How to manage a generational shift in the family business

5 tips to ease the transition in 2024

Family comes first – until succession goes sour. Prepare for the challenges and embrace the opportunities of handing on the business reins with professional advice.

Succession is a detailed and delicate challenge

There are over 1.4 million family businesses operating in Australia, and even the most steadfast founder must eventually pass the torch. With generational shifts inevitable, family businesses must prioritise succession planning.

If increasing costs and high inflation mean business is already doing it tough, managing a generational shift may add fuel to the fire. A successful transition, without sacrificing family harmony, requires thorough planning and support from unbiased professionals.

5 ways to ease the transition

Achieving a smooth transition requires considered planning, transparent communication and a united commitment to the business’s long-term success.

1. Plan ahead to avoid rushed decisions

Start the process well in advance – allowing time for careful contemplation, preparation and the development of a thorough succession plan. Early discussions about roles, expectations and future goals will aid a smooth transition.

2. Prioritise clear communication

Encourage family members to honestly express their thoughts, concerns and goals, and consider engaging an external advisor or mediator to guide these conversations.

3. No handshake deals

Don’t rely on familial goodwill – even the closest relationships can sour in the context of business and money. Ensure ownership and role transitions are documented with support from expert lawyers and accounting services.

4. Prepare for challenges

Consider how you will manage differing generational perspectives, business continuity risks, conflict and more – and engage business consultants or family business experts who can offer valuable insights from other successful transitions

5. Look for the innovation and growth opportunities

A generational shift presents a valuable opportunity to assess where a business is and where you want it to go.

Why a successful generational shift matters

Business continuity

A generational shift is a time of upheaval for a family business. A smooth transition ensures survival by protecting jobs, preserving customer loyalty and prioritising stability.

Innovation and opportunity

Survival is one thing – creating long-term success is another. Smart family businesses seize a generational shift as an opportunity to leverage fresh ideas and perspectives to innovate and gain competitive advantage.

Family harmony

Blood is thicker than business – provided a transition goes smoothly. A well-managed generational shift can ensure family ties are not only maintained but strengthened by prioritising honesty, fairness and respect.

An enduring legacy

Family businesses often have a proud origin story, a rich history and a strong connection to community. A successful transition preserves this legacy for generations to come.

Family business success for future generations

The generational shift can be a daunting prospect with a huge amount at stake – business, family, wealth and longevity.

Prepare for the challenges and leverage the opportunities by engaging professional support to ensure careful planning, open communication, thorough documentation and successful execution.

Enjoy a smooth generational shift with expert accounting and business advice. 

Ask for a callback from Accelerate WA Accounting Group.