Grant Thornton Australia just released their 2023 family business survey, called Future-Proofing Your Family Business.
It’s a very relevant title, because so many of the benefits of the family business model depend on longevity – the ability to take a “patient capital” view of business investments; the ability to create a legacy for future generations; the ability to sustain a big-picture vision.
And yet about two-thirds of family businesses (rule of thumb here) do not survive beyond the founding generation’s tenure. About three-quarters of the 280+ businesses surveyed by Grant Thornton identify succession planning among their top five challenges.
What might be different about multi-generation family businesses? Here’s a suggestion.
The survey shows a critical change between the second and third generation leaders: from a majority identifying themselves as “owners”, to a majority identifying as “stewards”. The difference is future focus. A steward is someone looking after an asset, holding custody of it, for the eventual benefit of someone else.
The third generation leaders of family businesses were also the most concerned with community impact.
Put these together, and you see a couple of challenges to standard assumptions. For one, it is often said that the third generation of a family business tend to take their inheritance for granted and waste it. Stewards don’t do that. Second, there’s the old chestnut that the only proper purpose of a business is to enrich its owners. But success for stewards is about benefits to others, including those not even born yet, as much as about paying the stewards themselves.
Which brings me to our mantra at Upland: Head, Heart and Bottom Line®. The businesses that most engage and reward us involve our rational selves, but also our values and humanity, while creating wealth. No-one takes on the responsibility of stewardship, or concerns themselves with community impact, just for the money.
Here’s to the third generation. And if you’re wondering how/if you’re going to get there, talk to us. We facilitate family business succession planning.
It’s what we do.
