All I want for Christmas is….

When I meet with a family business for the first time, I’ll often ask what do they want to achieve from working with me and they all have the same answer…

I want to be able to have Christmas lunch with my family

As a family business advisor I spend a lot time training, upskilling and learning to ensure I can offer the best advice to my clients and their businesses. But it is important, every step of the way to never lose focus of what the family wants.

The two key areas I focus on to ensure my clients grow their family business and achieve their ultimate goal of that Christmas Lunch is –

1. Family Governance; and
2. Succession planning.

Why is governance so important to a family business and family harmony?

In a family business every family member is juggling multiple roles in the family, in the business and in the ownership of the business. You may also have some family members who are not in the business and can feel an outsider within their own family.

As much as the strength of a family business is their agility and speed to market, without a governance structure in place, this can also be their biggest downfall because as quick as you can decide on a decision, it can also be stopped in its tracks just as fast! And this is where a business can start to unravel and so can a family.

A governance structure is crucial to a successful family business and a happy family. Governance includes many aspects such as a family constitution, family council, family assembly, owners Room and an advisory panel. But the first step is just to set up regular meetings, ensure they have an agenda and I recommend an Independent facilitator. This will ensure your meetings stay on track, every one has a say and is heard and family matters never surface around the boardroom table. It also allows you to have a structured family meeting once or twice a year where all family members are updated on the business, so family members who don’t work in the business feel included.

Governance is something that evolves over time, it should never be considered something that you set and forget.

What does succession planning have to do with family harmony?

Succession planning is a topic families prefer to avoid. Retirement has become a “dirty word” in society and also the next generation don’t want to think anything will happen to their parents. And this is why I try to move the succession planning conversation away from retirement. It is about having a plan in place should anything ever happen. As parents we want the world for our kids but interestingly, we don’t consider, if we don’t have the discussion now, we could be causing our kids a lot of unnecessary stress in the future.

A succession plan, isn’t all about the plan, it is about the open conversations you have with your family in developing the plan.

I focus on what I see as the 7 barriers that can block a succession plan. They include:

1. Financial Security – many family businesses have all their wealth tied in the business.
2. Retirement planning – have you thought what you want to do when you retire. Your family business has been so fulfilling for so many years, just golf won’t be enough!
3. Election of a successor – have you discussed with your next gen to see who is interested?
4. Education – the benefit of time is you can train and mentor the next gen to ensure when the time comes, they are ready
5. Disaster and recovery – do you have a plan in place? The biggest disaster can be the loss of the Matriarch or Patriarch.
6. Objectives alignment – do the current and next gen have a shared vision or agreed family values in respect of the family business?
7. Managing communication – Is there appropriate communication and trust between the current and next generation enabling effective decisions and the sharing of information?