New Zealand's competitive advantage in an increasingly global market depends on the sustainability of its vital family business sector.
That's the view of a leading international family business expert visiting Hawke's Bay.
Dr Justin Craig, Co-Director of the Australian Centre for Family Business at Bond University and Associate Professor of Entrepreneurship andFamily Business, is in Hawke's Bay leading a seminar for local family and owner managed businesses (FOMBs) on Wednesday.
His visit is part of a BDO-sponsored road show for FOMBs across the country.
"Family businesses are the engine of all economies around the world," he said.
"They contribute disproportionately to the economic and social fabric of all communities. They are the driving force for most towns and this is particularly true for New Zealand."
New Zealand FOMBs were more than 60 per cent of the national economy, according to recent research by the University of Auckland Business School and were not necessarily small.
"Some of the largest businesses in the world, and indeed in New Zealand, are family owned. Many have survived multiple generational transitions and much can be learned from these long lived business families."
Jeff Roberts, head of the BDO Family Business and Succession Sector, said one of the major issues facing FOMBs was transition of the business to the next generation of leaders.
"Indeed, over the next decade we'll see the biggest ever inter-generational transfer of wealth in our history take place as the baby boomers retire," he said.
According to the latest ANZ privately-owned Business Barometer, 61 per cent of owners were over 50, 23 per cent are over 60, and 41 per cent aspired to retire in the next five years.
About half were actively seeking succession but only 16 per cent had a plan in place.
"Transfer of wealth is potentially the most life-threatening stage of the family business and regrettably many businesses do not survive to the second and subsequent generations," he said.
"Family businesses have complex and often emotionally challenging issues to resolve as part of this process and the longer it is left, the more difficult it becomes."
Dr Craig said that given the entanglement of business with family, it was inevitable that emotions become involved.
However, the weaknesses of family businesses were also their strengths, including strong culture, commitment and pride in the business which can be harnessed for competitive edge.
"We know from research that customers all over the world place high value on a visible family presence. They know family businesses don't compromise on quality."
