Family businesses are the backbone of the Australian economy, making up over 70% of all businesses and contributing significantly to GDP. Yet for all their strengths, they face unique challenges when it comes to passing the torch to the next generation to ensure business continuity. Poor succession planning can lead to big financial losses, cessation of trading, fractured family relationships, eventual business collapse, and a major loss of family wealth.
At The Solutionist Group, we’ve seen firsthand how these issues play out, over and over again – and how mediation can lower the cost and prevent the pain of prolonged conflict.
In this article, we explore the obvious and hidden costs of inadequate succession planning in Australian family businesses, highlight common issues and pitfalls, and explain how a carefully tailored family business mediation process offers a more appropriate, practical and compassionate solution than any other conventional response.
Whether you’re a business owner preparing for the future, a family member trying to help your family navigate a tricky transition, or a trusted adviser trying to guide valued clients through a once-in-a-generation event, this guide provides insights and actionable steps to help secure the family’s legacy.
The High Stakes of Succession Planning
Succession planning is more than just choosing who takes over the family business – it’s about ensuring the business thrives while maintaining family harmony. Unfortunately, many Australian family businesses get it very wrong. Although 100% of businesses need some form of credible succession plan if they intend to keep trading, a 2023 report by Grant Thornton revealed that only 25% of family businesses actually have workable succession plans in place. That leaves 75% vulnerable to conflict and failed succession in both family and business.
Consider the story of a Melbourne-based family business we worked with. After years of running a successful manufacturing operation, the founder’s reluctance to make any commitment to the future of the business (or the family) prevented all attempts at succession planning by the two sons who’d been working in the business for many years, and his executive team.
Out of frustration, the siblings developed a bitter conflict that reflected their different personalities. One wanted to modernise operations; the wanted to cling to their traditional ways of doing things.
Key staff started bailing out as the conflict grew. Lack of any clear leadership messages escalated the tension – ultimately resulting in 18 months of legal battles, hundreds of thousands of dollars in legal fees, and a fatally fractured family, where the Patriarch and Matriarch were forbidden to have any interactions with one set of grandchildren. This just about broke Nanna’s heart.
Eventually, they settled on the steps of the court on almost exactly the same terms developed during an abandoned mediation process. Had they accepted those terms at the time they’d have saved themselves a great deal of time and money, and probably strengthened family relationships.
Sadly, this story is far from unique. Poor succession planning often leads to:
- Financial Losses: Legal battles, major operational disruptions, and forced sales of businesses drain family financial resources. In the worst cases, businesses lose their goodwill and get sold at fire sale values – all as a result of poorly managed transitions.
- Family Breakdown: Disputes over business leadership and ownership can irreparably damage relationships, as seen above.
- Business Stagnation: Without having a clear successor in sight when they need one, businesses start losing good staff, customers, and competitive momentum, because they fail to adapt to new challenges.
These costs are entirely preventable with proactive business and succession planning and the right support.
Common Succession Pitfalls in Australian Family Businesses
If we know, through Family Business Best Practices, what family businesses should do to have successful successions, why do so many family businesses struggle to get it right, or indeed, do anything?
Here follow the most common issues and pitfalls we’ve seen being repeated over nearly three decades at The Solutionist Group:
1. Generational Clashes
Different generations often have conflicting visions for the business, and for the family that sits behind the business. Older leaders may resist change, while younger family members push for innovation or expansion. These clashes can escalate into power struggles if not addressed early.
2. Unclear Plans, Roles and Responsibilities
In the absence of clear plans supported by appropriately defined roles, responsibilities, and accountabilities for family members and other employees, inefficiency plagues the business, profitability falls, and confusion and resentment build.
What’s the plan? Who will lead? Who gets ownership?
Ambiguity fuels conflict, especially when promises and expectations differ amongst family members.
3. Poor Relationships lead to Poor Communication
Family businesses often avoid tough conversations about succession, assuming things will “work themselves out.” This avoidance leads to misunderstandings and mistrust. A major 2024 study found that 65% of family business conflicts stem from poor communication.
We believe families need to go deeper than that to identify the root causes of the communication breakdowns that have contributed to the development of conflict and the family’s inability to resolve conflict when they take hold.
Family business mediation processes address both causes and symptoms of conflict to create durable solutions.
4. Ignoring Non-Family Stakeholders
Employees, partners, and clients are often overlooked during succession planning. Failing to involve key stakeholders destabilises the entire process, erodes trust in people and processes, and leads to conflict.
