Family Business Governance has been specially designed to assist family and owner managed businesses access understanding, support and guidance across every possible area they may face. We firmly believe that building from a strong foundation with a clear vision is the best way to grow and protect your family’s future.
Wealth can be looked at in many ways, but perhaps what’s most important is what it can truly mean for you and how can it be preserved.
MORE THAN JUST YOUR PERSONAL PERSPECTIVE
Wealth can be looked at in many ways, but perhaps what’s most important is what it can truly mean for you and how can it be preserved. It is often a highly personal perspective, but in a family and owner managed business, wealth can impact the way the business runs and what you want to happen now and into the future – for you, your family and employees.
To understand and explore wealth, we need to consider the assets. Very often people don’t realise what assets they have, let alone what they plan for them. Knowing where you are today, understanding the vision for the future, along with the purpose, will allow us to work with you in creating a suitable road map.
Part of this will of course include how to protect these assets when faced with a range of possible events and situations. Wealth is built over time, often over many years, and deserves to be fully considered. Wealth is also viewed as a gauge of success but we help you to see this not just from a financial perspective, but one of fulfillment and overall well-being, as well as the options it creates.
Do you have an up-to-date Will and understand why this is so important?
Are all assets required for the desired standard of living?
INCREASING BUSINESS VALUE
A seemingly simple question of ‘worth’ for a family and business leader can reveal a great deal. Worth isn’t always a financial value, especially to a family business. Legacy, status, purpose and identity are often highlighted as elements of worth.
In addition to knowing what we mean by ‘worth’ it’s also important to recognise what a family business is worth, financially, practically and emotionally, to the full range of stakeholders. Employees, suppliers, customers, family, shareholders, founding generations and future generations, all place different meanings to this.
Of course, value doesn’t have to mean revenue or even profit, as value can be in terms of investment, relationships, development and funding growth. What’s most important is that everyone shares an awareness and can align to views of value, worth, investment and debt. This will be from training and human capital development through to strategic or organic growth.
The question of “what is the family business worth?” is vitally important for everyone and by being addressed it can open up trust and understanding as well as guiding strategy, budgets and ultimately success.
Have you identified a strategy for growth in the future?
Do you have any idea of what your business is worth to aid future decision making?
SUCCESSION AND OPTIONS
If there was one topic that gets more coverage than any other regarding family businesses it would be succession, and yet it remains a mystery and challenge to so many. Our research shows that only 4% of family businesses have full, communicated and detailed succession plans.
DON’T FORGET TO LOOK AHEAD
So many of us are focused on the challenges and demands that we encounter each and every day at work and at home. In essence we’re all trying to survive and so the thought of trying to plan for an unknown future, which will be littered with decisions and options along the way, can be so overwhelming that we don’t bother. We convince ourselves ‘we’ll think about that tomorrow’.
THINKING ABOUT TOMORROW TODAY
We understand that it can be difficult to know where to begin. But if you think about succession as ‘future-proofing’ the business, skills, market, wealth, brand, reputation and success, it makes sense that you incorporate it into every day as a matter of course.
By involving everyone in this approach it will allow the more specific areas of tax planning and leadership to be tackled in a more manageable way. Gaining awareness, knowledge and understanding of choices puts things safely in your hands rather than risking a reactive and unknown situation.
When should succession start to be considered?
Has a successor been identified?
INCENTIVISE KEY STAFF
The ability to think, create and innovate lies with your team; so how do you best protect them and incentivise them now and into the future?
YOUR PEOPLE ARE YOUR KEY INGREDIENT
Anyone can copy what you do as a business, but no one can ever duplicate your people and the culture you build within your team. Developing and retaining talent is an essential part of growing and protecting your business.
As a family and owner managed business, this can be daunting. Finding the right people to trust and be part of your vision isn’t always easy and mistakes can be made along the way. So when you find those key members of staff, you’ll want to feel confident about a number of ways to incentivise them.
UNDERSTANDING STAFF INCENTIVES
Knowing the appropriate salary level or how to encourage individuals to contribute to the overall success of the business is important for you and them. There are many options available to you to do this in a way that works for your business and also your vision. From structuring and protecting ownership, through to health benefits or bonuses, there are a range of possible ways to incentivise and support your very best people.
Do you know what incentives could be offered to employees?
Why is it so important to invest in training and development?
One of the most wonderful things about a family and owner managed business is the flexibility and freedom they create. As a business grows there are often more opportunities for effective remuneration planning.
LOOKING AHEAD TO THE FUTURE
Business leaders tell us that the biggest benefit of being part of their family business is the flexibility, however this can also create questions and issues. When a business starts, its focus is on getting revenue up and running – and just doing what is necessary, day in and day out. Little thought is given to the future and building structures that can support a growing and successful business.
REMUNERATION THAT FITS WITH BUSINESS AND INDIVIDUAL NEEDS
The earlier you can build robust communications, plans and systems for expenses, dividends and paying family members that contribute to running the business, the better. These areas, when left, can very quickly create a hotbed of tension and misunderstandings. Assumptions and expectations build and become tangled, especially when understanding and agendas are not aligned amongst everyone.
In addition to this, there are a number of ways to efficiently and effectively plan when you have the right information and awareness of what’s possible and what people are looking for.
Has the business considered the remuneration objectives of family members?
Have family members considered the advantages of starting a pension for young children?
BARRIERS TO GROWTH
We live and work in a fast paced and changing world with new industries, social development and other interesting issues that can create barriers as well as opportunities for growth. In family and owner managed enterprises, barriers can sometimes come from a wider range of sources; internal barriers exist as much as external ones.
EXPLORING THE BARRIERS
From exploring the barriers created by cash or financial planning, through to how your people, skills and experience can potentially hold you back, the Barriers to Growth section will explore what’s happening in a changing society, including the implications of environmental, political, economic and technological factors.
UNDERSTANDING THE BARRIERS
When you begin to gain a greater awareness of the barriers, you can begin to turn these into opportunities. Gaining an awareness is often the first step to removing any barriers. We aim to support you in your understanding of the implications and stay up to date with what you may face, not just today, but tomorrow and into the future. This way you’ll be ready and armed to make decisions while remaining alert and ahead of the game.
Whether you see your current challenges as external or internal to the business or family, we will work with you and guide you as required.
Is the business making best use of the digital environment to drive sales?
Does the business have the premises and infrastructure to be able to grow?
RISKS TO THE BUSINESS
To fully protect your future and safeguard all the work that you have put in to get to where you are, it is important to build resilience and contingency plans for a range of eventualities. This has to begin by exploring the potential hazards.
Many people put off risk management because it is not an issue today. Managing potential risks is the best way to develop future proofing not just for the business, but for your family and wealth.
This section of the governance aims to raise questions. While risks can come in many forms, many are created by people, whether directly or indirectly. This can be from sudden loss or illness, through to not having the necessary experience to drive the business forward.
Even great successes and business growth can cause potential risks. Just spending a little time considering what the risks for your business might be, will serve you well.
IT PAYS TO PLAN
If you focus a little time on creating recovery plans, having challenging conversations and being ready, this means you and the business can stay healthy and proactive – ready for whatever life, the world, business and people can throw your way!
Working through potential risks to the business will also help you stay in touch with what’s happening in and around the business – and may even highlight new and exciting opportunities you might otherwise have overlooked. And of course, risks change over time so like all of the areas within the Family Business Governance, they need to be revisited regularly.
How well prepared is your business if it suddenly lost a key employee?
Could cash building up in the business be a concern?