Thanks but no thanks: Local family businesses struggle as heirs vanish

Only 1% desire to lead right after graduation.

Succession planning may be overlooked among family businesses in Singapore, as only 3.8% of those next in line revealed their intention to follow in their parents' footsteps five years after they finish their studies.

According to a report by Ernst & Young, family businesses may be deemphasising the importance of formulating long-term goals and identifying successors.

Ernst & Young adds that family businesses in Singapore are relatively young and into their second and third generation only.

The presence of the 'founder figure’ who still controls the business may influence the next generation’s desire to join the family business. Family businesses in Singapore should consider proper succession planning and integrate the next generation into the business early to better enable the successors to succeed in the business,” says Goh Siow Hui, tax and private client services partner at EY in Singapore.

Meanwhile, Ernst & Young says the decline isn't necessarily bad news for family businesses, as it gives more opportunities to those who actually wish to join the parental company and may be better motivated to take on the challenge.

“Clearly, the succession career path is in competition with other career options, such as taking another job or starting a company. The healthier capital and job markets are, the stronger the competition is from elsewhere," the report added.