Family Business Owners Concerned About Their Future Post The Global Financial Crisis

The commercial world in which today's family or privately owned business finds itself is starkly different to the early 1990's when professor Kosmas Smyrnios and his colleagues first commenced these landmark studies.

At that time Australia was emerging from the impact of the “recession we had to have”. Businesses were recovering from the financial excesses of the 1980s, rising inflation, an overstretched economy, and the tightening of credit.

Today, as Australia disentangles itself from the grip of the Global Financial Crisis (GFC), the current survey shows that family businesses have changed from pre-GFC days. Despite Australia having weathered the GFC better than most countries, the concerns of family business owners about the future of their businesses has generally risen since 2006, the date of the previous survey. More business owners are significantly more concerned about competition, funding for growth and for the future of their particular industry than they were in 2006 and 2003.

The survey reveals a less confident family business sector post-GFC than pre-GFC – with family business owners more reliant on the continuity of their business to fund their retirement and more concerned over the future of their business. The proportion of family business owners who would seriously consider selling their businesses if approached has decreased from 75% in 2006 to 61% in 2010. While those who plan to sell their business has dropped from 53% in 2006 to 44% in 2010. Changes in attitude to selling the family business appears to have much to do with the fall in prices of businesses as a result of the drying up of available cash for funding.

Retirement plans also seem to have been impacted by the GFC. In 2006 only 17% of family business owners stated they did not have an adequately funded retirement program. This has increased to 31% in 2010, most likely on the back of the reduced investment values in 2009. Further concerns for family business owners for the future include selecting a successor and the future financial performance of their businesses.

While there has been much discussion about the low level of female participation on public company boards, a similar situation also exists in the private sector – even in family business. The survey results highlight the low participation of females as owners and managers of family businesses – only 11% of owners are female; only 7% of current owners have daughters actively involved in the businesses (with only 2% of business owners’ sisters being involved in the business); sons are five times more likely to be involved in the family business as daughters and five times more likely to succeed the current CEO than daughters. While these statistics in themselves paint a picture of the current low level of female participation in ownership and management of family businesses, more surprising is the fact that this position has changed little over the last seven years.

The value of this longitudinal study cannot be underestimated in gaining insight into the motivators of Australian family and privately owned business. The current study, as well as others in the series, has made an important contribution to the understanding and appreciation of the attitudes of family and private business owners, and their valuable contribution to the Australian economy.

MGI would like to acknowledge the work of Professor Smyrnios and his research team. With a tradition of supporting Australian family and privately owned businesses, spanning some 25 years, MGI has the skills, experience and understanding to assist this important sector through their upcoming challenges. MGI is again proud to be associated with this important work.