"I started from scratch ... today I am proud of what I have achieved ... I am fifty-five years old but I feel I still have a lot to contribute to the business ... I would like my son and daughter to be involved in the management of the business but I am hesitant about handing over the ownership just yet....", this summarises one of the early conversations we had with one of our family business clients with whom we have built a working relationship for the past six years.
We have listened to his concerns, needs and expectations, met his wife, children and close business advisors and now we are at a stage where the succession plan implementation process is in its final stages. Roll forward to today and our client, who now enjoys a certain peace of mind that governance, management, ownership succession and the tax implications linked thereto have been catered for, has embarked on a new exciting project, diversifying his portfolio while we, as his advisors, are proud to be on board, once again. This is just one example of the many exciting journeys that we are embarking upon with our family business clients.
The growth and sustainability of a family business lies in the fine balance between the needs of the business and the expectations of family members. With this in mind, as independent advisors we truly believe in investing time and energy throughout our journey, working shoulder-to-shoulder with family businesses, meeting the family members and listening to their needs, fears, and expectations both collectively and individually.
Our enthusiasm for the work we do, lies with the fact that working with family businesses is a learning journey. We speak and meet up with our family business clients practically on a weekly or bi-weekly basis. Building such long term and solid relationships with our clients allows us to understand the nuts and bolts of the business and not least, the family dynamics placing us in the best position to be able to help the family understand their options for the future, provide tailor made solutions that are just right for that family business, and support them in making decisions that combine their aspirations, traditions and values.
We are actively involved in raising awareness of the importance of being proactive with regards to succession planning. In meeting family business owners we become conscious that it is easy to get caught up in the day-to-day running of the business, so much so that owners often fail to adequately plan and prepare for the succession process.
Our recommendation is very clear – begin the discussion early. As most of our clients learn to appreciate, a properly considered succession plan is certainly no overnight achievement. In the last couple of years, we have seen family business founder members, who even though at first may feel reluctant to step back from management, realising that encouraging younger generation involvement in determining business direction can only benefit the family-business dynamic, and as such they are working with us towards having a succession plan in place anywhere between 5 to 10 years ahead of schedule. Additional time allows for better adaptation and flexibility as the business grows and shifts.
We often hear that communication is key to success. There is no better example to prove this point than our family business clients who have gained huge benefits from this process. Bringing together the family members, listening to their needs and concerns both with regards to family and business issues, on an individual basis and facilitating the discussion around these issues amongst the family members, strengthens the family's emotional cohesion or as we like to call it, the 'family glue'.
Family businesses seek growth. With growth, governance issues become crucial. Building on what we would have learned from our discussions with all the family members, we assist with the formulation of the family charter or constitution, a set of guidelines that will help the smooth transition of the family business to the next generation. The family charter ensures clarity and transparency, and families know what to do when disagreements arise because they would have agreed to specific procedures that kick-in in such instances. A family charter also regulates other areas of management structures within the company, like management succession, profit distribution and the process of selling shares. A family charter is a working document that is adapted as the business grows.
Another important consideration that needs to be taken into account are tax implications. No family business owner would like to think that upon his/her retirement or death, a good part of the wealth generated will be paid in taxes. Seeking expert tax advice in conjunction with advice on governance issues is key as some avenues are only available if one prepares and plans ahead.
Passion, it's what drives family businesses. It's also what inspires our Family Business Team to help drive the success of these family businesses for years to come.
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