Family businesses are the unsung heroes of the Australian economy. They form the backbone of our economy – supporting more families, industries and sectors that you can probably imagine.
To give you an idea of their magnitude, Australia’s largest family-owned business, Linfox Australia Pty Ltd, was internationally ranked 240 in the world’s 500 largest family-owned companies in 2015. It employs over 23,000 people and has more than $6 billion in revenue per annum. The next largest, Visy Industries – a packaging and resource recovery company – generates $4 billion in revenue and employs over 5,500 people.
These behemoths are enormous compared to most family owned businesses, who scale all the way down through multi-generational corporations to the small, mum-and-pop corner stores.
How many are there?
Across almost every sector of the world’s economies, family owned enterprises include small, medium and large privately owned businesses operating as partnerships, trusts or a company. It’s estimated that the total economic impact of family businesses to global GDP is over 70 per cent.
According to the Australian Bureau of Statistics, in 2013, there were 1.5million family businesses – almost 70 per cent of all businesses, nationwide. Conservatively, it’s estimated that up to 60 per cent of all employment is through family owned businesses, with 64% of them having less than 20 employees.
According to the Family Firm Institute Inc., internationally, family businesses represent:
• 85.4% of China’s private enterprises are family owned (2010)
• 60% of all European companies are family owned (2013)
• 79% of all private sector employment in India is through family businesses (2013)
• 25% of the total United Kingdom GDP is generated through family firms (2012)
• Over 80% of all businesses of businesses in the Middle East are either family-run or controlled.
How long do they last?
Most people generally say family businesses are unlikely to last the second generation, but in Australia there are numerous examples of multi-generational businesses that are still thriving today – Packer (entertainment and leisure), Murdoch (media), Kennard (hire & self-storage), Monkhouse (funerals), Akubra (hats), Haigh’s (chocolates) and Bundaberg (brewed drinks).
A successful family owned future, depends on a multitude of factors. It requires a discerning eye for financial matters and a sensitivity to the fact that a family business intertwines both business and personal assets, as well as interpersonal relationships. Navigating those mixed waters requires wise counsel and advice from experienced professionals, who have your interests at heart as well as an understanding of your family as both a unit, and as individual people.
Want more information?
The latest, 2015 Family Business Australia and KPMG Family Business Survey can be downloaded from the Australian Small Business & Family Enterprise Ombudsman website.