This seminar looks at the advantages gained by family businesses and will help you to capitalise on these strengths. Presented by Tony Haffenden, it also looks at some of the key challenges and suggests ways that they can be turned into positives for business growth and success.

1. Ensuring the success of your
family business
Tony Haffenden
Family business and succession coach
Helping senior business leaders exit or transfer their business and
young business leaders create a new vision and a
profitable way forward

2. Ensuring the success of your family
business
The economic importance of family businesses
The real differences in running family businesses
Family business leadership and transition
Where will we (and our businesses) be in 2017
Using conflict to take the business forward
Pass on, sell on, carry on or……………
Some real examples of family business transfer
Communication and organisation solutions

3. Family businesses as a % of registered
companies
Portugal 70%
United Kingdom 75%
Spain 80%
Switzerland 85%
Sweden >90%
Italy >95%
Middle East >95%
© Family Business Solutions

4. What every family business adviser
should remember
No family business is at exactly the same stage
No family firm is static for very long
Professionals must respect these differences
No one professional has all the tools
Working with a family business is a multi
disciplinary undertaking
It’s a privilege to work with each one
© Dr Barbara Nunn

5. Today’s challenges for the Family
Business
Modern economy driven by:
Globally expanding markets
Technical innovation
The environment
Knowledge and Information
Change (stress)

6. What does this mean?
Greater opportunities
More effective decisions/higher levels of risk
Successful transition of the family through its life
course and the family’s business through its
organisational life course
Consequences of mismatch are more critical to
the well being of the family and the viability
of the family business

7. Qualities of a family business leader
Clarity, consistency and passion
Excellent people
Talk to staff and find out what’s going on in
the business
Purpose, price, costs and volume
Brainstorming skills
Strategy 5 years and 1 year in detail
Guts, nous, vision
Above all the ability to get on with people
Sir Gerry Robinson

8. The next leader of your family business
Inside outsider?

9. The family business system
Family Business
Family needs Business needs
Emotional Facts/profits
Inward Outward
Little change Fast change
Born into Contracted into
This is where it gets interesting!
© Family Business Solutions

10. Non family business- two circle model
1 2
Business 3 Ownership

11. Family business - three circle model
Developed by Tagiuri & Davis, Harvard
1 3 2
Business Ownership
7
5 6
4
Family

12. © Family Business Institute

13. The model in practice

14. Move forward together with confidence
What are your personal and business aspirations?
Shared vision for the business and family in 2017?
Where will you be in your biological life cycle?
At what stage is your business life cycle?
Where are you with your product life cycle/s?
What innovations do we have in the pipeline?
No need to wait for happiness and success?

15. Focus on the positive
Working in a family business can be unique and rewarding
in many ways
Create enmeshed goals and implied trust among
the various functional positions
Have built-in teams, they often have a common
philosophy of management, culture and ethics
And no amount of time can replace the sense of
familiarity that family members bring to the
workplace
Recognising and fostering these positives at
times of conflict can result in easier resolution
of issues

16. Unique benefits and some tricky
challenges
Key people are related to one another
Unless family members understand and are
committed to preserving these relationships,
the business can destroy them. Yet the
business also has to function profitably
Women often use their experience in juggling
activities, negotiating peaceful settlements
among siblings, and acknowledging
different needs to resolve conflict

17. Family Business Models (i)
Family first Business first
Business decisions favour Business decisions based on
equality and unity as fair what’s best for the company
Differences in contribution Professional principles for
aren’t recognised (golf compensation, promotion
course scenario) and recruitment are seen as
fair
A happy, united family is Principles are followed even
good for the business if it leads to unequal
treatment of family
members

18. Family Business Models (ii)
Active Passive
Only family members working Ownership is open to
in the business can own working and non-working
shares (who is “family”?) and shareholders
ownership control is in the
hands of those who run the
business
Non active family members Non active family members
lose their right to their family’s may continue to participate
heritage in their family’s heritage
Family wealth may be Family wealth may
consolidated in a small group be diluted amongst
of shareholders a large group of
shareholders

19. Roles and responsibilities
Conflict can arise from lack of clarity around responsibilities
Casual, informal management, can cause problems as the
business needs to change. Especially as the family business
grows
Solutions
Using the disciplines that any well run company uses –
managing workflow, job duties and responsibilities across
functions – can help
Each person understands their role and how he or she
contributes to the organisation’s overall success.
Problem solving is then focused on resolving
the business issue rather than pointing fingers .

