Some years ago, the accounting firm Grant Thornton undertook a survey that examined the ambitions of small to medium business owners. They found that certain patterns emerged that allowed them to categorise the responses into four main groups:
- The Protectionists: Their main priority was to keep the business at its present size and protect their investment. They are conservative by nature and believe that business is primarily about hard work.
- The Business Oriented: Their primary goal is to grow the business, sometimes at all costs. Their focus is business and growth. Family is of little concern. They want to protect and grow their business and believe it’s just as important to work on the business as in the business.
- The Dynasts: Their primary objective is to grow the business, build upon the family legacy and pass it onto the next generation.
- The Family Oriented: They wish to keep the values and standards that especially apply to a family business. They wish to grow with caution and careful planning. They also want to pass control onto the next generation.
AMBITIONS DRIVE BEHAVIOUR
Differing characteristics can bring about conflict in many areas including the attitude to growth, planning, succession and off farm funding.
Protectionist’s key areas of concern relate to future business investment and finance. Do they have the most appropriate gearing in place? Is the plant and equipment up to date? Does the business need to diversify? The Protectionists need to be careful they do not miss an opportunity because of their cautious approach. Fortunately for the Protectionists, they are the group most likely to have established sufficient off farm investments.
For the Business Oriented group the problem is the opposite. They may be too highly geared and strategic planning becomes essential to ensure they do not venture out of predetermined parameters. They are the least likely group to consider off farm investments so putting aside funds for superannuation becomes a priority. They also need to make sure they take a collaborative and communicative approach to their staff, business partners and family. As the business grows they should be careful that it does not lose the inherent family characteristics that may have contributed towards a rewarding and enjoyable culture.
The Dynasts main concern is to grow the business and pass it onto the next generation. This can be problematic when there is more than one family wishing to take over. Dynasts often take it upon themselves to expand the business in order to look after multiple families. They sometimes forget the liability side of the balance sheet. This can have the opposite effect they hoped for and make it more difficult for the next generation, rather than easier. Early succession planning is essential with this group. The next generation should be involved in long term decisions that will ultimately affect their future.
For the Family Oriented, keeping the business within the family is the top priority. They do need, however, to make sure that the next generation is capable of taking over. Roles and responsibilities need to be carefully determined and the right business structure put in place. Consideration may have to be given to the contribution that could come from outsiders entering the business and to the fresh ideas that they may bring with them. Family Oriented businesses can sometimes suffer from a lack of formality and it is important that such things as business agreements, job descriptions, strategic plans and remuneration policy all be documented. They need to be prepared to make the tough decisions that are right for the business even where it may have negative consequences for a particular family member. On the positive side, core values and beliefs often unite family businesses, creating a sense of cohesion and purpose. These values should also be formalised so that all who enter the business understand the family ethos and spirit.
Of course, the answer is all about balance. Our greatest strength is invariably our greatest weakness. Most people do not fall exclusively into one of the above categories, however it may be worthwhile to consider if you, to some degree, fit into any one of these types, then take time to understand from where pitfalls may arise and take counter measures.
It is also important to keep in mind that those around us in business may fall into a different category from ourselves. This may present a totally different set of priorities from their perspective.
Workshopping a detailed business plan can bring together participants from various business types and create a positive outcome that turns a potential weakness into a real strength. For instance, a Protectionist may help the Business Oriented to limit their over gearing or from making hasty decisions. On the other hand, the Business Oriented type may assist the Protectionist to take a few chances and build for the future.
Consideration of these differing ambitions, approaches and priorities can help create empathy and understanding. If properly managed, celebrating the distinction between people and taking advantage of what that can bring to the business, rather than letting it become a source of conflict and disharmony.
James Benson is an Executive Director at Next Rural:
1800 708 495 or email email@example.com
Web site: www.nextrural.com.au