What is Family Business
There is no legal definition of what constitutes a family business and commentators vary in their definition.
It is generally accepted however that the key characteristics of a family business are that the business is substantially owned, operated or influenced by two or more members of the same family.
Family businesses operate across a wide variety of industries; include small, medium and large enterprises; through different structures such as partnerships, companies and family trusts.
Family business plays an important role in Australia’s economy and workforce, however its diversity and lack of easy definition hinders recognition of family business as a separate business sector.
Professional services to businesses have traditionally been provided without reference to differing structures and in particular, have focused on the size of the businesses without regard to how the dynamics, structures, goals and constraints of family businesses may differ from non-family businesses.
Some family business facts
- Family businesses constitute around 70% of all businesses in Australia.
- 90% of family businesses employ less than 200 people, and depending on what business category is adopted, can therefore be classified as 'small'. This is supported by the fact that the average number of employees in a family business in Australia is 23.
- Many family businesses survive for generations, and the average length of time of operation of family businesses in Australia is 34 years.
- The average age of the owners is 58 and 25% percent of owners of family businesses are aged over 65.
- 26% of family businesses are in a second generation of ownership and 14% are in a third generation or more.
- Just over half of family businesses do not have a strategic plan and just less than half do not have a formal business plan.
- 75% of family businesses do not have an agreed succession plan and 85% of them have no agreed or documented family charter, constitution or code of conduct.
- Family businesses are pessimistic about succession with 41% of them saying it would not be feasible to have a formal succession plan. This is reflected by the fact that only 37% of family business owners report that letting go of leadership and control is one of the most critical issues facing their business.