20. Using conflict to make business progress
Set out the ground rules
Establish everyone’s initial positions
Confirm common interests and goals
Proceed to brainstorming – everything is listed
Present objective data/facts
Explore benchmarks, best practice examples
Reach agreement
Write up and circulate the agreed action plan
Clarify responsibilities and time table

21. Conflict resolution
Team
Good fighting
Non judgemental
Attack the problems
Participation by all
Productive
Conflict
Business
Growth
Leads to more
professionally
managed businesses

22. The Developmental Model
Maturity Business
Development
Expansion/
formalisation
Start-up Young
Entering the Working Passing the
business
business together baton
development
Controlling
owner
Family
Development
Sibling
partnership
Ownership
Cousin Development
consortiums
Developed by Gersick,Lansberg, Desjardins,Dunn
Developed by Gersick,Lansberg, Desjardins,Dunn

23. Marc Isambard Brunel – April 1769
Son of a prosperous farmer
in northern France
Showed a talent for maths
and drawing at an early age
As an 11 year old, he
earned his father’s
displeasure by declaring a
wish to become an engineer

24. Developing young family members
Formal training (technical & financial)
Special assignments – strategic/decisions
Superior/subordinate interaction
Job rotations (across functions/divisions)
Goal setting and performance reviews
Employee exchange
Job redesign project
Real challenges – stretched goals

25. Seek help in traditional ways
Women who become leaders in their businesses
generally know that they do not need to face these
obstacles alone. Consultants who understand family
businesses can help immeasurably in moving
businesses to more structured, traditional management
methods. Setting goals and planning implementation
can bring family businesses greater benefits. And
mentors and peer-to-peer networking can help family
members learn of other models that work.
© May 2000, Women's Business, all rights reserved. Reprinted with the permission of Women's Business.

26. Business Family
Communication Solution - Family Council
A separate time and place for discussing family matters
that affect the business and business matters that affect
the family. A forum for discussion of difficult issues, eg:
Continuity and succession
Hiring and firing relatives
Preservation and communication of
the family’s core values
Without a supportive and nurturing family there
can be no family business

27. What is a family business constitution?
“A statement – gained by consensus – of the
family’s shared values and policies in relation to
the family and the ownership and management of
the business. It serves to balance the best
interests of the business and the well being of the
family”

28. Why a family business constitution?
Avoids emotionally agonising predicaments
Creates “fitter” families, not just problem averters
De-personalises and anticipates issues
Minimises damaging behaviour patterns:
“leaving issues in the air”

29. The Content
Shared values and vision
Family Assembly? or Sunday lunch
Family employment and compensation
Ownership policies
Board best practice
Family philanthropy
Regular review intervals for the constitution
Other matters that the family feel are important

30. Key considerations with example
answers
Q Should all family members get a job in the business?
A Probably not – unless low number
Q Should the business only employ the best for the job,
whether or not they are family?
A Yes, if the skills are not in the family
Q Should family members have any relevant outside
experience and/or a relevant academic qualification?
A Yes, unless they are an inside/outsider or
when low skills are required

31. Continued…
Q Who recruits and appraises family members?
A CEO or line manager
Q Should the board / partners be comprised only of
family members
A Non Execs can be valuable. Also think of an
Advisory Board
Q How do you discipline family employees?
A CEO or line manager

32. What do family business boards do
(and senior management teams)
Everything a non-family business board does
and then…
Help to create family business policies
- ownership transfer
- liquidity (capital and dividends)
- employment of family members
- management training
- remuneration
© gwe

