Your Family Business Survival Kit

Free advice from global experts in family business
corporate@insights.org.au
www.insights.org.au
+ 61 (7) 3229 7333Page 2
Thanks for downloading our
Family Business Survival Kit.
It’s designed for anyone involved in the large
community of family businesses in our region.
From it you will gain answers to many of your
burning family business questions, as well as
encouragement, confidence, guidance and
inspiration.
Insights is a not-for-profit offering online
educational resources for families in
business, aiming to encourage harmonious
conversation, shape the thinking of family
businesses, and empower family businesses
to create a long lasting legacy.
Kind Regards,
The Insights Team
T +61 (7) 3229 7333
E corporate@insights.org.au
W www.insights.org.au
F facebook.com/familybusinesstools
L inkedin.com/company/insights--customised-family-business-resources
CONTENTS
Building a 100-year family business ............ 3
10 Questions every family business should be
able to answer ............................................. 4
5 Ways to manage conflict in a family
business ....................................................... 7
Ten commandments for long-term
survival ....................................................... 10
14 Questions to ask yourself as you transition
away from a full-time role .......................... 12
Three barriers to success in your family
business and tips to overcome them ........ 15
20 Reasons to start a family business ...... 18
Breaking the cycle of family business
failure ......................................................... 21
The future of family business (video) ......... 24
The future of my family enterprise -
what options are available to business
families (video) ........................................... 25
Family Business Survival Kit
By Insights.org.au

BUILDING A 100-YEAR FAMILY BUSINESS
Successfully Transitioning Over a Century
(Infographic)
Sustaining a family
enterprise across
generations requires
qualities in action which
enable them to respond to
challenges that emerge in
each generation.
These qualities are necessary to maintain an
entrepreneurial drive for generations.
How can you build a 100-year family
business?
1. Respect your legacy and core values.
2. Continually adapt, innovate & change.
3. Value the development of your human
capital.
4. Value the experiences & knowledge of
generations to come.
5. Grow through communication &
education.
6. Cultivate clear methods of decision-
making or governance.
Source
D. Jaffe, 2013: Good Fortune: Building a Hundred Year Family
Enterprise. Wise Counsel Research.
https://businessfamilies.org/read/building-a-100-year-family-
business-successfully-transitioning-over-a-century/
Infographic Design By
Susanna Vogel, The Entrepreneurs’ Ship
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10 Questions Every Family Business Should be
Able to Answer
By David Harland
(Article, page 1 of 3)
It’s easy to lose track of the big picture and get bogged down in
the daily minutiae of running a family business.
Here are 10 questions every successful family firm should be able to answer about their business.
1. What are our family values and how do they contribute to our business success?
Research shows that family businesses that formalize family values and incorporate them into
the business have longer, more successful outcomes.These values offer a competitive strength
that non-family competitors cannot duplicate and act as an anchor, allowing families to establish
connections across multiple generations.
2. What structures do we have in place to deal with conflicts?
All family businesses experience conflict and differences of opinion are perfectly healthy.
However, ongoing disputes can harm business operations and lead to resentment in the
family. Businesses that develop effective ways to communicate and create a safe space to air
disagreements are more likely to thrive over the long term.
3. What governance systems do we have in place?
Research shows that durable and successful family businesses have strong governance. Clear
guidelines set out in family constitutions or codes of conduct are key to effectively managing
business operations, dealing with conflicts, and setting the stage for eventual succession. A
governance structure should establish business roles and expectations and outline equity and
compensation.
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4. Do we have clear compensation and equity arrangements?
Compensation in family businesses is a thorny issue since money can be an emotional subject;
however, establishing fair wages is important to integrating non-family employees, attracting
talent, and promoting business success. Well-defined job descriptions, compensation, and
explicit promotion criteria will help ensure that all employees are paid fairly. Many family
businesses separate equity in the firm from employee compensation to ensure that all family
members share in business profits while fairly paying those who work within the business.
5. What are the greatest challenges facing the business?
Every business faces challenges and it’s important to be able to articulate your top obstacles
to success, whether they are competitive, structural, or familial in nature. For many family
businesses, succession and the retirement of the current owner remain major challenges.
6. What are the wealth management strategies for family assets?
Business families need the ability to manage the wealth they hold outside the business. A prudent
investment strategy can diversify investments to manage risk, provide a source of cash for
liquidity events and help increase family wealth. Wealth management is important to the long-
term health of the business because it can prevent family members from needing to take money
out of the business and offer greater options for retirement.
7. What is our business succession plan?
Succession is one of the biggest hurdles facing family businesses and 80% of family businesses
may not survive into the second generation. It’s important to start planning for succession
as early as possible to give heirs time to grow into their roles or to start seeking non-family
successors.
If you’d like to learn more about succession and how to navigate it gracefully, I strongly
encourage you to attend the 2013 Bus Industry Confederation Conference, where I’ll be speaking
on the topic. The conference is on Oct 27-30 in Adelaide and promises to be an excellent
opportunity to discuss trends in the industry and meet some great people.
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+ 61 (7) 3229 7333Page 5
Able to Answer
By David Harland