5. Administrative Challenges
Australian family businesses face the usual mix of technical impediments during suc cession processes:
- Tax Implications: Complex tax laws, like capital gains tax and stamp duty, complicate ownership transfers. Without expert advice, families may face unexpected financial burdens.
- Cultural Dynamics: Australian families often value egalitarianism, which can lead to disputes when one sibling is favored for leadership over others.
- Regulatory Hurdles: Compliance with Australian business regulations, such as those overseen by ASIC, adds another layer of complexity to succession.
These require proactive strategies to avoid problems.
Mediation: A Smarter Path to Succession
The Solutionist Group specialises in helping Australian family businesses resolve conflicts through our Solution-Oriented Dispute Resolution (SODR) process. Unlike litigation, which is costly and adversarial, the SODR process focuses on collaboration, preserving relationships, and developing optimal solutions for everyone involved.
Benefits of the SODR (Mediation) Process
- Cost-Effective: Mediation costs much less than fighting legal battles. The Melbourne family mentioned earlier spent hundreds of thousands on lawyers and would have resolved their dispute for less than 10% of that cost if they’d followed through with their mediation.
- Preserves Relationships: Mediation fosters open dialogue, helping families rebuild trust and avoid the emotional toll of court.
- Faster Resolution: Mediation usually resolves disputes in weeks, rather than years, which helps to keep the family happy and the business on track.
- Tailored Solutions: Unlike courts, which impose rigid outcomes if the case ever gets to judgement (less than 5% do), mediation helps families to craft agreements that suit their unique needs.
The SODR Process
Our proprietary SODR process is designed to address the root causes of conflict, create optimal and lasting solutions, and get everything done quickly, for a modest cost:
- Discovery: We dive deep into the family’s dynamics, business operations, and goals to understand the issues.
- Facilitated Dialogue: Our facilitators guide open, constructive conversations to explore all relevant issues (personal and otherwise), address concerns, and align expectations.
- Solution Design: We work with all parties to clarify everyone’s aims and objectives, resolve inter-personal issues, and develop a clear path forward that includes a workable succession plan.
- Decision-Making: If the process gets stuck, the Facilitator can make a decision to get everyone “unstuck”. Those decisions are accepted as binding so the process concludes with finality.
- Implementation Support: We provide tools and follow-ups to ensure the plan succeeds over the short, medium, and long-term.
By integrating mediation early in the succession process, families can avoid the pain of prolonged disputes and secure their business’s future.
Australian Case Study: A Success Story
One of our clients, a Queensland-based retail family business, faced a succession crisis when the founder planned to retire. The eldest son expected to take over, but his siblings felt betrayed and sidelined, leading to heated arguments.
Through our SODR process, we facilitated discussions that clarified everybody’s expectations, addressed individual roles in the future, covered off all financial concerns, and created a shared vision for the future of the family and the business.
The result? A smooth transition, preservation of family ties and the family’s legacy, and a business that continues to thrive under the next generation’s leadership.
Actionable Tips for Succession Planning
Ready to start planning for your family business’s future?
Here’s a practical checklist to get you started:
- Start Early: Begin succession planning at least 5–10 years before the transition. Early planning reduces stress and allows for gradual change.
- Involve All Stakeholders: Include family members, key employees, and advisors in the process to ensure buy-in.
- Document Everything: Create a formal succession plan, including leadership roles, ownership splits, and contingency plans.
- Communicate Openly: Hold regular family meetings to discuss goals, roles, and expectations. Use a neutral facilitator if tensions arise.
- Seek Expert Advice: Work with family business and other expert advisers to plan for and navigate the inevitable practical, financial and legal complexities.
- Test the Plan: Gradually transition responsibilities to successors to identify and address gaps.
- Plan for Conflict: Ensure the Succession Plan has a sound problem solving and conflict resolution process attached.
- Deal with Conflict: Engage a family business qualified mediator early to resolve disputes before they escalate.
Take the Next Step with The Solutionist Group
Succession planning doesn’t have to tear your family or business apart. At The Solutionist Group, we’ve helped countless Australian family businesses navigate the complexities of succession with compassion and expertise. Our mediation services can save you time, money, and heartache while securing your legacy for future generations.
Ready to take control of your family business’s future?
Take our FREE Family Business Surveys to assess your succession readiness, or contact us to speak with one of our experienced advisers and mediators. Don’t let poor planning cost you what matters most – act now to protect your business and your family.
Web: solutionist.com.au
By Jon Kenfield
Copyright © 2025 The Solutionist Group
