The challenges of families in business

Understand the position of the family or family in business

Maturity Expansion/formalisation Start-up BUSINESS AXIS

Young business family Entering the business Working together Passing the baton

MVA Bennett

YOUR FUTURE, OUR BUSINESS

Controlling owner

Sibling partnership Cousin consortium OWNERSHIP AXIS FAMILY AXIS

Source: Family Business Australia

The challenges of families in business

MVA BENNETT is a Chartered Accounting firm in Melbourne and an REIV strategic partner. Our belief is that YOUR FUTURE is OUR BUSINESS, arising from rich history that dates back to our founding in 1941. Our capabilities are delivered by a team of seven partners and 50 staff governed by the profession’s quality controls.

In the past, succession was often automatically actioned by death or disability. It is now commonplace for two generations of a family to work together in the family business, creating a unique dynamic. The key in today’s world is communication.

Where do you sit on the aXIs?

The above chart is a useful tool to know where the family and business is positioned now, to set up the strategy both short and long term.

Families in business comprise around 70% of Australian business. There is a view that if a business was to be well advised and, set up on the best advice, it would be not to set up as a family business. Families and businesses have conflicting systems of operation. Examples may include:

Families

• Emotional • Obligation based • Relationship-oriented • Status as birth rite • Nurture the weakest • Nepotism

Business

• Objective • Task based • Task oriented • Selecting best person for the job • Survival of the fittest • Competences

Think of the above differences in relation to the leaders of your business.

Warning signs of family wars

Warning signs of family wars are forever present and worth looking out for. Look for attributes such as:

• Perceived unfairness or inequality • Process disagreement • No consensus • Privilege • Factionalism • Ambiguity

It may be possible to mitigate the possibility of a family war or it maybe clear that no amount of wise counsel will deliver a positive result so a move towards separation may be the sensible solution – divide and conquer.

Consideration and takeaways

• Is there a common set of values across generations? • Are there conflicting systems of operation – business (General

Manager) vs. family (Owner)? • Is there a dominance of negative attributes that will prevent reconciliation? • Is the governance system still appropriate as time has marched on? • Is the family “event ready” – death, disablement, divorce or just opportunity • How do you know that all is as it is? • Communicate, communicate communicate

Why engage MVA BENNETT?

We strive to differentiate ourselves from other accounting firms by seeking to: • Develop agreed wealth goals, by identifying and aligning mutual values and obligations that will underwrite our relationship • Continually meet expectations, with strong communications throughout our engagement • Use cutting-edge skills and tools to achieve our deliverables, and • Practise what we preach

For further information, please contact Nicholas Rodier Partner, MVA BENNETT Chartered Accountants

nicholas@mvabennett.com.au

03 9642 8000. Level 5, North Tower, 485 La Trobe Street, Melbourne

mvabennett.com.au

– MVA Bennett

Please note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their circumstances.