Succession planning and why it should be at the top of your to-do list
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Deep down, we know it’s important to plan and prepare for what’s next. We contribute to superannuation for our retirement, purchase travel insurance before heading overseas and write a will to share our wishes with family. Planning ahead helps protect us and achieve our goals.
The same principle applies to family businesses and enterprises. Yet despite its importance, succession planning is frequently neglected.
'Succession is about more than who is going to step into the role when the current generation steps down. It is easy to think a few conversations will get succession sorted, but in reality, it is a process that takes time, planning and patience, and communication.' Catherine Sayer, Family Business Association (FBA) CEO.
Why it’s important to plan
Having a well communicated and documented succession plan is essential to answering questions about the future of your business.
A succession plan will help you to outline:
who will take over the family business
how the transition will occur
the structures and rules that will guide the process.
The 2025 Family Business Barometer Report found that while 45% of respondents nominated a successful exit strategy as a long-term goal, only 23% have a formal succession plan and 37% acknowledge the process is complex. These figures show the need to move succession planning from the bottom of the to-do list to the top.
'Succession planning often gets pushed aside because the immediate priority is keeping the business running. Many family business owners continually tell themselves they’ll address it later, but later often comes too late.' Matthew Bartemucci, Director at Hood Sweeney and FBA Accredited Advisor.
As a business owner you need to ask yourself the following questions:
Have I discussed the business's future with anyone?
Have I worked through who will take over leadership?
Are they prepared to take over?
Is everyone aligned on these decisions?
How to plan effectively
There are 4 key areas for effective succession planning in your family business:
Plan early.
Communicate.
Document the process.
Prepare the next generation.
1. Plan early
Planning early gives you time to approach succession thoughtfully, rather than reacting under pressure. Starting as early as 10 to 15 years before a transition helps safeguard your business in the event of unexpected circumstances. It gives you time to explore options openly, rather than making rushed decisions in a crisis.
Give your family the room to consider different paths. Many businesses will stay in family hands, while others may be sold if circumstances or goals shift. Survey results from the Family Business Barometer Report reflect this with 42% of the participants planning to pass the business to the next generation, while 45% intend to prepare for a sale or exit.
If you decide to keep the business, early planning will give you the time to identify potential successors, whether from within the family or outside the business. This allows time for targeted training and development, so the person or people stepping into leadership are prepared to take on their responsibilities.
Early planning also provides an opportunity to establish rules, processes and governance structures that support a smooth and well-organised transition.
2. Communicate
Succession touches on family relationships as much as it does business structures. You may worry that raising the topic could spark conflict or reopen old wounds.
'It’s hard to begin. It could lead to conflict, upset someone or open a can of worms. But here’s the truth – not having the conversation doesn’t make things better. Silence just lets assumptions harden and tensions build up.' Iain Massey, CEO of Upland Consulting and FBA Accredited Advisor.
The Family Business Barometer Report data supports the value of communication. 36% of the participants said balancing family versus business needs kept them awake at night. Nearly 10% of participants said sibling rivalry was a concern.
Open dialogue can help prevent these issues before they become a bigger problem and stops the potential for assumptions being made across the family.
3. Document the process
One of the most practical and impactful steps in succession planning is documentation.
Recording the structures, rules and decision-making practices ensures that knowledge is preserved. It can prevent misunderstandings when leadership or ownership changes hands.
Some family businesses assume that family connections automatically grant entitlement to roles or responsibilities. Addressing these assumptions early through documentation helps avoid conflict within families and the business.
Expert advice strongly encourages documentation of everything very early on in the process. Good documentation makes life a lot easier for future family members to come in.
The Family Business Barometer Report results show that formal governance structures remain underused. Less than a quarter of businesses have a documented succession plan and only 31% report having a family charter or constitution.
Clear governance structures, including detailed position descriptions and defined job responsibilities, not only maintain fairness but can also highlight where external expertise may be needed.
By documenting processes thoroughly, a business provides transparency and clarity for everyone involved. It supports the smooth integration of successors, ensuring the business can operate effectively, even during periods of transition.
4. Prepare the next generation
Succession is ultimately about people. Giving emerging leaders the knowledge and confidence to take the reins takes time and intent. Provide them with exposure to different roles, encourage formal training and allow them to gain experience outside the family business.
Annette Bonnett advises, ‘Having discussions with next-generation family members about their progression path in the business is vital. Set a clear development plan that covers governance, financial literacy, operational responsibilities and risk. Measure progress, stick to the plan and recognise this is a journey.’
Succession isn’t just about handing over leadership; it’s about preparing the next generation. It’s a long, evolving process that adapts as the business, family and future leaders grow, ensuring they’re prepared to take on the role and lead.
9 Apr 2026
Business Victoria