Seven out of ten Australian businesses are family owned, but the personal cost is higher than you think
What’s happening: Seven out of ten Australian businesses are family owned, with many operating from dining room tables that double as boardrooms. However, the blurred boundaries between home and work life are creating unprecedented strain on family relationships and business succession planning.
Why this matters: Family businesses account for 70% of Australian businesses and employ approximately half the country’s workforce, yet many face unique challenges that traditional business support structures don’t address. Understanding these pressures is crucial for economic stability and family wellbeing.
Blurred Boundaries
Australian family businesses are grappling with unique pressures that extend far beyond typical commercial challenges, with the boundaries between personal and professional life creating unprecedented strain on both family relationships and business operations.
“Their personal identity is often tied up with their family business, there’s no switching off at the end of the day and they are often investing their energy, time, and personal funds, to make it work,” explains Bruce Billson, Australian Small Business and Family Enterprise Ombudsman. The reality for many family business owners is that work never truly ends.
The financial and emotional pressures are intensified by the personal stakes involved. “Financial and emotional pressures are amplified when many have put their home on the line to build up their business. And often, the family dining table is the board table or work zone, impinging on any semblance of work/life balance, adding potential fragility to family dynamics and relationships,” Billson said.
Family businesses make up 70% of businesses in Australia, spanning diverse sectors with distinct characteristics. Seven out of 10 businesses are family owned and 40 per cent are run by a couple, with many concentrated in farming, hospitality, convenience and construction sectors, as well as professional services.
Australia stands out internationally in how it recognises family contributions. “Australia is one of the few major economies that records and recognises the immense contribution of family members to a business, even when they might not receive a separate income for their endeavours. Many more don’t record or are directly paid for the work they do in chipping in to help out the family business, and some aren’t paid the market wage,” Billson noted.
Generational Divide
The workforce dynamics within family businesses reveal interesting patterns about age, commitment, and the changing attitudes of younger generations toward inheriting family enterprises.
Family businesses demonstrate remarkable retention of older workers. “In terms of workforce too, as we age, those in work associated with a family business are more likely to stay working, making up about 13 per cent of all workers aged over 70. Among those over 80, it rises to 24 per cent of all workers being a contributing family worker,” Billson observed.
This pattern extends to retired family members seeking new roles. “We also see others who have retired from their own careers go to work in a business started by their children, and fill roles wherever needed often for little or no wage.”
However, younger generations are increasingly reluctant to continue family business traditions. “In meeting with a variety of business owners over the years, one consistent theme comes up when it comes to the next generation contemplating stepping into the family business,” Billson said.
“The young adult children of family owned businesses tell me that they don’t want to enter the family business, often citing the lived experience seeing the dedicated efforts by their parents over the years. It’s a little too close to comfort to have seen the highs and lows of running their own business.”
Currently, only 12 per cent of family businesses transition to the third generation, highlighting the scale of this generational challenge facing Australian family enterprises.
Succession Struggles
The intersection of family dynamics and business decisions creates complex succession challenges that go far beyond traditional business planning, with emotional and financial considerations often conflicting with practical business needs.
“Succession planning is all the more paramount for family businesses,” Billson emphasised, noting the unique complications that arise. “When business decisions are also family decisions there can be an added layer of emotion. What one family member thinks is best for the business may not align with what other family members envision.”
The generational transfer issue is compounded by changing career aspirations. “For the parent who may want to pass on the family business to their children, the next generation may not be interested or have career or business interests elsewhere and not necessarily aligned to the family business.”
Family dynamics add another layer of complexity. “There can be unique situations involving family dynamics and perception of equality when it comes to succession. And where family wealth is involved, there can be additional complexities to manage legal, tax and accounting implications,” said Billson.
The distribution of family businesses across sectors shows their economic significance. 25 per cent of contributing family workers are in agriculture, forestry and fishing, with family farms running sheep, beef cattle or grain accounting for two out of three contributing family members across the entire agricultural sector. Additionally, 10 per cent of those working in a family business are in construction, with similar percentages in accommodation, food services and retail.
Community Champions
Despite the personal challenges, family businesses remain vital community pillars, driven by values that extend beyond profit maximisation and contributing significantly to local economic and social infrastructure.
“Family businesses are deeply driven by family values and are often community champions. They sponsor local sports teams, help build community infrastructure, and establish charitable foundations that add value to communities,” Billson said.
The motivation behind these enterprises often stems from generational thinking. “Family businesses also take inspiration from future-proofing generational livelihood,” he noted, with many focused on building lasting legacies rather than short-term returns.
Billson praised the resilience and commitment of family business owners: “But for the families that have a go, their passion and drive is commendable. National Family Business Day is a great day to remember the entrepreneurial spirit of family business owners and celebrate their efforts and impact to our communities. But let’s not only give recognition on this day but every day. Family businesses – we see you, we hear you, we celebrate you.”
Support structures are evolving to address these unique challenges. Billson praised the Family Business Association (FBA) for their specialised approach: “FBA is uniquely focused peak body for family business and they help their members navigate the intricate juncture of family dynamics and business operations. They provide valuable support and insights for family businesses including succession planning, governance, financial management and strategic planning.”
The dual nature of family businesses – as both economic engines and family legacies – means their success requires balancing commercial viability with family harmony. As these businesses continue to form the backbone of the Australian economy, addressing their unique challenges becomes essential for both economic stability and family wellbeing across the nation.
More information about ASBFEO is available on the ASBFEO website.
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