8. What are the short and long-term goals for the business?
Every decision you make should add value to your business and take you closer to your goals
and it’s important to share your goals with key family members. If your plans include significant
growth, then your firm may need to seek infusions of capital without diluting family equity.
Durable family firms usually favour steady long-term growth over short-term profits to avoid
risking family wealth.
9. Do we have a trusted family business adviser who truly understands our business?
Although it may sound self-serving, I truly believe in the value family business advisors provide
their clients and evidence suggests those who work with trusted advisors are more likely to
prosper. Advisors can offer insight into persistent problems, arrange financing, assist with
restructurings and governance, and establish a succession plan.
10. Do I participate in the family business community and take advantage of resources?
Family businesses share many of the same challenges and actively participating in the
community can be a great way to share ideas, tackle problems, improve your work/life balance,
and make connections in a supportive, confidential environment. We’re strong supporters of
Family Business Australia and encourage our clients to attend FBA family forums and other
member events.
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Able to Answer
By David Harland
Source
http://www.finh.com/newsDetail/?6th-of-September-2013---10-
Questions-Every-Family-Business-Should-be-Able-to-Answer-131

5 Ways to manage conflict in a family business
By David Harland
Conflicts are normal in family firms.
Follow these 5 golden rules to keep them from boiling over.
Conflict is a natural part of running a business but when colleagues and employees are also
family members, ordinary conflict can take on new dimensions.
Corporations and non-family business have formal barriers to conflict between colleagues;
Human Resources departments and the natural separation between work and family make it
unlikely that a workplace conflict will have serious repercussions on a firm’s future.
On the other hand, the interconnected nature of family businesses means that family drama,
workplace issues and conflicts about the business can more easily become serious problems
without special handling.
Many, if not most, family firms lack formal processes and strategies to mediate disputes, making
it difficult to prevent inevitable quarrels from developing into ongoing issues.
Here are five rules to help manage conflict in a family business:
Rule 1: Leverage formal governance structures to mitigate conflict
One issue that we have seen arise in many family businesses is that family members may lack a
forum for discussing issues in the business. Formal structures like family councils, boards and
family forums can offer family members a safe, organised way to bring up issues and negotiate
conflict. Formal governance can also help mitigate family and financial issues by separating
ownership of the business from its management functions.
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Rule 2: Give family members space (and permission) to air grievances
One problem that we frequently see in businesses with a first-generation matriarch or patriarch
is that family members may lack a safe way to express their needs and concerns. When people
don’t feel listened to or appreciated, seemingly small problems can mushroom into major
business and family drama.
To help prevent conflicts, family leaders should actively encourage family members to air
concerns constructively and give them the space they need to disagree. Senior leaders should
come prepared to listen without judgment and be willing to fairly consider what is being brought
up.
Rule 3: Don’t let business bleed into family time (too much)
It’s very challenging to keep from bringing business home, but one way that conflicts turn into
family drama is by failing to keep them separate. Family business leaders must set the example
by separating business and family time as much as possible.
One way to make this separation possible is by having formal spaces and structured times
to discuss business issues. Explicitly making other times no-business zones can help family
members relax into their personal roles and get away from work.
Rule 4: Communicate early and often about issues
Many large complications start as small problems that could have been resolved with early
intervention. Sometimes, spotting issues early and addressing them through clear communication
can be enough to prevent a conflict from developing.
Even when family members see each other regularly in the business, formal family meetings
can be a better place to hash out complex issues. Whether it’s at a family retreat or simply at a
separate meeting, making a break from daily routine to tackle the big issues can help open lines
of communication.
A formal setting can also help ensure that issues are not ignored and that members of the family
have the opportunity to make their opinions heard.
By David Harland
www.insights.org.au
+ 61 (7) 3229 7333Page 8

