Making the most of family business

Family businesses are in a unique position, but they need to communicate and plan as a family to make the most of their competitive advantages.
BDO Rotorua invited Dr Justin Craig, from Australia's Bond University, to speak to Rotorua family business owners and advisers this week.
Craig said this sector was a driving force in most economies and its resilience in the wake of the global financial crisis meant policy makers were now starting to hear its voice.
That resilience comes from a longer-term perspective and having a stronger personal interest in the company's survival and retention of employees.
"There is more to it than just the bottom line. It is about your role and reputation in the community and how you position the business for the next generation."
Craig said family businesses were usually able to make decisions quickly and tended to be very innovative, finding creative, workable solutions. But they also come with their own unique difficulties around succession, allocation of responsibility and rewards and governance.
He recommended creating family structures, as well as business structures, to include everybody wanting to play a role in the family's affairs, even if they were not directly involved in the company.
This could include a family council, providing a forum to communicate with all branches and generations of the family.
Although he initially rejected the idea of a family constitution, Craig said he had witnessed their success so often he was now a convert.
"It sets out what it means to be part of the family, what its values are and how family issues will be dealt with. It articulates the expectations on family members."
Questions family businesses often face include family members' rights to employment, sibling rivalries, the role of in-laws and the impact of separations and divorces - all of which can be outlined in the family constitution.
BDO Rotorua's accredited family business associate Martin Pipe said it was important for families to have a clear plan to:
*Learn about business - make sure new generations, in-laws and others coming into the business get a good grounding in general business, through education or experience outside the family firm.
*Learn about the family business - give them the opportunity to learn about all aspects of this specific business.
*Learn how to lead - nurture leadership talent by mentoring and promoting people who will bring the most benefit.
*Learn how to leave - plan your exit.
Pipe said 41 per cent of New Zealand business owners were looking to exit, but only 13 per cent actually had a plan in place to make this happen.
Planning ahead allows the founder or leader to make a more gradual exit, giving them time to get used to not being in charge and to build a life outside work, while allowing the incoming leader to gain experience and build their own relationships.
"Retirement will be a lot less traumatic and you can let go knowing the business is in good hands and your life's work will continue into the future."