Posted on: October 8, 2025
Generational Handover Risks: Family Business Succession Planning
A Costly Challenge for Australian Family Businesses
Yet only 23 percent of these businesses have a documented succession plan. Many leaders say succession planning is their biggest challenge, but progress remains slow.
That’s worrying considering $3.5 trillion is set to pass through family businesses over the next twenty years.
The risk is compounded as business owners grow older. Over half of Australia’s small business owners are aged 50 or above. Twenty-two per cent are over 60.
Almost half of Boomers owning businesses intend to exit within the next five years; only a quarter of them have succession plans in place.
When planning fails, legacies built over decades can unravel quickly. Lost clients, leadership confusion, staff uncertainty, and business closure are real possibilities.
$3.5 trillion is set to pass through family businesses over the next twenty years.
Only 23 percent of these businesses have a documented succession plan.
Planning Early Preserves Business Health
Proactive succession planning is vital. Australian studies show the process works best if started three to ten years ahead of the transition. Leaving it too late risks confusion and missed opportunities.
Don’t underestimate the power of communication. Honest conversations prevent costly surprises and help families make informed decisions. As well, bringing in outside advice can add a valuable, unbiased perspective. Many forward-looking families now use digital planning tools and AI-led business analytics to:
- Identify succession risks
- Simplify documentation
- Make smarter long-term decisions.
These technologies can help spot bottlenecks early, track governance performance, and improve communication between generations, according to the Family Business Association.
What Goes Wrong and How to Fix It
Most failures trace back to three issues: family members avoid discussing succession; younger generations are involved too late; and founders hesitate to let go.
When the next generation isn’t ready or willing to take over, businesses sometimes close or are sold off under pressure.
Succession also falters when businesses don’t formalise governance, develop next-generation leaders, or record handover details.
The solution? Focus on structure and preparation. Research finds that strong advisory boards and tailored leadership development programs can significantly boost success rates in generational handovers. Consider these tips:
Establish governance:
Invite independent advisors and set clear family policies
Define roles early:
Set out who does what in management and ownership
Train successors:
Get the next generation involved in running the business well before the handover
Document everything:
Capture procedures, customer details, and asset lists so nothing gets lost
Staying flexible is vital. Innovation often arises from generational differences, so embrace new ideas while safeguarding core business values.
Insurance Pitfalls During Handover
Ownership and management changes may trigger insurance problems. Property insurance or liability cover might not reflect the new structure or risks, especially if asset valuations change along with ownership.
For family businesses with written buy-sell agreements, updating these legal arrangements and their policies before the handover prevents gaps.
Working through transitions with us means you’ll have a professional who understands the ins and outs of family business succession. We’ll help you spot hidden gaps, plus review and keep your coverage up to date throughout every stage of the handover.
That way, it’s not just profits being protected; it’s your family’s future.
