Succession is always an issue

In recent times I have been working with a family who have a successful business but no succession plan or anyone interested in taking over from the current owner. The only real option is to get the business ready for sale or establish systems that make it sutable to be operated by external management. However, the owner did employ an external general manager in recent times but it all turned to mud as the owner endeavoured to work on his business and not in it as the saying goes. It has been discovered that there are many thousands of dollars missing and the owner is back working in the detail and not focussing on business growth. A difficult situation for someone who started with nothing and built up a large business through their own street smarts and hard work. No wonder the cash flow was tight and I am puzzled how their external accountant did not realise that something was wrong as they were producing monthly trading results and using excellent diagnostic software. The owner now has someone working on the internal systems and processes and slowly progress is being made. When a small business becomes a medium sized business systems, processes and checks and balances are required. Its hard for many who have built their business from the ground up to accept outsiders into the fold.

Planning for Business Families

Every senior family member engaged in a family busines should read a book by Randel S. Carlock and John L.Ward titled 'Strategic Planning For the Family Business'

As an advisor to families in business, I am concerned by the lack of time spent on developing strategic plans that ensure the family and business objectives are mutually supportive.

In my experience there is too much time at board meetings looking at results that have already happened. One of the primary responsibilities of a board is to set the strategic direction and then delgate that resonsibilitiy to the CEO and the senior management to achieve the expected outcome.

At regular intervals, the board should take time out and hold a strategic review planning day. This should be at a location away from the usual place of work and facilitated by someone who is experienced in the process. And, there are many tools that are useful in getting great results from such a day.

Contact me if your would like any further information: billwinter@bigpond.com.au

Plane Crash Lessons

The recent plane crash where a whole board of a company died should cause concern for owners and directors of private companies.

On top of this, recent research coming out from Stanford Universtity highlights that more than half of private business surveyed cannot name a successor to their CEO.

In my experince in private companies, the percentage would be more like ninety percent do not a working succession plan for a staff member to take over if the CEO or MD died suddenly.

In fact how many family board members or senior executives travel overseas on the same plane ? I bet the board members who died earlier this week did not believe it would happen to them.

Have a look in your own business and role play a situation where a couple of your senior leaders
are no longer able to come to work.

What is your back up plan ?

There are plenty of examples in Australia where where this has happened and guess who was first to knock on the door. ?

The bank of course ! After all they hold most of the outstanding loans.

I have recently come across two large medium size companies and they both do not have any Business Continuity Plan ( BCP ) in place. And, in both examples, the CEO was not interested. One of these is a small listed entity with a turnover of $70 million.

Go ahead and do the role play or simulation and see what gaps you identify.

A great book to read for families in business

I have just finished reading for the second time a book titled Strategic Planning for the Family Business by Randel Carlock and John Ward.

Last year research by KMPG and FBA in Australia indicated that only 26% of family companies have a formal business strategy in place. This book is a great insight into the issue of intergrating the needs of the family with the need to ensure the business is the vehicle that generates the resourses to meet the family expectations.

Many business owners sometimes become confused with business planning and strategic planning. This book will help make sense of the the whole issue of strategic planning.

My concept of strategy is that it is the tactics you are going to use to get to where you want to be in the future.

For example, I have just started a new boutique business consulting company with two collegues ( http://www.symphony3.com.au/ ) and when determining our internal operational strategy, we have decided that the admin will be done online. That is a clear strategic decision made to eliminate the need for physical facilities. In fact we will look to outsourcing secretarial work online.

Also its import to be clear that strategic planning is worthless unless there is first a strategic vision ( John Naisbit )

The book is available online at amazon.com

Family Business and External Directors

last Wednesday I completed a series of talks for the Australian Institute of Company Directors on the topic of the benefits Family Business engaging external non family directors.

The session last Wednesday included Chris Stillwell, the Chairman of the Stillwell Motor Group and Adele Levinge , second generation director at the Dennis Group. Both presented their family business story and highlighted value that external directors added to their business.

Their stories reinforced the strength of family business in Australia and highlighted that many are operated to the highest professional standard.

The key message from their presentations was that external directors bring an independent and different business insights to the business. Often family members are too close to the business and get caught in the daily grind of running a business and they know only one way of doing things.

No one has a mortgage of smart thinking. An external director should be able to ask the hard or challenging questions and bring new experience and wisdom to the board table. They must respect confidentiality, act as mentors to the younger family board members and add to the diversity of the skills of the group.

Now that I have restarted this blog, I will detail some of the key points over the next few weeks on the AICD presentations.

I believe that family business boards are there to be custodians for future generations and

Everyone needs to be held accountable.

Non Family directors for Families in Business

In March and April 2010 the Australian Institute of Company Directors will be holding a series of meetings for Families in Business in Geelong, Ballarat, Bendigo, Warrnambool, Albury, Traralgon and in Melbourne. The dates will be published by the AICD in the New Year.

The key topic I will be presenting will detail the benefits of bringing outside directors onto your business board. My own experince as a non executive director by way of a real case study will hold some valuable insights on this.

We will also have a family business memebr from the regional area presenting their issues on succession with family members.

The recent survey by KPMG and the FBA highlights the importance of the topics.

Send me an email if you want any info : billwinter@bigpond.com.au

My blogs are on my web site

My web site also features regular blogs about a variety of issues. Go to http://www.pointnorth.com.au/ for my latest blogs