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In the family Business, a panel beating shop, two brothers, Aaron and Michael already had a fractious relationship, that became toxic when Michael, the elder did all he could to alienate and push the younger out. Michael convinced his father he was the rightful one and best suited to take over the family Business, and that he did.
Regrettably the father, Mr Brown had no formal structured governance plans in place to guide discussions. He hadn’t made any provision for himself in retirement or for the younger son’s future. This played out with a family breakdown, disconnected ties and bitter outcomes.
This scenario highlights the importance of implementing effective Structures in a Family Business. A situation that could have been avoided if the Business had a formal body to govern, direct and protect all parties involved.
Revisit the same scenario, in this example the Business has established a formal structure and is governed by a Board. Mr Brown, the father has arranged and secured a Succession Plan. These arrangements provide direction, clarity, and authority with provision for all.
If you are setting up a new Business or if established, implementing the right structure is crucial.
Need advice? contact Blackburn Accounting we can help develop what best suits your enterprise and lay down the foundations for success.
Personal and Business Financial matters:
Mixing money, personal and Company transactions is fraught with danger, including relationship friction and can easily lead to ‘robbing Peter to pay Paul’!
And it is easy to fall into the trap of thinking it's all the same money, same interests but that is a slippery slope, particularly when the 'chips are down'. Moving money, shuffling IOU's and broken promises is a recipe for disaster!
Tips:
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Personal and Business matters are different matters.
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Keep separate systems and records and avoid ‘borrowing’ from either.
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Adopting these practices makes it simpler for all concerned including for providing true and accurate Business financial reports, taxes and audits.
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Supports transparency of operations.
Sibling rivalry, nothing new, but in a Family Business if left unchecked can become a major problem presenting challenges for all concerned!
Addressing it is crucial! Ignore and the consequences can be great!
Adopting proactive strategies, planning and communication is key to taming and tempering negative competition and contentious issues.
Why, how does rivalry occur?
It can happen when emotional needs are not being met. Siblings compete for parental recognition, attention and reward that can translate to and present in the Business environment. If unresolved, rivalry festers and relationships can become toxic as siblings strive to prove their worth.
Strategic differences are also factors, such as differences in Business direction, values or approach. There may also be assumed expectations. All these can manifest as conflict, arguments and disagreements over leadership roles, authority, decision-making or succession planning.
Consequences:
Sibling rivalry if left untamed has the power and potential to impact and threaten the stability of the Business activities, family relationships and future of the family entity. Such disputes are destructive resulting in decreased trust, difficulty in reaching or making decisions, and weakened morale. Worst case scenario family's are torn apart and the Business colapses.
Example:
In these uncertain times having strong foundations underpinning your Business has never been more critical. That is a certainty, successful Businesses, are established with strong building blocks of:
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A Vision, Business Model, Plan & Strategies
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Develop a Strong Team
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Exceptional Customer Service
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Effective Financial Management
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Meeting Responsibilities and Obligations
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Adaptability
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Marketing
Business success, stability and security doesn’t happen by chance. It begins and thrives by laying down these foundations.
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A Vision, Business Model, Plan & Strategies
Having a vision and making it happen comes with creating a comprehensive, well-thought Business Model. This needs a clear roadmap, a Plan with related strategies for the now and future, for growth and success. Elements include identifying its unique value proposition, niche market and targeting those customers to generate revenue and profitability.
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Develop a Strong Team
Having the right Team is vital. A ‘winning’ Team shares and supports the Business vision and values to drive and deliver the best results. With everyone on the same page innovation, excellence and commitment are the norm. This fosters a positive work environment that attracts and retains ‘talent’ who are rewarded with appropriate renumeration, training and opportunity. Effective leadership will lead, motivate and guide both the Team and Business in achieving goals.
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Exceptional Customer Service
Strategy No.2
Overdue payments - monies due, owed to you:
Slow and late payments pose the greatest risk to Small Business. Cash in keeps the money flowing, without it the cash river dries up! and so can your Business.
Tips:
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Have an efficient invoicing and billing system in place, one that generates accounts at the point of sale
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Offers a variety of payment methods and options.
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Electronic systems can also monitor receipts and overdue accounts allowing you to better manage and avoid late payments.
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Keep on top of your debtor's ledger, remember you are running a Business, it's your livelihood.
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Keep in communication - ask for a payment plan or set up a payment plan
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