Family businesses still ducking succession planning, says report

Research from Grant Thornton shows succession planning is still the number one challenge facing Aussie family businesses, and most don’t have a plan nailed down.

The 2025 Family Business Report, released for National Family Business Day, found only 19 per cent of family businesses have a documented succession plan. That’s despite both current and future leaders agreeing it’s critical for survival.

Kirsten Taylor-Martin, Partner & National Head of Family Business Consulting at Grant Thornton, suggests the problem is that succession is still wrongly tied to the R-word: retirement.

“Succession planning is not synonymous with retirement – it should be a strategic priority as it’s about being ready for change, whenever that may come,” she says.

Why passing the family baton is hard

The survey revealed a stalemate between generations. Incumbent leaders often wonder if their kids or nieces and nephews are ready to take charge, while the rising generation is equally doubtful about whether the old guard will ever let go.

Remember how long Prince Charles waited in the wings before he became King… It’s the same story in many family businesses. The next gen is an aging cohort. The research found that almost a third of the next-generation group is between 44 and 64 years old. These aren’t fresh grads waiting for a go; they’re seasoned professionals who’ve been warming the bench for years.

“More than 30 per cent of this group are experienced leaders in waiting,” Taylor-Martin says. “If you’re only thinking about succession alongside retirement, you may not be giving yourself enough time and space to plan well to ensure your family business is growing for generations to come.”

Different generations, different worries

If you ask today’s family business leaders what keeps them awake at night, it’s external headaches like staff shortages, cash flow, and sales taking a hit from cost-of-living pressures. For the younger cohort, the worries are closer to home. Succession itself tops their list, followed closely by economic uncertainty, cash flow, and, perhaps most relatable, tricky family relationships.

That gap highlights a bigger truth: the older generation is preoccupied with running the business day to day, while the next gen is wondering how they’ll ever get their foot properly in the door.

More family charters

One encouraging finding is that more families are sitting down together to thrash out rules of engagement. Since 2021, adoption of family charters has jumped from 28 to 41 per cent, and formal boards of directors are on the rise too.

While governance around the family is tightening up, business strategy is slipping. Fewer businesses have a documented plan or shareholder agreement than four years ago. It’s a bit like sprucing up the family handbook but forgetting to service the business engine.

Technology is a divider

The digital divide is alive and well in family businesses. Many incumbent leaders remain wary of artificial intelligence  (AI) and tech shifts, whereas the rising generation is far more enthusiastic. For one group, AI is a looming challenge. For the other, it’s an exciting opportunity. That difference is shaping everything from decision-making to collaboration styles.

Challenges shift depending on the industry

The survey makes it clear that while succession is the top concern across the board, industry pressures colour the conversation.

In retail and consumer products, half of family businesses reported that reduced sales from cost-of-living pressures were hitting them hard.

In professional services, staff shortages top the list, with 63 per cent struggling to attract and retain people.

Manufacturers are feeling global competition bite, with a third flagging international online rivals as a major issue.

Health and aged care operators are evenly split between succession worries and economic uncertainty, both cited by half of respondents.

And in arts and recreation, a whopping 67 per cent said reduced sales were their biggest problem.

These sector-specific challenges show how succession planning doesn’t happen in a vacuum. The family handover is playing out against a backdrop of industry turbulence.

Preparing the kids to take over

The report shows plenty of families are actively grooming their successors. Mentoring, gradual handovers, and even shadowing board meetings are becoming more common, Rising leaders are also putting in the work: more than half are sharpening their skills in business growth, financial literacy, and leadership as they prepare to earn their place.

Why the state of play is important

With an estimated $3.5 trillion wealth transfer looming as baby boomers pass on assets and businesses, the stakes for getting succession right are enormous.

A messy handover doesn’t just risk family drama, it could jeopardise jobs, livelihoods, and decades of legacy.

Taylor-Martin says the earlier families tackle it, the better.

“Succession is complex and often uncomfortable to talk about, but with structured planning and open communication, families can grow for generations to come.”

Taylor Martin says the most important thing is to tackle the succession conversation.

If you’re running a family business and haven’t yet mapped out the future, the time to start is now. Think of succession less as waving goodbye and more as creating space for the next generation to lead.

Do you run a family business? Enter our Australia’s Favourite Family Business competition for your chance to win a $48k media package, including a segment on our national TV show Kochie’s Business Builders.

Want more? Get our newsletter delivered straight to your inbox!  Follow Business Builders on Facebook , X , Instagram , and LinkedIn.