Rule 5: Bring in experts to mediate major conflicts
Some issues simply cannot be resolved internally. When family members become entrenched and
constructive dialogue isn’t possible, an objective expert who is trained to help resolve conflict
can help cut through the emotions and focus on issues. A mediator can also help guide a family
through initial conversations all the way to a final resolution.
We have found that many family groups can achieve more in a few hours with an outside expert
than they have in years by themselves.
Final thoughts
Many conflicts boil down to age-old family disputes. It’s common to see businesses that mirror
family hierarchies. For example, parents might run the company together or a favoured eldest
child might serve in an executive role while other children and spouses fill in other management
positions. However, these parent-child and family dynamics can make the separation of family
and business even more difficult.
Leaders must be able to treat children like employees and managers during business time to help
reduce the risk that family dynamics will damage the business culture.
Ultimately, managing family conflicts often comes down to creating better communication
skills as a family. While conflict can never be completely avoided, treating it as a normal part
of business and developing the skills to handle it can go a long way toward building healthier
business and family ties.
By David Harland
Source
http://intheblack.com/articles/2015/10/28/5-ways-to-manage-
conflict-in-a-family-business
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Ten Commandments for Long-Term Survival
By John Connolly
www.insights.org.au
+ 61 (7) 3229 7333
Think about this. Right now about 40 per cent of all family
businesses are facing succession issues, half of all family
businesses will fail going through that process, and in a new
trend family businesses are increasingly run by siblings.
On top of that, while there is some truth in family businesses only lasting three generations, some
have lasted more than 1500 years.
But, in good or bad news, depending on your family, as guru John Grant says, “the most critical
issues facing business-owning families are family-based issues more than they are business-
based issues”.
So here are my Ten Commandments of family businesses.
Don’t get your meat where you get your bread: With a $170 billion market cap, Volkswagen is
a reasonably sized family company but the battles between majority shareholders, the Porsche
and Piech families, make the automotive giant look like the Beverley Hillbillies. Basically, the two
families are both direct descendants of founder Ferry Porsche but the Porsche side stayed at the
sports car company and the Piechs went to VW. Things got really bad when Ferdinand Piech had
an affair and two children with Marlene Porsche, wife of Gerd Porsche. Earlier this year Piech got
the flick as chairman of VW and Wolfgang Porsche and his family look like the winners. This time.
Strategic investments: If someone comes to you seeking to make a strategic investment,
substitute the word stupid for strategic and you will be fine. David Crane, the boss of NRG
Energy, doesn’t run a family company but he’s right about this.
Page 10

Appoint a consigliere: When Vito Corleone hit the big time, the first thing he did was to hire
Genco Abbandando to help run the family business. Almost every successful family operation has
a “consigliere” -- an outsider who shuns publicity -- to keep things on the straight and narrow.
Sydney lawyer John Churchill plays that role in some of Australia’s biggest family outfits.
Pay your taxes: Paying tax always sucks -- especially when you are starting out. Neither political
party “gets” small business. Both make laws that suit big companies and penalise the rest of us.
But that’s no reason to deprive the fiscal fiend of his tribute. The bottom line is, if you don’t pay,
he’ll find you and put you out of business before you can think about handing over to the next
generation.
Make some of your non-family people senior executives and give them some skin in the
game: Your relatives aren’t always the sharpest tools in the box. Have an independent board of
directors. Be in hotels, booze, food ingredients, sweets, Japan, Italy or Germany if you want your
company to be around for the next 1000 years.
Commit to being a family-owned business for generations to come: Longevity rules. Have
lots of adult conversations: The most important conversations are the ones you don’t have.
Communication is one of the biggest problems in families and family companies. It’s hard to have
adult conversations about the really important but sensitive issues, so most things go unsaid.
The customer is God: In most western countries the customer is meant to be king or queen
and at the centre of all we do. However, in Japan, the country with the longest lasting family
businesses, the mantra is Okyakusama wa kamisama. The customer is God.
Have a happy family: Dysfunctional families equal dysfunctional businesses. As we saw, the
odds are against family businesses. You need to take a long-term view, take succession seriously,
and call all-in family meetings.
Ten Commandments for Long-Term Survival
By John Connolly
Source
http://www.theaustralian.com.au/business/the-deal-magazine/
family-business-10-commandments-for-long-term-survival/story-
e6frgabx-1227488911127
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+ 61 (7) 3229 7333Page 11

