Blog
Case Study
Scenario 1: Dad has verbally told his children that the Business will be left to his son, and his personal assets will go to his daughter. No one wants to think about Dad leaving the Business or his eventual passing away, so the sensitive conversation about formal arrangements is avoided. We are family, all will be ok!
In reality, without a legal document, this verbal arrangement can be fraught with problems. The family assumes the Business will pass on according to the will, not realizing it’s legally separate and governed by a family trust. Dad does not own the Business directly. This leaves a fragmented and unplanned outcome for all concerned.
Need advice or if you want to have the hard conversation, we are here. Contact Blackburn Accounting, your Family Business Specialist, we can help you with Succession Planning, Financial structures, Strategic Planning and more!
Scenario 2:
Dad, Jack, founder of the Business, a local hardware store, recognises the importance of Business structures in providing a clear framework for the Business unit.
Leading when you have the winning Team is commendable, memorable! Congratulations it all came together. Sit back, celebrate and enjoy the glory and success.
Flip the situation!
If you are the Leader of a group that has just experienced loss, setbacks and disappointment, whether it’s a football final, or a bid for a contract, when ‘teams’ lose, the impact can be devastating. Reactions vary and it’s easy to start the blame game or dwell on what-ifs.
This is where strong Leadership is vital to deal with the fallout of defeat. Supportive leadership to address the challenges, pick up the pieces, and rebuild. Importantly, it’s about taking the group with you, transforming the pain of loss into purpose.
4 Actions of Strong Leaders and Leadership:
1. Understand the emotional impact
-
Acknowledge disappointment, allow time for ‘grieving’
-
Give support, individually and the team
-
Demonstrate empathy
-
Address any fears or uncertainty
-
Provide access to mental health services
2. Rebuilding Morale
With fanfare, the Federal Government announced on October 1st that it has expanded the 5% deposit scheme. The rules for the First Home Buyer Guarantee now allow eligible buyers to avoid lender's mortgage insurance and to purchase a property with just a 5% deposit. And for those previously excluded, the strict income caps will now disappear, providing an opportunity for more potential buyers.
A win for first home-buyers! Alas no!
As many of us who have been around longer will know that historically, politically driven economic policy that throws incentives or cash into the property market has led to property prices increasing.
Already this is happening.
'Parting is such sweet sorrow'! a famous sentiment by Shakespeare. How true, and whether in our personal or professional lives parting ways plays out in different scenes. Let the story begin!
Family Businesses are usually built on a common purpose, commercial activities and a web of intricacies, including kinship and history. All merge, converge and sometimes diverge.
Diverging, the parting of ways! This can be a time of celebration, planned retirement, and popping the champagne bottle. But on other occasions, it is a more tumultuous time. Divorce, internal disputes or partnership breakdowns can bring irreparable damage. Damage requiring professional financial and legal advice to deal with the complexities.
Parting on good terms. Early Succession Planning is usually at the heart of this scenario. A typical situation, the Business founders are ready to retire and hand over to the next generation. Time to step away, take and enjoy that well-earned retirement.
This Business has a strong structural framework, formal governance practices, along with backup contingency plans. These arrangements are developed to support what’s good for the Business and family members. Members’ roles, responsibilities and skills are defined and recognised. Importantly, these arrangements are legally sound and documented.
Parting on bad terms. Business breakups are painful and costly and if you have experienced one I am sure you will agree. Divorce of Business partners, generational conflict and sibling rivalry are common examples. The stakes can be high, and emotions are elevated, particularly when the interplay of professional and personal dynamics clash!
There have been some spectacular publicly exposed examples, corporate giants in disarray but family Businesses too can experience breakups. Dissolution and despair are words that come to mind. Professional help and intervention are usually needed in these situations. Legal advice, Lawyers, and financial experts are engaged to deal with the problems and ideally find solutions.
7 Key Foundations to build harmony.
Case Study: Scenario 1:
A good news story!
A Family Business of 50 years is enjoying the benefits and reaping the rewards of a smooth transition as the next generation takes the reins.
The founders, parents Mike and Mary, are stepping back confident that their early Succession Planning is paying off. Their legacy is embedded. A local Business, the brand remains family-owned, WA-based, providing locally crafted goods. And the next generation is passionate about keeping it that way. It is Business as usual for all concerned, staff, customers and suppliers. Everyone is a winner in this situation.
Scenario 2:
Your Accounting Partner
Your Management Accounting Partner
Your Expansion Engineer
Your Special Projects Partner