Having being involved my whole life in family businesses, 6 years as the South Australian chair and on the board of the national body of Family Business Australia (FBA) it is safe for me to say, I have seen a lot, the good and the not so good.
What is the test of greatness in a family business? Is it the profits you make? Is it how the family work together? Is it the legacy you leave? When it comes time to hand over the baton is it a birthright or is it a work right? The best CEO may not be family, another role may actually suit that person better…is the next generation ready, willing and able to take over the reins? Often the current leader does not wish to handover, holding on too long to the detriment of family relationships and the business itself. Handing over versus abdicating are not the same. Consider the role of CEO and the role of chair, one can fulfil the day to day and support the board/family vison, whilst the other mentors and supports the CEO, both roles working together respectively for the greater good of all.
Don’t know where to start or simply prefer not to think about it and what happens, happens? You are not alone, the vast majority are doing the same! According to research a significant percentage of family business leaders indicate that having a transition plan is critically important to the success of their business, only 18% of family businesses actually have a written plan. Transitioning a family business is not easy, can be time-consuming and emotionally challenging (that’s why many ignore it).
There are many options (some listed below) and it is about considering each, without the pressure to decide, ideally with the collective input and understanding of those family members involved and/or likely to be affected by the decision:
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Retain, transition leadership and continue
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Sell & distribute assets
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Sell & create a Family Office
The key to all good businesses and relationships is communication, start the conversation sooner rather than later, planning the transition, however that may look, is the absolute key.
My advice is to :
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Get involved with Family Business Australia fambiz.org.au, together with family businesses are stronger and of course, seek the right advice from those with the experience to support you through the process.
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Research the three-circle model of Family Business. As the image shows there are three independent and overlapping groups: family, ownership and business. As a result of the overlap of these groups, there are seven interest groups, each with its own legitimate viewpoints, goals and dynamics. The Model reminds us that the views of each sector must be respected and integrated in order to set the direction for the family business system. The long-term success of family business systems depends on the functioning and mutual support of each of these groups.
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Maximise business value – The first step is to speak to someone who can assess the market value of your business today, then identify the drivers that will build value. Unlike valuing a property, there are far more moving parts, that is where Dale Wood can assist. Once you have this information you have some choices. Who doesn’t want to see their assets increase in value!
Take pride in what has been achieved and enjoy the fruits of your labour and the joy of family, they are worth it.
For a confidential discussion please contact Kent Aughey on 08 8334 0600 or kent@dalewood.com.au