FBRC Newsletter – November 2011

Planning for the next 10 Generations

Following up on the theme of my last newsletter (Developments in the Family Business Market Place), I recently sat down with a potential client who presented me with his plan for the next 10 generations!  Wow what an inspiration. 

What he laid before me was not some wild fantasy, nor a concrete plan designed to be a straight jacket that locks his children into a legal structure and generations of misery, but an insight into his dream for the future. 

The decision as to whether or not to participate is left up to his children, but they have been presented with a detailed road map outlining what that future could look like. 

I have on occasion had exploratory discussions with potential clients who have had a vision of the future for their family.  But never before have I been presented with such a comprehensive, detailed and costed plan that considers issues such as –

• Growth and reinvestment beyond the family business
• Maintaining the incentive for future generations to be self-sufficient
• Incorporating philanthropy as a key objective

Having been part of an ongoing battle to get succession listed as an agenda item for the past decade and a half, it is heartening to see the work that some people are doing in this area.

Will the future work out as envisioned?  He is the first to admit that it probably won’t.  But this is a fantastic starting point.  The challenge now is to make it happen and I look forward to watching its progress from the sidelines.

Sibling Start-ups

In my work with second and third generation family businesses, the issue of brothers and sisters working together successfully is fundamental. 

This week’s Business Review Weekly (23 November 2011) has an interesting article that looks at these issues from the perspective of siblings who have made a conscious decision to start up in business together. 

The fact that it is the result of a considered decision, in some ways avoids the challenges faced by the more traditional approach.  But it does present some other issues. 

I was asked to contribute to the article and here are the five key points I offered –

1. In terms of a sibling start-up (in fact any start-up) – begin with the end in mind.  Think about your exit strategy before you go into the business.  Are you building a business for sale or succession?  If sale, when?  What happens if one person wants out before the others?  Discussing these questions and documenting them in a shareholders agreement can safe guard against future mis-understandings.  It should also be the starting point for ongoing conversations on these issues.
2. Maintain the fire – keep the original passion alive and use it as the basis for building a common uniting vision for both the family and the business
3. Get together and define some simple ‘rules of the game’ around decision making, working together and ownership transfer.  As the business grows it’s a good idea to formalise these into a Family Charter or Constitution that addresses these and a range of other issues which arise from mixing family and business.
4. Network with others in a similar situation.  You’ll find that you’re not alone and that the issues that arise when you combine family and business have been faced by others.  Family Business Australia is the place to start.
5. Beware of transitions – at times of change there is the danger that what was a common vision for the family business becomes a number of disparate personal visions.  Continual refinement of the vision in the light of changing circumstances is the key to success.

FBA 2011 National Conference

Belated congratulations to all at Family Business Australia for another successful conference. As always there were some fantastic presentations including –

• Bert Dennis and Adele Levinge of the Dennis Family Corporation spoke about social wealth creation.  Their session expanded on an earlier presentation by Bert discussed in our November 2010 Newsletter.
• Rob Brown from Peppin Planners presented a fascinating session titled ‘Emotions and the Mind'.  It offered a fascinating insight into how to overcome the number one limitation most of us face; internally imposed barriers.  Rob highlighted the importance of building trust and resilience.
• Chris Galvin of the 4th generation Galvin Engineering told the story of their family business and the path that they had pursued in professionalising both their business and their family. He highlighted the importance of planning and working with external advisers.  One of his favourite quotes, (which is quickly becoming one of mine,) is 'More sweat in training, less blood in battle' - Napoleon
  
• Calvin Coyles spoke about next generation leadership and identified some the strengths and weaknesses Gen Y will bring to the family business and some strategies for engaging with them.  It was an exciting and involving presentation from a member of Gen Y and contained a number of important messages for current leaders.
• Though his session was not about family business issues, Will Fuller presented on the importance of coming to grips with social media.  Love it or hate it, social media has become a key element of doing business in today’s world.  Will’s key message was to beware the ROI – Risk of Inaction.

There were too many great sessions to go into them all.  If you missed out this year, make sure you don’t make the same mistake in 2012 and lock 23^rd to 25^th August into your diary now.

Family Office Conference IV

The Private Wealth Network is holding its annual Family Office Conference in Sydney next week.  I’m not sure if they still have space, but this conference is highly recommended for those family businesses that have reached that critical mass.

Best Wishes for your Family Business Success

Harry Kras

FBA Accredited
Family Business Adviser

www.fbrc.com.au

Phone 03 9018 9800 Mob 0418 175 564

Dedicated to the success of families in business