Five things I’ve learned as a family business advisor
A family business advisor shares the unique challenges and opportunities such businesses face on a daily basis and her key learnings.
Family businesses are a crucial part of the Australian economy, comprising approximately 70% of all companies in the country. These businesses not only provide employment opportunities for a significant portion of the workforce but also contribute to the growth and development of local communities.
As a family business advisor, I’ve had the opportunity to work closely with many family businesses; I understand the unique challenges and opportunities they face. They have distinct characteristics, such as the interplay of family dynamics and business decisions, requiring specialised knowledge and skills to navigate them successfully.
Here are five things I’ve learned through my time as a family business advisor.
1. Asset and business valuation includes emotional value
Emotional value and monetary value are two ways to assess the worth of a business — this should be considered even more when it comes to a family business. While the valuation methodologies learned at university are important, it isn’t only about multiples or market values.
Many times, when a family member wants to leave the business, another family member will buy out their share. Often this is done via calculations to arrive at a final number. However, it may be the case that they want you to consider the emotional value too — even if that means it’s below market value.
So, what’s the lesson? When you are dealing with family, sometimes harmony is more important than the calculated value. Sometimes they’re not looking to maximise their wealth at the expense of the family business and their relationships.
2. All advice requires your head (and heart)
It’s important to listen and understand what the family is requesting. This means having an open heart as you aren’t just providing business advice — you are assisting a family in achieving their goals where monetary outcomes might not be the only objective.
When the COVID-19 pandemic hit, many family businesses discussed how their team was more than just their employees — they knew their kids, and they knew they had school fees and mortgages to pay. The discussion rarely involved maximising their profit; it was more focused around what they could do to keep the business going, and ensure their team retained their jobs.
So, while decisions in family business require your head, they also require your heart, because your employees are usually so much more than the people who work in your company.
3. No family is perfect
I felt for years to be a family business advisor, your own family must be perfect, or you weren’t in the position to be an expert. But over my career, I have learned everything that happens in your own family provides life experiences that can assist in advising others. It enables you to draw upon your own experiences and helps create personal relationships with your clients.
4. Bring the tissues
Tears occur in many family meetings — it’s family, so it’s personal. People care. People hurt. When it comes to making a business decision — whether financial, structural or anything in between — it’s hard not to blend years of family memories with these decisions. As a family business advisor, you need to remember your meetings are not just about business. I have experienced tears from family members feeling overwhelmed for various reasons and this is where soft skills and relationships are critical.
I’ve worked with key family business members passing, and those who were left with the business feeling lost and distressed. I’ve also witnessed families coming to terms with their children not working well together, which provides additional emotional strain on parents who are nearing retirement age and wish to pass on the business through a succession plan.
In my years of experience as a family business advisor, you can never forget many emotions rise to the surface and it is critical to know how to navigate them.
5. Experience brings value
As family business advisors, we bring experience and expertise so family businesses can make informed decisions without forgetting about the emotional value.
- We are independent.
- We can facilitate conversations that are ordinarily very emotional.
- We can listen and don’t carry the emotions attached.
- We can hold family members accountable.
There is immense value in families having an experienced independent facilitator as they hold everyone accountable, set an agenda and assist in facilitating the conversation to ensure everyone is heard and that feelings are moderated but never forgotten.
Final words
Sometimes in a corporate world emotions and business struggle to coexist, but in a family business, they’re always present. As a family business advisor, it’s my role to provide the necessary skills and support with every client interaction.
As a chartered accountant with over 15 years working alongside family businesses, I’ve learned they each require a unique approach to their problems. Emotional value, listening to your heart, self-awareness, and understanding emotions and experience are all key to being a successful advisor.
Kirsten Taylor-Martin is a partner and the national head of family business consulting at Grant Thornton.
