succession

Many succession discussions begin with ownership. Questions typically focus on:

• Who will inherit the shares?
• How will ownership be divided?
• What are the tax implications?
• How will family wealth be preserved?
  

These are important issues.

However, they are often not the biggest risk. The greater challenge is usually management succession.

Ownership can transfer overnight through legal documentation. Leadership capability cannot. A business can survive a change in ownership. It often struggles to survive a leadership vacuum.

This is particularly relevant in Australia, where many family businesses remain heavily dependent on founders.

PwC's most recent survey found Australian family businesses continue to face challenges around:

• Leadership capability development
• Next-generation readiness
• Founder dependency
• Delayed transition timelines
• Resistance to change from senior generations

These issues are ultimately management issues rather than ownership issues.

Why Management Succession Matters More Than Ever

The best family businesses understand that succession is not an event. It is a process and it needs time. Leadership capability needs to be developed years before a transition occurs. This includes:

• Building strategic decision-making capability
• Developing commercial acumen
• Strengthening governance disciplines
• Creating accountability structures
• Establishing confidence among employees, customers and suppliers

Without these foundations, ownership succession alone creates little value. The challenge is particularly acute because many Australian family businesses are approaching first-generation transitions. Founders often possess decades of institutional knowledge, customer relationships and decision-making authority. When those capabilities are concentrated in one person, the business becomes vulnerable.

Why This Matters for the Australian Economy

Family businesses play a critical role in Australia's economy.

They employ millions of Australians, contribute hundreds of billions of dollars to GDP and support communities across metropolitan, regional and rural Australia.

When succession fails, the consequences extend well beyond the family.

Potential impacts include:

• Job losses
• Reduced business value
• Lower investment
• Lost productivity
• Business closures
• Disrupted regional economies

Australia therefore has a broader economic interest in improving succession outcomes.

This is not simply a private family matter.

It is a national business capability issue.

Moving from Planning to Execution

The next decade will likely determine whether Australia successfully navigates this transition wave.

The focus now needs to shift from creating plans to implementing them. Family businesses should consider five priorities:

1. Start Earlier: Succession planning should begin years before retirement becomes imminent.

2. Separate Ownership and Management: The best owner is not always the best CEO.

3. Develop Leadership Capability: Future leaders need real responsibility and decision-making experience.

4. Reduce Founder Dependency: Critical relationships and knowledge should be shared across the leadership team.

5. Strengthen Governance: Clear governance structures improve accountability and support smoother transitions.

Conclusion

Australia has made progress. Fifteen years ago, succession planning was often treated as a future problem. Today, it is recognised as one of the most important strategic issues facing family businesses.

Yet the data shows a persistent gap between awareness and action. Compared with global peers, Australia has improved but still trails leading regions in succession readiness. More importantly, many businesses remain focused on ownership succession while underestimating the importance of management succession.

The next generation of successful family businesses will not be those with the best succession documents.

They will be those that successfully transfer leadership capability, decision-making authority and organisational knowledge before the founder steps away.

The challenge for Australian family businesses is no longer planning for succession. It is executing it.

Read one Active Directions Case Studies: Learning from Businesses That Execute Well

A useful example comes from the Active Directions case study, Getting Exit Ready by Getting Out: Management Succession. The business involved was a founder-led commercial services company generating more than $50 million in annual revenue. Rather than focusing solely on ownership outcomes, the succession strategy concentrated on leadership readiness.