THE use of the word ‘family’ in family business should not detract from an enterprise’s main focus – doing business.
THE use of the word ‘family’ in family business should not detract from an enterprise’s main focus – doing business.
But according to Abbott Business Consultants principal Steve Abbott, many family operations fail to implement strategies to ensure the longevity of their business.
While corporations undertook exhaustive searches for their chief executive, because they want the best person for the position, many family businesses did not put systems in place to ensure the ‘heir-apparent’ was the right person for the job, Mr Abbott said.
He said it was unfortunate many family businesses did not take succession planning seriously, or thought the process too difficult to deal with.
“Succession planning is tricky; people often find it difficult to distinguish between the business and themselves, Mr Abbott said.
“If the company is in the form of a family trust, mum and dad do not own it, the trust does, and mum and dad simply control the company. It’s difficult to hand over control.
“Often they are too busy building the business to consider the future.”
Principal of family business John Garland International, John Garland, said planning for the future was vital to the continuation of his, and any, business.
“Succession planning is vital because in today’s commerce world there is no such thing as retirement,” he said.
Mr Garland said family business management had to plan for a successor and, in situations where that management stopped at the owner, that person needed to be aware of their capabilities and be prepared to relinquish control, otherwise the business could dissolve under them.
He said future planning also helped in the event of the loss of a key family member.
“If the business is growing well and you take a key member out or suffer the loss of a leader and there is no succession plan in place, you can fold overnight,” Mr Garland said.
Howarth managing partner David Stevens agrees that succession plans can help keep a business stable in the event that the leader becomes absent.
“It can affect suppliers and people you are selling to. It can rattle the staff,” Mr Stevens said.
“They might say ‘we know what the dad was like but what is the son like. Should I stick around?’ It is much better to have a plan in place.”
He said business owners should carefully consider succession.
“You need to assess the skills of the family members and you need to move the person [the nominated successor] through the different processes of the business and get them involved in the business,” Mr Stevens said.
He advises clients to have a succession plan that spanned many years.
“Have a young family member get involved through different phases of the business and then give them control of the sections,” he said.
“Then get them involved in the finance side and then six, seven, eight years down the track, they can take it on.
“The business owner needs to work him or herself out of a job and make him or herself redundant.”
Mr Stevens said the succession plan should be subject to change depending on how well things were developing.
“You may find there are no family members who have the capabilities to take over,” he said.
Mr Abbott said succession planning was a complex process that involved more than just who would take over the company.
Succession planning is recognised by Family Business Australia as an important aspect of maintaining a viable family business.
As part of its entry assessment, the association asks entrants in its Family Business Awards to address what succession plans are in place under one section of the Family Business Awards entry form.
Entries for the 2002 Family Business Awards close on Thursday August 15.
But according to Abbott Business Consultants principal Steve Abbott, many family operations fail to implement strategies to ensure the longevity of their business.
While corporations undertook exhaustive searches for their chief executive, because they want the best person for the position, many family businesses did not put systems in place to ensure the ‘heir-apparent’ was the right person for the job, Mr Abbott said.
He said it was unfortunate many family businesses did not take succession planning seriously, or thought the process too difficult to deal with.
“Succession planning is tricky; people often find it difficult to distinguish between the business and themselves, Mr Abbott said.
“If the company is in the form of a family trust, mum and dad do not own it, the trust does, and mum and dad simply control the company. It’s difficult to hand over control.
“Often they are too busy building the business to consider the future.”
Principal of family business John Garland International, John Garland, said planning for the future was vital to the continuation of his, and any, business.
“Succession planning is vital because in today’s commerce world there is no such thing as retirement,” he said.
Mr Garland said family business management had to plan for a successor and, in situations where that management stopped at the owner, that person needed to be aware of their capabilities and be prepared to relinquish control, otherwise the business could dissolve under them.
He said future planning also helped in the event of the loss of a key family member.
“If the business is growing well and you take a key member out or suffer the loss of a leader and there is no succession plan in place, you can fold overnight,” Mr Garland said.
Howarth managing partner David Stevens agrees that succession plans can help keep a business stable in the event that the leader becomes absent.
“It can affect suppliers and people you are selling to. It can rattle the staff,” Mr Stevens said.
“They might say ‘we know what the dad was like but what is the son like. Should I stick around?’ It is much better to have a plan in place.”
He said business owners should carefully consider succession.
“You need to assess the skills of the family members and you need to move the person [the nominated successor] through the different processes of the business and get them involved in the business,” Mr Stevens said.
He advises clients to have a succession plan that spanned many years.
“Have a young family member get involved through different phases of the business and then give them control of the sections,” he said.
“Then get them involved in the finance side and then six, seven, eight years down the track, they can take it on.
“The business owner needs to work him or herself out of a job and make him or herself redundant.”
Mr Stevens said the succession plan should be subject to change depending on how well things were developing.
“You may find there are no family members who have the capabilities to take over,” he said.
Mr Abbott said succession planning was a complex process that involved more than just who would take over the company.
Succession planning is recognised by Family Business Australia as an important aspect of maintaining a viable family business.
As part of its entry assessment, the association asks entrants in its Family Business Awards to address what succession plans are in place under one section of the Family Business Awards entry form.
Entries for the 2002 Family Business Awards close on Thursday August 15.
