Businesses ill-prepared for crises
Kiwi companies are poor at succession planning, says a new survey that showed more than half of company executives were ill-prepared for the business to operate without them.
A survey by Board Dynamics found that almost 20 per cent of New Zealand businesses would be forced to shut down immediately if the head was struck down by illness or death. About 30 per cent could function for a few months before having to close.
Ernst & Young tax partner Jo Doolan said succession planning was absolutely critical.
"Some business owners just don't actually think it through enough and they also expect that the heir-elect will have the necessary skills . . . People don't want to look at their own vulnerability, the fact they might die.
"They really should sit down with family and have an open discussion that can be facilitated by an external party on what their expectations are."
Board Dynamics chief executive Henri Eliot said there was a "she'll be right" mentality. "But this laissez faire approach is leaving staff, business partners, investors and family financially vulnerable in the event of a crisis."
Ecoya chief executive Stephen Sinclair, who had worked with 42 Below, skincare company Trilogy, Moa Beer and Dorchester, said it was important to document and implement succession plans.
"It's about assuring you have got a plan in place and ensuring you've got the right team in place to take the business forward."
KPMG partner Troy Newton said the survey results reflected the relatively small size and family business nature of a lot of New Zealand companies that would make up the population for the survey. Smaller businesses often had talent but a lack of experience, he said.
"I think there is definitely a case for having some independent advice, whether that is professionals or other business owners who have been in the same situation."