away from a full-time role
By Insights.org.au
Research shows that Australian family business
leaders are putting off retirement and succession,
many to the detriment of their businesses.
Whether it’s because of underfunded retirement plans, lack of succession or sales options, or a
sheer unwillingness to relinquish the reins, family business leaders are increasingly delaying the
transition to retirement.
Part of the issue may be that family business owners often have more complex retirement
situations than their non-family counterparts.
First, there is the issue of transferring management or ownership of the business, as well as the
issue of transitioning to non-working life. Some owners choose to retire while maintaining an
ownership stake; others sell or pass on the business as part of retirement.
After the global financial crisis (GFC), many business owners have found capital and potential
buyers in scarce supply, complicating the financial transition.
A 2013 survey (http://mybusiness.com.au/news/survey-finds-family-business-owners-delaying-
retirement) found that just 24 percent of family business owners had experienced increased
profitability in the previous three years. Fewer than 40 percent expected their business and
market prospects to improve in the succeeding year.
Owners who have not planned ahead for succession may find themselves forced to put off
retirement until they can find either a buyer or a successor who is trained and ready to take over.
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Start the retirement planning process soon
Retirement and succession can’t happen overnight. Much like you wouldn’t take an extended trip
without some forward planning, it’s not possible to successfully make the retirement transition
without advanced preparation and a roadmap.
Think carefully about the financial and business requirements for an eventual retirement.
Ask questions such as these:
• What structures will need to be in place before you can leave?
• Who is qualified to take over your role within the business?
• How will you fund retirement?
• Are your personal and family assets separate from the business?
• How will you financially exit from the business?
• Will you need external sources of capital to provide liquidity for an exit?
Value the business and identify options
Funding retirement looks different for every family business owner. Whether a sale is intended or
not, understanding what a business is worth is critical to preparing for the ownership transition.
Unfortunately, most family business owners haven’t undertaken a valuation exercise and may
have unrealistic expectations of the value of their business.
Realistically, most buyers will be more interested in the potential cash flows and book value of
the business. Poor capital and management structures can take away from the value as can a
business that depends too much on the contribution of the owner or other key employees.
Understanding the key drivers of growth and profitability will be key to preparing a business for
sale or transition and also prevent a business owner from being blindsided by issues during the
sales process.
Re-purpose and re-focus life
For many business owners, work is their life. Emotionally, retirement can seem like being put out
to pasture rather than a well-earned period of relaxation and enjoyment.
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By Insights.org.au
Page 13

Many Australians can look forward to living well into their eighties or nineties. Sitting around at
home for that length of time isn’t realistic for healthy, active, ambitious people and many find
fulfilling roles in second careers or through volunteer work or philanthropy.
Likewise, family business owners should rethink their vision of retirement: rather than treat it like a
never-ending vacation, think of retirement as simply another phase of life with a different focus.
Thinking ahead about creating a fulfilling next phase of life can make the work-retirement
transition much more appealing. To help delve into the issues involved, ask questions such
as:
• What gives you pleasure and fulfillment?
• Where is your ideal place to live?
• What would you like more of in life?
• What would you like less of?
• Who would you like to spend most of your time with?
• What other business or personal interests do you have?
• What gives your life purpose once your basic needs are covered?
• What would you like to be remembered for?
The bottom line
Ultimately, today’s business leaders are going to have to confront their eventual need to exit the
business.
Whether they leave on their own terms and move on to comfortable, fulfilling retirements or are
forced out of their careers by illness or age, a change is coming.
My hope is that family business leaders will take the time now to think about their personal vision
of retirement and take steps to prepare for a comfortable financial, business and psychological
transition to a post-work life.
www.insights.org.au
+ 61 (7) 3229 7333
By Insights.org.au
Source
http://intheblack.com/articles/2015/09/08/rethinking-retirement-
for-family-business-leaders
Page 14

