Family business and SME owners in Australia are the unsung heroes of our economy.
There are thousands of family members operating successful business every day and employing over 70% of the Australian workforce. Family members are the ones who will eventually lead us back to better long term economic times. Families put their personal assets on the line and don't look for handouts all the time. They work hard and usually always see a positive way forward. They have genuine core values and have a passion to create and build wealth for future generations.
Over 85% of registered businesses in Australia are family owned or SMEs. The latest research into family business highlights that only one third of family business pass to a second generation and succession is a major concern right now.
There are thousands of family members operating successful business every day and employing over 70% of the Australian workforce. Family members are the ones who will eventually lead us back to better long term economic times. Families put their personal assets on the line and don't look for handouts all the time. They work hard and usually always see a positive way forward. They have genuine core values and have a passion to create and build wealth for future generations.
Over 85% of registered businesses in Australia are family owned or SMEs. The latest research into family business highlights that only one third of family business pass to a second generation and succession is a major concern right now.
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Our own family business story is typical of the tens of thousands of regional and suburban families in business who keep the Australian economy moving.
I was one of five siblings who were brought up living in a country pub in Yarrawonga followed by living on a diary farm and orchard in Cobram, Finally, our father started a soft drink beverage manufacturing business in Geelong. The business was our life, the kitchen table was just an extension of our parents work life. So, as is the situation in many family businesses, we learnt about business by osmosis. When our father died we lost control of the business as he never would address the issue of succession. It is past hard-earned experience, working with numerous families and my family business knowledge that can add value and assist you in solving some of the traditional problems all families in business face as the next generation members enter the firm. |
We find that the most successful family business members don't assume they understand all the issues they face on a daily basis.
Many have implemented a formal or advisory board to bring an external perspective how they conduct their business or have trusted advisors who they meet with on a regular basis.
Directors of family companies operate in an environment that can be explained by the statement " they don't know what they don't know " Family company directors face a potential onerous risk in that they generally fail to understand their obligations and responsibilities as directors. Ignorance is no excuse and will not protect you. I suggest that at least one member of a family business should complete the Australian Institute of Company Directors course . This would be an effective risk management strategy.
Many have implemented a formal or advisory board to bring an external perspective how they conduct their business or have trusted advisors who they meet with on a regular basis.
Directors of family companies operate in an environment that can be explained by the statement " they don't know what they don't know " Family company directors face a potential onerous risk in that they generally fail to understand their obligations and responsibilities as directors. Ignorance is no excuse and will not protect you. I suggest that at least one member of a family business should complete the Australian Institute of Company Directors course . This would be an effective risk management strategy.
INSIGHT No 1 DECIDE IF YOU WANT TO KEEP THE DREAM ALIVE
For many, the hardest decision you will have to confront is making a choice with regard to the business you now own or operate. It is well documented that there are thousands of business owners who are struggling because of COVID lockdowns and they believe they have reached their final chance. For many older business owners, their business is their superannuation policy. Do you have family members to take over ? Have you nurtured a successor ? Do you have to find a buyer ? Is your business ready to gain a maximum value for a sale ?
What a waste of lifelong effort if all those years of blood sweat and tears result in your business going out of existence. Do you have the courage to make the decision right now and action an exit strategy or a strategy to continue ?
For many, the hardest decision you will have to confront is making a choice with regard to the business you now own or operate. It is well documented that there are thousands of business owners who are struggling because of COVID lockdowns and they believe they have reached their final chance. For many older business owners, their business is their superannuation policy. Do you have family members to take over ? Have you nurtured a successor ? Do you have to find a buyer ? Is your business ready to gain a maximum value for a sale ?
What a waste of lifelong effort if all those years of blood sweat and tears result in your business going out of existence. Do you have the courage to make the decision right now and action an exit strategy or a strategy to continue ?
INSIGHT No 2 HAVE A CLEAR VISION OF WHAT THE FUTURE WILL LOOK LIKE
If you had two jigsaw puzzles, one with a picture on the front of the final scene and one with just a white sheet of paper, which one would be easier to complete ?
