Nearly half of boomer business owners plan to exit within five years, yet only 24% have succession plans ready for transfer.
What’s happening: Research reveals 48% of Baby Boomer business owners plan to exit within five years, yet only 24% of SMEs have succession plans, creating a massive generational transfer challenge.
Why this matters: With 75% of Gen Z considering business ownership and retiring boomers needing exit strategies, this generational shift will reshape Australia’s SME landscape and determine economic prosperity for millions.
Australia is facing an unprecedented business succession challenge as two powerful generational forces collide: retiring Baby Boomers seeking exits and entrepreneurial Gen Z wanting ownership.
New research reveals a stark planning gap that threatens to complicate this massive wealth transfer. According to findings from the Bi-Annual Business Monitor, just 24% of small and mid-sized business owners have succession plans in place for their exit.
The timing couldn’t be more critical. The research shows 48% of Baby Boomer business owners and operators (aged 60-78) plan to exit within the next one to five years, with 87% departing due to retirement.
The retirement reality
For departing business owners, the financial stakes are substantial. Thirty-four per cent plan to use proceeds from business sales as their retirement nest egg, while 19% intend to pass their businesses to family members.
This aligns with broader trends showing that one in four young Aussies now has a small business, driven by cost-of-living pressures and entrepreneurial ambitions.
Paul Robson, CEO of research provider, explains the generational implications: “This wave of generational succession will create a shift in the way we define SMEs next decade. As Generation Z take the reins of this community, fuelled by rapidly diversifying technology solutions, the way we interact with businesses will be materially different in 10 years’ time.”
Previous research found 75% of Gen Z respondents are considering starting businesses. Forty-one per cent find being their own boss appealing, while 37% want to move away from traditional 9-to-5 employment. For 33%, it’s about developing passions or projects into something bigger.
This aligns with Australia’s broader entrepreneurial trend, where a record 436,000 new business ventures launched in 2024, demonstrating the appetite for business ownership among younger generations.
Digital preparation gap
The research identifies a critical mismatch between retiring business owners and incoming entrepreneurs. Baby Boomer business owners show the lowest uptake of digitisation within their businesses, with particularly low adoption of cloud-based solutions for inventory management (9%), sales and marketing (12%), and employee management (19%).
This digital divide creates challenges for potential buyers, particularly tech-savvy Gen Z entrepreneurs who expect integrated, automated business systems. However, businesses that properly prepare their digital footprint can create smoother transitions when selling.
“Ensuring your business is future fit will be essential for existing business owners, to maximise business performance and build wealth,” Robson notes. “Futureproofing comes in many forms, from integrating AI for efficiencies, to digitising more and evaluating product mix.”
The OiOi story: Success in succession
Lisa Bennetts was designing luxury handbags when she gave birth to her daughter Isabella in 1998. Lisa saw a gap in the market for premium nappy bags, and OiOi was born.
Five years ago, Isabella joined the company and succession planning became top of mind for Lisa. Together, they shifted the business to an e-commerce-led model, now 70% of their sales, digitally proofing their homegrown business for the next chapter.
“It was never the plan for me to join my mum’s business, she started OiOi in 1998 when I was a baby,” says Isabella Bennetts-Roberts, Director at OiOi. “But after a few years in e-commerce, I saw huge potential in how OiOi could reach a new generation of parents. Since joining, we’ve shifted to an e-commerce-led model which is now 70% of our sales and the business is thriving.”
“With Mum ready to step back, we’re exploring succession options that feel sustainable and play to our complementary strengths.”
For Lisa Bennetts, founder and co-owner of OiOi, the transition has been deeply personal: “I started thinking seriously about succession planning around five years ago, not long after Isabella joined the company. She showed a clear interest in the business and had a natural aptitude for it, which made me realise there was a real opportunity to begin passing on knowledge and experience.”
“Isabella grew up with OiOi. From a young age, she travelled with me to trade shows and factories overseas, shaping her understanding and developing a sharp eye for design. She brings a thoughtful, creative, and strategic approach to the brand. It felt like the right time to gradually step back and support her in taking the lead on key decisions.”
The founder reflects on watching her daughter take control: “OiOi is in Isabella’s DNA. What gave me the confidence to hand over parts of the business to her was seeing her combine that deep-rooted connection with solid expertise in business and marketing. She brings a youthful, inspirational energy that resonates with a new generation of parents, while respecting the legacy we’ve built. Watching her take the reins has been one of the proudest moments of my journey.”
Professional guidance crucial
Ainslie van Onselen, Chief Executive Officer of Chartered Accountants Australia and New Zealand, emphasises the complexity of succession planning.
“Life can throw up unexpected challenges. The last thing a business owner needs when planning their succession is pressure to make a rushed decision,” van Onselen explains. “Succession planning needs careful, gradual consideration, to align personal goals with a transition away from businesses that may have taken decades to build.”
According to the Australian Taxation Office, succession planning for private groups typically involves preparing for business sales or planning wealth transfers to family members. The ATO recommends establishing succession plans early and reviewing them regularly, particularly when circumstances change.
The tax office highlights key documentation requirements for succession transactions, including changes in ownership interests, asset acquisitions and disposals, entity restructures, and valuation requirements for market pricing.
Expert analysis of family-owned SMEs shows that succession strategies require careful planning, as family businesses make up around 70% of all Australian enterprises.
Van Onselen notes that Chartered Accountants can assist with tax efficiency, staff retention, investment planning, and continuity strategies. “There are a lot of options when it comes to succession – you may be surprised about insights a Chartered Accountant can provide, to both attract new owners and set yourself up for the future.”
Bridging generational divide
The succession challenge extends beyond individual businesses to economic impact. With SMEs forming the backbone of Australian commerce, successful transitions will determine whether entrepreneurial energy translates into sustained economic growth.
Robson sees potential in the generational shift: “This next chapter is an exciting opportunity to see our freshest sector entrants gather their stride and lead the charge in Australian innovation. Previous generations can benefit from all the hard work they’ve put into their business by setting themselves up for a successful sale.”
The research suggests that proactive succession planning, combined with digital modernisation, can bridge the gap between retiring business owners and incoming entrepreneurs. Success will depend on whether existing owners recognise the need to prepare their businesses for a generation that expects seamless digital integration and modern operational systems.
As Australia navigates this generational transition, the quality of succession planning will determine whether this represents a smooth wealth transfer or a disruptive economic challenge affecting thousands of businesses and their employees.
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