Three Barriers To Success In Your Family
Business... And Tips to Overcome Them
By Insights.org.au
Overcoming Barriers To Success
In Your Family Business
Family-owned businesses have tremendous advantages stemming from their special status: deep
community ties, values, family traditions, and the ability to take a long-term view of success.
However, family businesses also face unique challenges. The most successful multigenerational
family businesses are able to overcome these barriers, incorporating new ideas while retaining
the competitive strengths that made them successful in the first place. Let’s talk about some of
the common obstacles that arise in family businesses.
Barrier 1: Failing To Keep Non-Family Employees Happy
Are your non-family employees happy and fulfilled in their jobs? If not, you may be damaging
your firm’s ability to retain talent. One common complain that we run across is that non-family
employees feel that there is a ceiling to their career progression within the firm. Since they are not
family, they may be barred from top positions within the business or think that they don’t have a
clear way to move forward in their careers.
If you want to retain key employees (and you should), it’s critical that you make them feel that
the firm’s success benefits them as well as your family. Consider allowing key employees an
ownership stake or initiate a creative compensation scheme. Bonusing well or offering some
share of the firm’s profits can help align their interests with the firm’s and motivate key non-family
employees to stick with your firm.
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Barrier 2: Letting Family Drama Affect The Business
Though family relationships may be key to your firm’s culture, sour dynamics between family
members can be very damaging to business success. One of the problems we see over and
over is that family members may lack an avenue to express their wants, needs, and concerns
– personal and professional. When family members don’t feel heard by others (especially
matriarchs and patriarchs), family drama can spill over into the business.
Non-family businesses have natural barriers to conflict; it’s unlikely for two employees to be so
angry at each other that they will overcome workplace boundaries and escalate the fight. Lacking
a Human Resources department, many family firms lack formal rules and processes for mediating
disputes, making it hard to handle the inevitable spats that can arise between employees.
Though we’ll never be able to completely do away with family drama, formal structures like family
councils, boards, and forums offer safe spaces where grievances can be aired and problems
mediated. We strongly advocate for formal governance as a way to help a family business retain
the values and intangible capital that makes it strong while managing conflict.
Barrier 3: Lack Of Professionalisation Within The Business
I’ve often spoken in this column about the importance of professionalisation in sustaining a
family business through generations. Family firms, particularly those within the first or second
generation where the founder is still involved in the business, tend to be more casual than their
non-family counterparts. The problem is that this informality often leads to a lack of strategic or
succession planning, and can limit the business’ access to outside expertise and capitalisation.
Professionalising a business doesn’t mean giving up the values and identity that makes a family
firm strong. Quite the contrary: professionalising means making better use of internal resources,
separating ownership from management, and creating strategies for the future of the business,
among many other things. We teach our clients to associate professionalisation with taking their
businesses to the next level of growth.
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By Insights.org.au
Page 16

Final Thoughts
Family businesses tend to go through predictable patterns of growth and development, and the
barriers discussed here are natural parts of running a successful firm. If you’re feeling isolated or
frustrated as a business leader, it can be enormously helpful to reach out to other members of the
family business community for support.
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+ 61 (7) 3229 7333
By Insights.org.au
Source
http://www.finh.com/newsDetail/?7th-of-May---Three-Barriers-
To-Success-In-Your-Family-Business...-And-Tips-to-Overcome-
Them-177
Page 17