How can your family members work with you toward achieving and maintaining a future successful business if they don'y know what it is they are aiming
for?. An agreed and understood vision for the future that embraces the individuals, the family as a whole and all employees in the business is essential.
Again, would you hop on a bus that didn't the final destination on the front ? Well, don't expect your family or others to get on board with you if cannot articulate where you want to end up.
If you had two jigsaw puzzles, one with a picture on the front of the final scene and one with just a white sheet of paper, which one would be easier to complete ?
How can your family members work with you toward achieving and maintaining a future successful business if they don'y know what it is they are aiming
for?. An agreed and understood vision for the future that embraces the individuals, the family as a whole and all employees in the business is essential.
Again, would you hop on a bus that didn't the final destination on the front ? Well, don't expect your family or others to get on board with you if cannot articulate where you want to end up.
INSIGHT No 3 BUILD ON THE CULTURE THAT MADE YOU SUCCESSFUL IN THE FIRST PLACE
The culture of the organisation is the behaviours and beliefs of all stakeholders from the founder through to the lowest paid or newest employee. It's the way people conduct themselves, the way they talk to each other and customers. It's the respect they have for each other as individuals and their overall attitude.
In my experience, it is usually driven by leadership that means successive leaders have to be able to lead in the first place and set the tone by example.
In a exemplar business, there is a feel about the employees and stakeholders that is different to most other workplaces.
What is the culture in your workplace ?
You are the only one who is responsible to ensure it never fades away.
The culture of the organisation is the behaviours and beliefs of all stakeholders from the founder through to the lowest paid or newest employee. It's the way people conduct themselves, the way they talk to each other and customers. It's the respect they have for each other as individuals and their overall attitude.
In my experience, it is usually driven by leadership that means successive leaders have to be able to lead in the first place and set the tone by example.
In a exemplar business, there is a feel about the employees and stakeholders that is different to most other workplaces.
What is the culture in your workplace ?
You are the only one who is responsible to ensure it never fades away.
INSIGHT No 4 PRESERVE YOUR PERSONAL AND FAMILY VALUES
The most successful and admired family businesses are those who have maintained strong family values. It is often the glue that keeps the business going through three or four generations. There are many examples of families in business in Australia who have multiple members across generations and have keep the founders dream alive but adapted to change as needed. Values are pervasive within all levels of the family and it is mainly through respect for what has gone before them.
Sometimes it is recognised as " That's the way we do it around here ". It can only happen if the founders have fostered this from the beginning.
INSIGHT No 5 EMOTIONS PLAY A KEY ROLE IN FAMILY BUSINESS
Show me a family without emotion and I will show you a family business without soul.The challenge is to harness all those different personalities and individual traits to work in harmony for the common benefit of the family business. The failure to do do this will lead to disputes, anger, spitefulness and the break up of marriages and families relationships. The founder or external chairman who can bring these powerful forces together without losing respect for, and recognising each individual's right to be different, is a skillful person indeed.
There is is nothing more tragic than a family that has been torn apart through arguments over family business issues. It takes an enormous amount of give and take by all to achieve harmony sometimes
INSIGHT No 6 UNDERSTAND EACH FAMILY MEMBER'S NEEDS
There are no two individuals the same, Over the years I have seen many parents become extremely frustrated with some of their children who are working in the business. Their conversation usually starts with, when I was their age. As soon as I hear this I know who is really at fault. That is a sure sign that its your own believe system is the stumbling block and you are not able to let go and trust the next generation.
The next generation is always operating to a different set of life issues compared to that of the parents and also from each of their siblings. just because they want to spend less time tied to the business than the founders did, it does not mean they are less interested. Many times baby boomers have to learn to let go, allow the younger family members to make mistakes and lead from the front. You must establish a communication process that allows for open discussion and work together to make positive progress.
Be warned, they could be smarter than you in a lot of areas and sometimes that hurts the ego.
