Ten aspirations of running a family business
All businesses seek similar goals. Depending on the stage in the business life cycle, some goals may be more relevant than others. However, family businesses have a further nuance. The family business decision makers must be constantly aware of the impact of their decisions on the family.
Structure: Set up, from the outset, in a manner to protect the owners’ assets from the business’ creditors and vice versa. Protect the business’ assets from the owners’ creditors and in a manner to maximise family wealth.
Cash: Retain sufficient working capital in the business but get all excess cash out.
Stability: Maintain a strong Balance Sheet so the business can support its own borrowings without personal guarantees.
Compliance: Meet all tax, superannuation and OH&S obligations in order to protect the directors from personal liability.
Staffing: Ensure fairness between family members working in the business and those not by adopting commercial remuneration.
Marketing: Australians like to support Australian owned family businesses. Advertise to this advantage.
Governance: Provide systems and regular reporting so family members outside of the family business understand their investment in the family business.
Freedom: Free up the key personnel’s time for maximum benefit either in and out of the business.
Plan: Set short term objectives to achieve long term goals and continuously review the plan.
Exit: Keep the business in a state ready for sale whilst monitoring /actioning succession options.
As you can see, whilst these aspirations apply to all businesses, they have a further level of complexity and wider ramifications for a family business. Greater care and thought is required.