20 Reasons to Start a Family Business
By Daphne Mallory
The best way to build wealth and leave a legacy is to grow a
family business.
Think of all of the family businesses whose products, services, and generosity you benefit from
on a daily basis. Your family name can be added to the history books for creating a better society
and uplifting others out of poverty. Here are 20 reasons to start your family business today:
1.Build wealth for generations to come. The wealth you generate in your lifetime can benefit
future generations. Reinvest a portion of your profits back into your business, your community
and other investment vehicles, such as real estate, to ensure future wealth.
2.Transfer family values. Business presents many opportunities to make choices that promote
or contradict your family values. You’ll have a great supply of teachable moments to share how
and why you make decisions.
3. Grow as a leader. Building a family business demands leading others. You will have to grow as
a leader if you want to succeed.
4. Make history. Your family name will be remembered because of your contribution to the
economy of your community.
5. Strengthen inter-generational bonds. Grandparents can work alongside grandchildren in a
family business and they can share their culture, experiences and knowledge along the way.
6. Get Quick access to capital. Your family can become your initial angel investors, giving you
the start-up funds for your business.
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7. Share your work load. Working solo takes its toll eventually. Spread your workload with your
family.
8. Increase Sales. Your family story is your competitive advantage. Your clients and customers
will remember you when they make the decision to buy.
9. Climb out of unemployment. You are your best employer. If done right, you can climb your
way out of unemployment with a family business.
10. Enjoy flexible work hours. I wake up at 2:30AM to get many critical tasks done before my
children wake up. You might be a night owl and prefer to do those tasks after your children are
asleep. Either way, you may be able to maintain flexible hours for your family business.
11. Improve your family’s health. You can schedule health related activities, such as running
or biking together, when you work together. Organize a hike or bike time in the middle of the
workday or in the evening.
12. Build a foundation. Did you know that many foundations are started and run by families?
That’s the beauty of family business. You can help to eradicate poverty and improve the quality of
life for others.
13. Become a community leader. Large companies send their leaders to visit city officials,
attend community meetings and participate in service clubs because they understand the
correlation between business and community leadership. The good news is that a family business
owner can become a community leader, and in some cases, has more influence and credibility.
14. Build other communities. When I moved to the United States, I understood my obligation
to one day help my fellow Liberians and other Africans who continue to struggle with poverty,
disease and corruption. My family business serves my children, but it’s also a vehicle for me to
promote awareness and raise funds to help women and children in my country. Where are you
from? What international community do you want to help?
15. Become a life-long learner. You won’t stop learning when you run a family business.
Industries, products, clients, selling and technologies change. You won’t get bored.
16. Gain new skills. We’re living in a world where skills are more valuable than academic
knowledge. The skills required to start and grow a family business are valuable to colleges,
internship programs, fellowships and adult learning opportunities.
www.insights.org.au
+ 61 (7) 3229 7333
By Daphne Mallory
Page 19

17. Create jobs. You benefit from a community that thrives economically. You can create that by
providing jobs.
18. Invest in other businesses. The easiest way to build wealth for your family is to become an
investor. Family business will provide you the money you need to invest in other businesses.
19. Run for office. We need more family business owners to run for office. Your family business
will generate the connections, credibility and capital to run for office and make a difference in
your community or nation.
20. Maintain a wealth of knowledge. When families are fragmented, cultural and business
knowledge gets lost. Working together helps to preserve both.
The benefits of running a family business far outweigh the negatives. Think on the positives which
will keep you motivated in the start-up phase.
www.insights.org.au
+ 61 (7) 3229 7333
By Daphne Mallory
Source
http://www.huffingtonpost.com/daphne-mallory/20-reasons-to-
start-a-family-business_b_6937316.html
Page 20

