Unlocking family business legacy for sustainable growth
Global research by KPMG Private Enterprise and the STEP Project Global Consortium (SPGC) shows there is a strong link between the legacy of family businesses and their performance and sustainability.
Drawing on a survey of more than 2,600 family-owned business leaders in 80 countries, Unlocking legacy – the path to superior growth in family businesses explores the nature of family business legacies and shares insights on how they can drive performance, sustainability and future growth.
The survey’s findings show that family businesses in Australia are well placed to capture these benefits and thrive as new generations step in. Key to achieving this is to view family business legacies through a future-focused lens as intentional and essential ingredients for sustainable growth.
How does legacy impact performance and sustainability in family business?
We surveyed more than 2,600 family business leaders in 80 countries.
Understanding family business legacies
How can legacy drive growth in a family-owned business?
As a valuable family business asset, legacy can drive growth and performance by:
- maintaining the strategic focus of the family and business
- preserving family values
- building a resilient culture
- establishing reputation
- passing on knowledge
- ensuring continuity
- strengthening emotional connections
- adapting to change
- guiding decision-making.
Family business legacy can be an enabler and a burden
Depending on the nature of a family business’s legacy, it can either be a burden or an enabler. A family business that focuses on the material or traditional elements of its legacy can have lower levels of entrepreneurship and risk-taking – causing business growth and performance to suffer.
Future-centric family business legacies reach well beyond their historical foundations, enabling new generations to build upon the hard work of their founders. This requires a commitment to innovation and growth, anchored in the business’s core values, heritage and traditions.
Amplifying legacy through transgenerational entrepreneurship
Transgenerational entrepreneurship among younger generations can amplify family business legacies for sustained prosperity. The survey found that family-owned businesses with strong legacies and high levels of transgenerational entrepreneurship reported significantly higher financial and sustainability results.
Assessing your family business legacy
Family-owned businesses can use the report to understand the strengths of their legacy and assess it across four different types: static, preservative, evolving and dynamic.
Each type differs by level of transgenerational entrepreneurship and legacy score. The highest percentage of small family businesses represented in the survey have static legacies.
Transforming legacy from preservative to dynamic
The oldest family businesses often have preservative legacies. When a legacy is preservative, it is too entrenched in tradition and can stand in the way of innovation, adaptability and agility.
A more dynamic legacy can serve as a source of identity, inspiration and innovation, so the family’s business can embrace the future and achieve higher levels of performance across generations.
Moving a family business legacy from preservative to dynamic requires a culture that embraces both the heritage of the family and the progression of its business. This can be achieved through strategic innovation, flexible governance, next-generation leadership, legacy communication, entrepreneurial encouragement and succession planning.
Take the assessment
Applying the legacy matrix to your family business may be an important first step in assessing the strength of your legacy and how it may be impacting the performance of your business.
Video: Unlocking legacy in family businesses
Discover how leading family businesses are balancing tradition and innovation to achieve superior business performance.
Talk with us about your family business
KPMG can help you understand and grow the valuable legacy of your family-owned business to drive enduring growth for future generations.
