SINGAPORE - Family businesses here believe that continued profitability is more important than preserving their legacy, according to a survey.
A new report released yesterday by KPMG and CPA Australia found that eight out of 10 businesses interviewed believe that family legacy, though important, should not be allowed to get in the way of business growth and profitability.
The findings were based on a survey of 100 Singaporean family businesses as well as detailed interviews with 20 local business leaders - both founders and successors - on issues that matter most to them.
"The resounding sentiment among founders is that they want their next generation in the business," the report said.
But most family businesses in Singapore falter at first transition, with only 13 percent surviving to the third generation.
"Informal governance structures that may have worked well for the founders of the business may not meet the needs and interests of a new generation," said Mr Chiu Wu Hong, the head of enterprise at KPMG in Singapore.
When planning for succession, "it is critical for founders of the business to develop leaders who will run the business, not just inherit it", said Mr Melvin Yong, the Singapore country head at CPA Australia.
"Family business owners can empower successors to make independent decisions, provide challenging assignments and increasing responsibilities while incrementally letting go of control to focus more on mentoring," he added.
If the younger generation is not ready to take over, the majority of survey respondents said they would prioritise business sustainability over family control.
Among survey respondents, 46 per cent cited professionalising the business as a pressing issue, compared with 41 per cent who indicated that retaining family control was of utmost importance.
The research also found that successors are more open than company founders when it comes to letting outsiders - who are not family members - run the business.