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Share the family business secrets

THE work of finance managers in family businesses is often hampered by business owners who wish to keep family affairs confidential and are reluctant to share financial information essential for business growth, according to recent research by CPA Australia. “The line between family and business finances is often blurred in these businesses,” CPA Australia business policy adviser Judy Hartcher said. “This makes it hard for finance managers to perform effectively. Family businesses that employ professional finance managers may not be getting the best value from them if they do not provide all relevant financial information.” The research was undertaken for CPA Australia by Dr Bruce Gurd, associate professor of management in the International Graduate School of Business at the University of South Australia, and Dr Jill Thomas, senior lecturer in management in the Adelaide Graduate School of Business at the University of Adelaide. Completed in May 2006, the research Finance Managers in Family-Owned SMEs examines the role of the finance manager in family-owned SMEs in Australia. According to the research, the most significant factors to inhibit a finance manager’s performance are lack of communication and lack of business planning. “These factors are linked to finance managers in family business not being kept in the loop with available financial information, and not being involved in the business’ decision making and strategic planning,” Ms Hartcher said. “Some finance managers felt they were under-utilised. The findings showed that finance managers are mainly involved in routine accounting and administration functions such as accounts receivable and accounts payable, with almost two thirds being responsible for these tasks. “They also played an important role facilitating access to capital. In more than half the cases, finance managers liaised with banks and over a third were responsible for negotiating loans. However, many expressed concern that they did not have the opportunity to be involved in strategic planning where they felt their expertise could be useful.” According to the research, more than a third were not involved in strategic planning. “Despite these concerns, most finance managers enjoy working for family businesses. Their sense of fulfilment and job satisfaction stem from the breadth of experience and responsibilities in their current roles and their close relationship with the family,” Ms Hartcher said. “That is why many of them had stayed with the same firm for so long, even though there’s no possibility of advancement to CEO in many of these firms. “The rewards of working in the family business can be high, particularly for those with good interpersonal skills, a passion for the business and empathy with family issues.”

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