A new survey from PwC reveals that 53% of family businesses plan to pass on management and/or ownership to the next generation.
But PwC's 2019 Irish family business survey found that 34% of such businesses have not engaged the next generation in preparing for these changes, while just 18% have a robust, formalised and communicated succession plan in place.
Teresa McColgan, Tax Partner at PwC's Entrepreneurial & Private Business Practice, said that with the majority of family businesses planning to pass on management and/or ownership, continuity planning is critical.
"NextGens will face a different landscape in terms of the impact of technologies such as artificial intelligence and robotics, as well as cybersecurity risks," Ms McColgan said.
"It is therefore good news that the majority (72%) of NextGen future leaders are expected to gain experience and develop skills outside of the family business to ensure they keep pace with innovation, " she added.
Today's survey also found that Brexit is the single key challenge holding up future growth.
58% of Irish family businesses are much more concerned about the impact of Brexit than global businesses at 11%.
But at the same time, the survey highlights that Irish family businesses can do more to diversify their businesses compared to global counterparts.
For example, 46% currently operate in only one sector and in one country compared to 30% of companies worldwide, while 29% said they will be selling their goods and services in new countries in two years’ time compared to a global average of 38%.
Owen McFeely, Director, PwC Entrepreneurial & Private Business Practice, said that businesses will face increasing concerns about Brexit as developments unfold in the UK.
"We urge those family businesses trading with or through the UK to intensify their Brexit plans. The survey highlights that Irish family businesses have some way to go compared to global counterparts to diversify their businesses. In light of Brexit, seeking scale in international markets needs to be considered," he added.
Aside from Brexit, other key challenges for Irish family businesses include accessing key skills, the need to innovate to keep ahead and the economic environment.
But despite Brexit and other external uncertainties at the time the survey was conducted - Autumn 2018 - 86% of Irish family businesses expected revenues to grow in the next two years.
However, the pace of this revenue growth is expected to slow. While 25% experienced double digit growth in 2018, just 15% expect sales to grow quickly in the coming years.
To achieve this growth, 33% said they expect to be involved in a merger or acquisition in the next two years.