Family business or family fracas?

Sylvia Pennington

From the father-and-son rag-and-bone merchants Steptoe And Son of ’60s television fame to more exalted multi-generational concerns, family businesses have been around since Adam was a boy.

Balancing family and business issues is the biggest challenge for those who spend nine-to-five with their parents, siblings or children, according to KPMG’s Family Business Survey 2013, which canvassed 570 family business leaders.

Blood ties with fellow members of the management team can be a formidable strength – or a recipe for disaster if individuals are unable to separate personal from professional when they’re on the tools.

So what are the secrets to ensuring your family business runs smoothly and doesn’t degenerate into an arena for sibling stoushes and intergenerational conflicts?

Have a strong business plan, a merit-based hiring policy and a succession strategy which leaves no one guessing, advises accountant and Succession Plus partner Scott Patterson, who’s seen the good, the bad and the ugly of family businesses.

Establishing a board structure with an independent Chair can add perspective and rigour to the company’s planning process and discourage decision-making based on sentiment and emotion rather than sound business principles.

Well-run concerns aren’t excessively reliant on just one or two people and don’t permit individuals to treat the family firm as a private fiefdom, personal banking facility or birthright, Patterson says.

Establishing a board structure with an independent Chair can add perspective and rigour to the company’s planning process and discourage decision-making based on sentiment and emotion rather than sound business principles.

“Don’t allow an attitude of entitlement to creep in with the second and third generations or let family members treat company funds as their own private funds,” he says.

Being genuinely willing to give the next generation their head when the time is right is also vital, according to Greg Stone, who took the reins at GJS in 2013 upon father Graham’s retirement.

Founded in 1978 as a distributor of screen-printing machinery and supplies, the business employs 15 staff and services the garment decoration, textile, promotional product, photo gift, signage and display industries.

Greg Stone’s first project upon joining the firm several years earlier was to take its activities online, with the establishment of a website and online ordering system.

Dye sublimation, the digital technology used to create photographic gift products – think mugs, mouse mats, t-shirts and other personalised paraphernalia – was identified as an emerging opportunity and agreements with key vendors put in place.

All with Dad’s blessing and support, Greg says.

The transition of management between family members can be rocky if the old guard is resistant to new initiatives but GJS’ experience exemplifies smooth generational change in action, he says.

Sylvia Pennington

Sylvia Pennington is a Brisbane-based freelance journalist who writes about small business, information technology and personal finance.

Image: Carl Lender, Flickr Creative Commons license

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