33. What is a family assembly?
“A separate time and place for discussing
family matters that affect the business, and
business matters that affect the family”

34. Family assemblies
Forum for family discussion relating to
business / social function
Communication link with board and owners
Initiating policies / family position papers
Approving major decisions
Appoint family director / observer

35. Business transfer failure in the UK
82% of SMEs facing transfer decisions do not
transfer for lack of a suitable successor
6,000 avoidable business failures each year in
the Business Link target market
Due to lack of planning, family tensions,
unsuitable successor, didn’t seek support
© gwe

36. Business Link and the 10 to 30s
Around 2,000 avoidable business transfer failures
each year with turnover of $4bn and 35,000
employees
1,300 family businesses
Helping businesses through transfer is complex
Addition of family element gives rise to different
and additional and often complex support needs
to non family businesses
Assisting a family business through transfer
must consider the family element
© gwe

37. Where transition can go wrong
Transitional Periods
Cousin Consortium
3rd
3rd 10%
2nd
2nd
30%
1st
1st
100%
Sibling
Partnership
Controlling Owner

38. Recognise the triggers for need to
transfer
Retirement or new challenges
Ill health
Desire to turn parts of the business into cash
Extreme downturn in business
Stress/role change
Disputes/divorce
Biological process

39. Succession chaos or proven
benchmarks?
Capitalisation
Estate of Business
Plan
Wills Tax Plan Business Plan
Ownership Business
Succession Leadership
Retirement Development
Family
Quality of Life Career
Development
© Family Business Solutions

40. Family business transition planning
4. COMMITMENT
Jumping to commitment is tempting - we’re off!
2. EXPLORE – where to next?
Communication
Involve everyone who is affected 3. CHOICE
by the outcome Consensus about the
Identifying key issues “best possible
Exploring and testing the options outcome”
(as many as possible) Letting go of the
Coping old way
EXPLORE
Resistance TIMESCALE
Doubts Size of business
Fears Size of family
Denial Personalities
Good process helps
1. DISENGAGE – we’re on the move
All “Key players” realise that the “old way”
will no longer work – things have got to change © Family Business Solutions

41. Some succession paradigms
Traditional Conventional
Not on my shift Liquidate
Only at end of career Mission goals focus
Come in as managers Come in as employee
Only directly involved Extended family
Family matters are Encompasses
secondary extended family
Haste to join External
employment
Cornell University

42. Putting these concepts to use
Recognising you are in or approaching
transition
Recognising the ownership, family and
business leadership requirements to get
through the transition
Managing the inevitable anxiety and
uncertainty
Knowing when the transition needs to end
Dr Barbara Nunn

43. Options – Business Link review –
broker service?
Pass on to family member/s - Valuation
Trade sale – begin early, get flirting
Management buy-out – accountant will help
Form a cooperative – Plunkett Foundation?
Close down – Insolvency Company
Retain property/land sell business
Sell land etc for building

44. Other real life example
What do you really want?
MD of engineering software company aged
51,with health problems
Wife and son in the business
One non family Director and shareholder
Profitable business worth around £1million
What happens next?

45. Recent real life example
What do you really, really want?
MD of Direct Marketing, family business
wants to retire and move to the coast.
Successful business employing 40 people,
well established
Wife in business
One other non family director in business
Daughter living in Hong Kong not interested
What happens next?

46. Another real life example
What do you really want?
MD/Head Teacher of specialist private
schools wants to retire in 4 years time
Wife in business – children very young
MD is highly talented in specialist field and
still middle age.
Very successful, four properties with large
mortgages
What happens next?

47. Owners 1st stage in grooming process
Understand current situation & future prospects
Identify, priorities, goals & timescales
Evaluate all possible exit routes and tax issues
Select preferred exit route, process & timing
Agree optimal shape of business to achieve exit
Identify obstacles, conflicts that may delay exit
Agree big picture action plan

49. My very best wishes for the success of your family
businesses and those you work with. Thanks for
coming tonight. I hope it has been useful to you all