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Family businesses and their legacies are established on hard work and family values. In most cases, building the family business is about more than just making money; it’s about creating a long lasting impact within their industry and their communities.
In Australia, only 12 per cent of family businesses make it to the third generation. This tells us work is required in facilitating family business conversations and educating the people within the business to ensure sustainable business continuity with the intention of positively impacting their communities.
The Grant Thornton Australia family business survey showcased a real shift in mindset from the second to third generation. Often, first and second-generation family businesses consider themselves owners, but once the business shifts to third and fourth generation, the mindset shifts to stewardship. In the third generation, the family expresses a desire to contribute to the community, while in the fourth generation, they are focused on establishing a sustainable legacy, lasting many generations.
When you’re undertaking the daily tasks in your family business, sometimes thinking about the future and generational success can be the last thing on your mind. But what if you could take small steps to ensure your family business will continue and grow for generations to come?
It’s critical to identify your future leaders in the business. Successful leaders can come in every form; they are visionary, strategic, adaptable, resilient and have a strong commitment to the family values and effective governance within the business.
The key to sustainable business continuity in family business is communication. It’s important to communicate clearly and openly. Sometimes in a family business you must deliver difficult news, but that’s not a reason to shy away from having the conversation. If people aren’t communicated with clearly, there is a risk of making assumptions and creating distrust amongst family members.
Sometimes family communication can be emotional. It’s different to business communication observed in conversations with customers or suppliers. Maintaining professional communication is crucial due to the stakeholders involved. It is important family members have the same conversations when family and business overlaps.
An external facilitator can help with taking those first steps when it comes to having insightful and constructive conversations amongst family members. They assist to navigate sensitive topics, mediate conflicts, and ensure all voices are heard. By fostering open communication, facilitators aid in aligning family members on shared goals and values.
Aligning your estate plan and succession plan is critical for long lasting success. Often, family businesses will have both, but they’re not created in synergy. Not only does it ensure continuity and reduces conflict within the business, but covers tax efficiency, protection of assets and legal compliance. Both plans should reflect the same goals and clear vision for the business now and into the future.
In the journey of sustaining a family business across generations, it's essential to have a guiding framework to encapsulate the core principles and strategies that contribute to its longevity and success.
The LEGACY acronym provides a structured approach to ensure your family business not only thrives in the present but also preserves its essence for the future generations. Exploration of the LEGACY elements that are pivotal for enduring family business continuity.
An aligned family vision is crucial to business sustainability.
The setting of family values are essential to providing the family ethical guideline in their decision making.
An independent facilitator adds enormous value to family meetings.
A sustainable business plans to be in business for the long-term, so they need to be able to adapt to new situations and changing conditions.
Clear and concise communication between the generations is key.
The future of any family business is in the Rising Generation.
This National Family Business Day we need to think about legacy and building confidence in the Rising Generation for maintaining and growing the business. If you’d like any help with educating the Rising Generation in your family business, please reach out to your Family Business Consulting representative today.