Breaking the cycle of family business failure
By David Harland
What does it take to build a successful multigenerational family
business?
Many of the world’s most enduring companies are family businesses. Coopers Brewery, Walmart,
Samsung, and BMW all have a controlling family dynasty at their centre.
But these successful family firms are a rarity; most family firms fail to survive multiple generations.
The statistics are grim: only 30 per cent of family businesses survive the transition from first to
second generation. Just 12 per cent reach the third generation. Why do so many successful
family businesses fail after the founding generation?
In my years of experience as a family business adviser, I have seen generational transitions fail
for many business and family reasons, and I’ve seen several common threads connecting many
failures.
One major reason is a lack of financial education for children born into wealth. Heirs that are
ill-prepared to manage money make poor decisions and squander their fortune. Perhaps the
most famous example of dissipated wealth is that of the Vanderbilts, once one of the wealthiest
families of the Gilded Age.
During the mid-1800s, Cornelius Vanderbilt built the family’s fortune on railroads and shipping.
At its height, his fortune totalled over $240 billion in today’s dollars, making him one of the
wealthiest businessmen in history. While Cornelius was a self-made man, his descendants lived
extravagantly, with little concern for preserving the family fortune. By the 1970s, there wasn’t a
single Vanderbilt millionaire left.
The Vanderbilts had also fallen prey to another common problem: the dispersion of wealth and
control among many children, in-laws, and other relatives. This left the dynasty with too many
decision-makers and not enough concentration of power to push through important decisions.
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Many families fail to nurture a sense of responsibility, history, and family values in the following
generations, neglecting what we call the spiritual and family capital of the family business. Great
wealth is a privilege and without a sense of stewardship and obligation, many rich descendants
fall prey to ennui and boredom, failing to safeguard the family wealth or treat the business with
respect.
Many problems also happen at the intersection of family and business. One key issue that many
fail to overcome is a culture of nepotism, which promotes unqualified relatives into positions of
power simply because they are members of the founding family. Another issue is a lack of formal
governance structures and succession plans that leave the business open to power struggles,
family discord, and transition problems.
A cautionary tale in this vein is that of the Anheuser-Busch company, which had been
successfully run by five generations of the Busch family until it was bought in 2008 by InBev in a
hostile takeover.
The final years of the Busch family’s tenure were marked by family conflicts, power struggles, and
financial mismanagement, dooming a 150-year-old company that had survived prohibitioners,
world wars, and global competition.
If you are the head of a successful family business, what can you do to ensure that your dynasty
survives into the third, fourth, and fifth generations? A great deal.
In my opinion, the most critical lesson is to take good care of the family side of the business and
develop a long-term plan for your family’s future.
Educate the next generations about wealth and responsible financial management as early as
possible. Too many wealthy parents fail to teach their children how to responsibly manage their
inheritance. Protect the family wealth by insisting on premarital agreements and separation of
personal and family property.
Cultivate a family culture around your family’s history and shared values. One way that many
successful multigenerational families nurture a family legacy is by developing shared philanthropic
ventures that help instil respect for family wealth and its future potential. Don’t make working in
the business a requirement in the family; allow each member to find their own way in the world,
within or without the business.
www.insights.org.au
+ 61 (7) 3229 7333
By David Harland
Page 22

Protect the business’ future by instituting formal governance and ownership structures that
separate family control from the daily management of the business. These arrangements will
make it easier for the firm to raise capital, bring in outside investors, and eventually navigate
generational transitions.
Professionalise the business by establishing employment standards for both family and non-
family employees. Consider bringing in professional managers to run the business while retaining
ownership stakes for your family. Most successful multigenerational family firms are largely run
by professional non-family executives while members of the family focus on diversifying and
managing their wealth.
Begin planning for the eventual succession of your business. Whether you intend to train up
an internal successor or bring in outside managers, proper succession planning takes years.
Too many business leaders leave planning too late and put the business at risk of a sudden,
unplanned transition.
Family discord, power struggles, spendthrift grandchildren, and poorly qualified managers
can all doom a family business. Ultimately, success requires many factors to align as well as a
healthy dose of luck. Developing a successful multigenerational family business doesn’t happen
overnight. It requires years of planning, careful management, and the cultivation of a family
culture that prioritises stewardship and a family legacy of success.
www.insights.org.au
+ 61 (7) 3229 7333
By David Harland
Source
http://www.finh.com/newsDetail/?31st-of-January---Breaking-the-
cycle-of-family-business-failure-168
Page 23

The Future of Family Business
By Business Families Foundation
(Video)
www.insights.org.au
+ 61 (7) 3229 7333Page 24
Watch the five minute video here:
https://vimeo.com/141449332

The Future of My Family Enterprise - What
Options are Available Business Families
By Lansberg·Gersick & Associates
(Video)
www.insights.org.au
+ 61 (7) 3229 7333Page 25
Watch the three minute video here:
https://www.youtube.com/watch?v=4sqe1DB20lc

www.insights.org.au
+ 61 (7) 3229 7333Page 26
Thanks for reading our Family
Business Survival Kit.
If you would like further guidance on understanding
family businesses, Insights offers a catalogue of over
300 free family business videos.
It features short (1-4 minute) videos of global family
businesses discussing the challenges they have
faced, how they have dealt with them and continue
to grow and remain successful.
Get your free access here http://insights.org.au/
education-tools/free-access
We also provide short tutorials and online courses
specifically for family businesses to do in their own
time.
You can contact us on:
T +61 (7) 3229 7333
E corporate@insights.org.au
W www.insights.org.au
F facebook.com/familybusinesstools
L inkedin.com/company/insights--customised-family-business-resources
Kind Regards,
The Insights Team
Family Business Survival Kit
By Insights.org.au

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