I notice you provide family office support. I’m 3rd Gen family business and our wealth is substantial and well managed currently. I have heard of family offices but don’t really know if this is an option for us just yet. When is the right time to set up a family office?
Thanks for your query. The objective of a family office is to manage the assets of ultra-high net wealth families as well as manage the day-to-day admin and management of the family group.
So the services include tax planning, estate planning, philanthropic ventures as well as assisting with lifestyle issues such as travel arrangements, education, and family governance.
The decision to start a family office or not can depend on many factors including:
- Using the Family office as a vehicle for family continuity: The family office can foster a sense of community and family unity.
- Better Financial Control: They allow the family I to directly oversee decisions about family financial matters
- Objectivity in Decision-making: You have a dedicated, professional independent team working for you.
- Customization of Services: You can customise exactly what your family wants the family office to provide.
My brother and I are 2nd gen family business and cannot agree on a remuneration process for ourselves. How should we approach this as it is causing ongoing conflict in our family.
Money and family is complex, adding the extra dynamic of business creates even more complexity. Trying to define what is “fair” can be very difficult and it not only affects family relationships but also how other employees view family members.
The first thing I suggest is that you separate business equity from wage conversations. Remuneration for the job done needs to be clear. Consider industry benchmarks and ensure you have clear role descriptions for everyone ( both family and non-family). Having independent reviews and appraisals will also assist.
The subject of remuneration does require open and honest communication. If those conversations become too heated I suggest getting an independent adviser such as members of the FINH team.
Here is an article I published in Bauer Media on the subject of family business remuneration. I believe it will also help.
We are a 4th generation family businesses. We are reasonably cohesive mainly due to some governance structures being put in place in recent years. The one thing we are struggling with though is getting the next generation engaged. They are becoming scattered all over the world with good education and careers. I think that is the difference between our generation’s engagement and theirs, we stayed local because there weren’t too many other options.
But I believe we need to get them to have buy-in for the long-term security of the family business. With holiday season approaching, we would like some of your thoughts on how other family businesses have done family businesses have done this successfully.
Firstly congratulations on the longevity of your family business – that is a wonderful achievement. You have a great advantage in having the governance structures in place so I would suggest you use those structures as a way of involving your next gen.
Include them (rotating participation perhaps) in family meetings- skyping means it doesn’t matter where they are based, they can attend. Understand what they value and ensure those values are incorporated into the long-term planning of the business strategy. Many family businesses have used community based projects as a way of getting the next gen actively involved in the family business.
Finally use technology and family gatherings to make sure the family business story is shared- how did it start, successes and failures, information about the founders. This is proving to be a very good indicator of family business success.
Here is an article I’ve written for Smart Company and from Campden FB on this subject.
What are your comments on the evaluation on the role of succession planning on the survival of family businesses especially in Africa – Zimbabwe in particular?
This is a question that the answer really does provide the reasons why “thoughtful” succession planning with a lot of premonition about the future is the KEY to the survival of family business. We refer to the survival of family business, as “Sustainability”.
Have a look at this eBook recently completed by our sister company Insights, it is a really good female perspective on your very question, which we thank you for.
I’ve heard you talk before and found you very interesting. I’m 28 years old and have a full time job in the Ag industry. I come from a family property in NSW. We are currently working through a succession plan and we had an idea that I start to buy a small section of the place now. It’s a house and 600acres. This would give my parents a bit more cash flow and ease some debt and give me a manageable debt and equity due to it being serverely under valued. I was wondering what your opinion on this would be.
Thank you for your help, and looking forward to hearing back from you.
It is pleasing to hear that your family are communicating and developing strategies to meet the liquidity needs of the 1st generation and the ownersip needs of the next generation.
While your suggested solution may well be ideal for your family’s circumstances, I am concerned about the process taken to come to this proposed solution and how some short term solutions may not be in the best long term interests of sustainability.
That is sustainability of the business/wealth and harmonious relationships across the entire family group.
I’m happy to meet with your family to discuss this further as global research evidences that someone that is expert and independent in this process is necessary if only to cut through the normal emotions that can cloud family decision making.Some questions for you to consider;
- What about you siblings, assuming you are not an only child
- What happens to the free cash flow coming from the business now?
- Is the business economically viable in the future?
- What legacy do your parents want to leave
- Do your family communicate about how your generation will deal with the business when your parents are not capable of doing so?
- Do you have any formal family get together to discuss these issues?
- In the family from generation to the next (who is going to lead how will you communicate at a family level and at an investment level)
- In Ownership from operators to governors. This looks at family capital; how it is invested and who is involved in decision making. Many families fail to separate the decision making around the operations from the governance and the strategic decision making. Many family members can have successful careers outside the family business but still remain very much part of the family business through various governance roles.
- In Business from local to global. That is the business is an evolving process of succession and in particular how it remains relevant in a growing global economy.