INSIGHT No 7 DEVELOP A MEANINGFUL BUSINESS PLAN AND STRATEGY THAT DRIVES FUTURE GROWTH
Would you build a house without a set of plans and drawings or try to make a movie without a script ? Some will say that to be successful in business you don't need a plan. Just as could eventually get the house built or the movie made, you will get there in the end. However it would be with a lot of mistakes and wasted time and effort.
It's the process of working through the plan that's important, more than the document you end up with in the end.
If you have loans with a bank, try telling them you don't have a business plan.
It's what you do with the plan that is important. It should be reviewed every three months and constantly updated to be relevant to changing market conditions. It is the blue print for where you want to be in the future. Make sure you are adapting the market changes and that your plan is inline with your business objectives
INSIGHT No 8 MAKE SURE THE NEXT GENERATION WORK OUTSIDE THE FAMILY FIRM.
There is a saying that insanity is continually doing the same thing everyday expecting a different result. If the next generation come straight into the business from school, TAFE or university, what hope do they have of learning anything different, particularly in relation to being exposed to different leaders and ideas?
In corporate life they will experience the diversity of silos, politics and egos. It's valuable learning.
Life is a journey of many different experiences and if you catch the same buss everyday and look at the same scenery, how will you advance your mind or see new opportunities?
It should be compulsory for the next generation to spend time n at least two other companies. Preferably large enterprises with great commercial disciplines in place. Send them overseas if possible to expand their horizons. More importantly they need to develop and their own networks.
There is a saying that insanity is continually doing the same thing everyday expecting a different result. If the next generation come straight into the business from school, TAFE or university, what hope do they have of learning anything different, particularly in relation to being exposed to different leaders and ideas?
In corporate life they will experience the diversity of silos, politics and egos. It's valuable learning.
Life is a journey of many different experiences and if you catch the same buss everyday and look at the same scenery, how will you advance your mind or see new opportunities?
It should be compulsory for the next generation to spend time n at least two other companies. Preferably large enterprises with great commercial disciplines in place. Send them overseas if possible to expand their horizons. More importantly they need to develop and their own networks.
INSIGHT No 9 ESTABLISH A FAMILY MEMBER FORUM
Sometimes referred to as a family council. It normally comprises those members who are working both in and outside the business. These family forums are an effective way to ensure the family values are maintained when the business has reached a stage where there are non-family staff are in leadership positions.
Family forums should also include younger members who are still studying, allowing for the values and culture to be reinforced with next generation members. There needs to be a chairperson who is able to act as a facilitator without fear of alienating any particular member of the family.
These family meetings also a offer a forum to separate the family emotions from the day-to-day business activity and may include the key non-family leaders for part of the session.
Open conversations are a key enabler of maintain harmony with the extended family group. It will negate any pillow talk that can occur outside the business.
INSIGHT No 10 PLAN FOR SUCCESSION
It is well documented that less than fifty percent of leaders and families in business have a succession plan. In fact, nearly eighty percent of business owners have never had an internal conversation with all family members.
Credible research states that 30-40% 0f family business leaders have not discussed the future of the business with their partner. 50 - 60% have not discussed the future oi the business with their sons or daughters.
What have you done to ensure that a suitable successor has been identified to lead the family business into the future?
If you were a director of a listed company it would be considered negligent if a succession strategy was not in place. The same attitude should apply to owners of private companies. Your staff, customers, banker, suppliers and other stakeholders will have a better level of comfort knowing the business was able to be managed for future sustainability.
As the owner of a private business, the issue of succession planning should be a high priority. It takes away any doubt for all family members regarding future family leadership roles.
Credible research states that 30-40% 0f family business leaders have not discussed the future of the business with their partner. 50 - 60% have not discussed the future oi the business with their sons or daughters.
What have you done to ensure that a suitable successor has been identified to lead the family business into the future?
If you were a director of a listed company it would be considered negligent if a succession strategy was not in place. The same attitude should apply to owners of private companies. Your staff, customers, banker, suppliers and other stakeholders will have a better level of comfort knowing the business was able to be managed for future sustainability.
As the owner of a private business, the issue of succession planning should be a high priority. It takes away any doubt for all family members regarding future family leadership roles.