Family firms warned to plan for succession
Half of Irish family businesses have no succession plan whatsoever and just one in seven has a robust plan, new research has shown.
According to the PwC Irish Family Business 2016 survey, firms are ill-prepared for handing on the reins when the time comes.
Nearly three-quarters of Irish family firms expanded last year, higher than the global average of 64pc, but PwC found a lack of appropriate planning and skills may stunt growth in the sector.
A quarter of companies here plan to pass ownership to the next generation, but bring in professional managers to run the company. Irish family owners are more likely to sell or float their firm than their internationals peers.
The survey of 2,800 family businesses across 50 countries also found a lot of work was needed in digitising the country's dynasty companies.
PwC Ireland family business leader Paul Hennessey said the outlook remained strong for the sector here.
"There has been some progress on succession planning, but less so on strategic planning.
"Having ambitions to grow, without a strategic plan of how to get there, is just an aspiration," he said.
"Not only is it limiting their ambition to expand and grow, it could also expose them to additional risks for which they have not effectively planned," he said.
Speaking at the launch of PwC's survey, Kevin O'Connor, managing director of Colourtrend, said: "It's important that the business is run according to the needs of the business, rather than the needs of the family. Running the business should be like running a PLC.
"We have non-family members on the Board and continually look to best practice. The important thing is that the business continues and that you have the passion to take it forward."
The vast majority of Irish companies are eyeing growth over the next five years despite uncertainties around Brexit and other issues.
Half of Irish family businesses think they have a strategy fit for the digital age, with 45pc believing their business is prepared for dealing with a data breach or cyber attack.
However, planning ahead for family splits has diminished over the past two years. Just one in four firms have procedures in place to deal with conflict within the household.
More than a third of family firms think their rivals have easier access to capital, and most plan to fund growth with their own capital.