2018 Was a Successful Year for Family Businesses in Singapore but Succession Planning Is Becoming an Issue
With 89% of Singapore’s family owned businesses showing strong indicators for growth over the next couple of years, there is a potential issue looming. Many family owned businesses in Singapore do not have formalized succession planning in place to ensure that growth is not hampered during times of transition.
Family Business Boom in Singapore
The Global Family Business Survey 2018, prepared by PwC noted that while Singapore’s family businesses were expected to grow at around 5% more than the rest of the Asia-Pacific region, and that 63% of businesses were actively encouraging next-generation involvement in senior leadership positions, only 8% of businesses surveyed had formal succession plans in place compared to around 12% in the region and 15% globally.
Mid-Term Strategic Planning
Strategic planning for succession and growth remains a challenge for many of Singapore’s family business empires. With increasing numbers of family members entering the business, as well as the overriding commitment to strong family values, many businesses are thriving, but lack of articulating family succession planning remains a significant risk. Having a formalized and communicated plan can provide much more than just a blueprint for the succession of the leadership of a business. It can also provide an outline for business growth and effective governance which many businesses in Singapore need to successfully navigate the unique challenges facing the market.
Business Growth Through Foresight
Business growth may seem like the most important aspect of running a successful company, but part of the growth stage needs to be a firm eye on what may happen after a founder leaves the company or passes away. Privately -owned companies need to devise an entity structure that is legally formalized and should include valuation structuring, outcomes and risk assessment as well as talent management planning and development within the family business. Ownership retention should be kept separate from good business management.