19 March 2014
Leicester Family Businesses State Biggest Challenges are Succession and Growth Strategy at FIB Launch Event
Monday 17th March saw the official launch event for Families in Business in Leicester. The exclusive evening event saw some of the best family businesses from the county gather together to share stories, experiences, issues as well as hear from guest speaker Charles Smith from Shoe Zone and FIB's CEO and founder, Dani Saveker. Held at the Bentley showroom at Rayns Way, Syston.
During the evening FIB ran the Family Business Fortunes live survey. The results of this stated that the biggest challenges for family businesses are Succession and Growth Strategy. Guest speaker and Leicester advisers (PKF Cooper Parry, Spearing Waite and Cooper Parry Wealth) were asked to discuss their thoughts and recommendations with key comments being:
#1 Strategy and Growth
- It’s never too early to start planning.
- Where possible this should be an inclusive process and include family and non family members.
- Succession isn’t just about leadership, it’s very often about the whole business
- Have a clear and concise strategy for the short, medium and long term
- Consider how you can manage any issues or unexpected situations such as illness and bereavement or key staff leaving
- Communicating the plan to everyone is imperative
- Discuss what growth means to you
- Stick to what you know and have a clear focus and strategy . "Stick to your knitting" or in other words do what you know and are great at rather than being distracted or trying to do something you know very little about
- Use your trusted advisers to assist you
- Your version of a plan may differ from other stakeholders – use a facilitator if necessary to help you all agree
- Skills and bringing in non family members may well be an important option
- In family businesses tensions and being protective can both cause issues to be buried
- Practice creating an environment of open and transparent communication
- Use your advisers wisely and when necessary consider a neutral facilitator
- Don’t ignore the elephant in the room – it may turn into a stampeding herd when you least want it
- Consider other stakeholders positions and where possible try to listen more than you talk.
- What’s not said can be more important than the words that are spoken
- Take time to think through the best way of bringing up issues and how you can approach it to be received positively
issues were rated as 4th and 5th respectively.
During the Q & A session, Charles Smith raised the common issue surrounding active shareholders who are in the business as opposed to shareholders taking dividends without investing back into the business for growth.
His advice is to ensure that employed family members receive a fair and reasonable remuneration package for their role and dividends are dealt with separately as a return to shareholders. He also mentioned that some times it's better to buy out family shareholders and keep shareholding in the hands of those growing and working in the business. There is no right or wrong in family businesses and it is very much encouraged that you have your own conversations with open and honest communication together and seek the advice of your trusted accountancy and legal firms.
The Radio 4 feature on Family Businesses today
covered this issue with T Cribbs Funeral Directors
commenting: "If you're not in the business you don't get a stake in it"
Another key point was raised about the valuing of a business and that perceptions are often not in line with commercial values - whether considering selling, MBOs or investment. The past few years have made a lot of business owners more aware of the true market value of their business - sometimes forcing the incumbent generation to delay retirement due to uncertainty. Again, we recommend discussing the value of your business and assets with your advisers - and ensure you have sufficient protection in place for all eventualities!