KUALA LUMPUR (March 15): With 96% of Malaysian family businesses showing strong optimism to grow their business in the next five years as shown from the outcome of a survey, having a succession plan is critical to extend the business’ lifespan and to ensure sustainable growth.
Having said that, a recent survey prepared by The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) in collaboration with PricewaterhouseCoopers (PwC) Malaysia showed that only 13% of Malaysia’s family-run businesses have a robust and documented succession plan set in place.
The bulk, or 46% of Malaysian family businesses that participated in the poll did not have a succession plan, and some even cited that having succession planning was not their priority at present.
The survey was jointly commissioned by ACCCIM and PwC Malaysia and attracted 96 participants. The survey's findings were revealed in the inaugural ACCCIM Family Business Survey report 2018 launched today to provide insights from the collective view of family businesses in the country.
PwC Malaysia's entrepreneurial and private business leader Fung Mei Lin said that the importance of having a concrete succession planning is to deliver the expectations clearly to the successor to minimise the risk of facing an expectation gap in future.
She also urged business owners to not wait to start building succession planning.
“Having a succession plan means that you must put a plan to identify the key criteria for the successor and using it to filter the [candidates] to maybe two or three people,” she said, adding that effective communication between the current generation and the next generation is important for developing a succession plan.
Having a robust and well-documented succession plan is not an easy feat. But the more challenging task is deciding on the successor of the family business, the report noted.
Indeed, more than half of Malaysian family businesses pointed out that aligning the family values and business strategy (56%) and identifying and grooming the capable next generation (54%) were among the top key issues for them to deal with during succession planning.
Some 83% of the respondents viewed having leadership qualities as the most important criterion when selecting successors.
This was followed by commitment and interest to run the business (65%), having relevant industry experience (49%), having experience within the family business (38%).
Being the eldest (8%) or education credentials (13%) were not key factors when choosing a leader to take over the business, according to the survey.
The family businesses surveyed were optimistic about future growth over the next five financial years with 27% of the respondents planning to grow quickly and aggressively and about 69% planning for steady growth.
It is worth noting that none of the respondents indicated any plans of slowing down their businesses.
The survey also showed the top five personal and business goals were to drive growth for business, namely to 'professionalising' the business, to diversify into a different business sector, to attract high quality talent, to move into the digital economy/e-commerce and to establish branding for the business.
Other challenges showed in the survey were the ability to attract and retain the right talent, succession planning and business transition as well as product branding and service quality.