AUSTRALIAN freight forwarders are failing to plan for leaving the industry, a new report reveals.
The latest International Freight Forwarding and Customs Broking industry report, released by HLB Mann Judd in conjunction with The Australian Federation of International Forwarders and The Frontline Group, is aimed at providing a snapshot of the industry based on a “large sample” business survey.
According to the report, succession planning was a key issue, with 72% of the respondents wanting to retire or sell their business albeit they had failed to plan the eventual sale or transition.
Freight Forwarding Lead Partner at HLB Mann Judd Sydney, Steve Grivas, said this was alarming.
“Most respondents in the survey acknowledge that they need to start preparing for what will happen to the business when the founder or owner retires,” Mr Grivas said.
“Indeed, almost a quarter (22%) indicated that they are contemplating retirement or selling the business in the next five years. In light of this, it is very concerning that almost three-quarters of these respondents have not yet started to think about what they need to do to prepare for this.
“Succession planning is something that takes time, and if it is to be done properly then businesses need to start thinking about it five or even ten years in advance.”
Mr Grivas said the value of the business, or even its future viability, could be damaged if a sale was done quickly and without proper preparation or thought.
Businesses were also found to have issues with the reliability of their financial information.
“In total, 12% of respondents indicated that they are not comfortable relying on the financial information available to them about the business,” Mr Grivas said.
“There are two main reasons for this – they either believe their financial team does not possess the appropriate experience, or they are unable to verify the accuracy of the data received.
“With the ATO and other regulators continuing to crack down on incorrect information, and using their own data matching and research capabilities to monitor financial reporting, it is imperative that businesses have in place the tools and resources to produce accurate and detailed financial reports.”
Mr Grivas said unreliable financial information also made the succession process difficult.
“If organisations don’t have this in place, they need to take steps to appoint managers or advisers who can address this issue,” he said.
Some 61% of respondents believe that economic conditions and their impact on consumer demands is the biggest external factor influencing their business, while 18% believe employment costs are the biggest factor. Some 21% nominated factors such as currency exchange rates; competition; merger and acquisition activity; and fuel prices as key influencers.
- The majority of organisations are planning for growth, with 55% of respondents currently recruiting, and a further 18% planning to recruit in the next year. A quarter (25%) have no plans to recruit.
“Encouragingly, 41% of businesses would like to expand into new and emerging markets, indicating strong confidence in growth prospects,” Mr Grivas said.