Australia’s youngest small business owners are rewriting the rules of what it means to be successful, aspiring to leave a lasting legacy that lives on through the positive impact they make in their community and through their businesses, which they intend to pass on to family.

The findings come from research commissioned by American Express, which sought to uncover the aspirations of Australian small business owners and how well equipped they are to achieve them. It uncovered a surprising difference between younger and older generations of owners when it comes to their definition of long-term success.

While 53% of all small business owners say leaving a legacy is important, this figure rises among younger generations, with 64% of Millennials and 59% of Gen Z operators focused on leaving a legacy compared to less than half (45%) of owners from older generations.

For more than a third (38%) of small business owners, legacy means making a positive impact in their community, with almost half (48%) of Millennials saying it’s the type of legacy most meaningful to them.

“These younger generations have grown up as digital natives with rich online communities, and what our research shows is that as business owners, they also care about making a difference in their real-life communities too,” said Liana Kohn-Gardner, Vice President of Merchant Partnerships, Global Merchant Services A/NZ at American Express .

After leaving a positive community impact, small business owners said that passing their business onto family (29%), creating a brand that outlasts them (25%) and building generational wealth (25%) are important legacies.

A family affair

With 81% of Australian small business owners surveyed being the original founder, succession planning is deeply personal. More than half of Millennial (55%) and Gen Z (53%) business owners say they want to pass their business on to family as a legacy. By contrast, the older generations are most likely to sell their business for the proceeds. Just 37% of Gen X and 40% of Baby Boomer and Older business owners intend to pass their business on to family.

“For younger generations in particular, we see that family is an important part of their business’ success,” said Ms Kohn-Gardner.

“Four in 10 Millennial business owners already employ family in their business today, significantly more than older generations, as they see them as trustworthy, naturally invested in their success and believe they understand the long-term vision of the business.

Long-term aspirations, short term priorities

While Australia’s small business operators may aspire to leave a lasting legacy, the research uncovered that most (65%) don’t yet have a succession plan in place. This figure is highest among Gen Zs, with almost half (43%) not having thought about succession plans — more than double any other generation.

“The Amex research found that more than half (62%) of small business owners plan only a year ahead or less, reflecting the fact that small business owners are some of the busiest people in the country,” said Matthew Addison, Chair of the Council of Small Business Organisations Australia (COSBOA).

“Even if small business owners haven’t had a chance to formalise their succession plans yet, some things that might be helpful for them to consider is who might step into key roles, how would customer relationships and business knowledge be passed on, and how finances would be managed through a transition. Forward planning gives business owners the best chance to protect what they’ve built and ensure their legacy continues.”

Strategies to turn aspirations into reality

While just one in ten (10%) small business owners is looking five years into the future, growth ambition is strong: 43% cite financial security as their number one motivator for expansion, followed by creating more freedom through passive income or work-life balance (30%).

But cashflow remains a critical barrier to growth. More than a quarter (28%) of small business owners have had to turn down growth opportunities due to cashflow constraints, with millennials (41%) and Gen Z (39%) operators the most affected.

While many rely on personal savings (44%), others are making the most of financial tools, with more than a quarter (27%) using business credit or charge cards, one in five (19%) using business loans and about one in 10 (11%) using flexible payment options included in cards.