The Institute of Directors estimates 50% of businesses are family owned, but many of those are left adrift without the specialist support they need.
That’s what Giles Ellis set out to fix when he established GECA in 2012. He’s passionate about helping family business owners work through thorny issues and get the best possible outcomes for their businesses. Giles’ experience and background dovetail nicely to perfectly meet the needs of family businesses. With more than 20 years’ experience in the corporate sector and an extensive governance career, Giles also brings coaching and facilitation expertise to the table – something he sees as critical to helping family businesses succeed.
One of the few experts in the field, Giles has seen it all. He can point to the three most common reasons why family businesses run into trouble, and what they can do to resolve their issues.
1. No succession planning
For any business, a lack of succession planning can be problematic – with no clear direction for the business, decision making becomes ad hoc, which can mean missed opportunities or waste.
In a family business, complicated personal relationships can make succession planning even more crucial.
As the original owner of the business gets older, retirement may seem imminent, but owners often find it hard to let go of the business which has played such a huge part of their lives for so many years. This makes it difficult for the potential successor, who may already be working in the business, and is keen to take over and implement their own ideas.
Giles explains: “One of the challenges is that owners don’t want to confront leaving the business. So they put off that discussion, then end up in tense positions with offspring asking to see the succession pathway or they’ll leave the business.”
This is where external mediation can help. Using his coaching skills, Giles works with family-owned businesses as a coach and facilitator, initiating tough conversations and guiding discussions to make sure they’re fair and productive. After 25 years in the accounting business, he’s not afraid to ask the hard questions – how will succession planning work? When will the founder retire? Who will take over? How will shares be divided? Often, says Giles, clearing the air and setting expectations is all that’s needed to ease tensions and set a clear path forward for the business.
2. A lack of formal structure
One of the advantages of a family-owned business is that everyone involved truly cares about making it a success – they can be expected to pitch in, make sacrifices and go the extra mile. In the early days, this can be an incredible boost. Family businesses can work flexibly, make do with less and get up and running much faster.
As the business grows, this informality can begin to have a downside, as it allows for a mismatch in expectation – some family members may begin to resent their remuneration, the time they spend or that they have little say in the direction of the business. Others who don’t work in the business may feel they deserve a cut. Tempers flare, decision making stalls as stakeholder opinions are negotiated, and the business can grind to a halt.
The solution, says Giles, is to put a more formal corporate structure in place. That could mean establishing a board or engaging separate management, but most important is to clarify roles and business direction.
This doesn’t just help protect personal and professional relationships, it also supports the business’s growth. A formal structure in place allows for the checks and balances critical to business health and success, such as KPIs, targets and independent assessment of management performance. It also gives the original business owner the confidence to step out of the day-to-day, and use his or her experience to make smarter strategic plans.
3. No specialised external support
Family businesses face unique challenges – personal relationships can spill over into the business and business spills over into personal life, adding extra complexity – which many businesses aren’t equipped to deal with.
When considering issues like governance, accounting, goal setting and reporting, family businesses need extra, specialised support.
“It’s not just a matter of ticking boxes – you’re dealing with people’s lives and families. The stakes are higher and the emotions are stronger. Family businesses need professional support from people who care about more than just numbers,” says Giles.
For example, when working with family businesses, Giles often begins with a workshop to get clarity over issues, put strategies in place, and establish business best-practices. This format allows time and space to cater for any extra tensions. His role continues after the workshops, coaching businesses through 90-day action plans, and being on hand to help resolve issues along the way.
Helping family businesses thrive
With the right external support, family businesses have a real advantage – made up of people who truly care about the business, they can often work faster, smarter and make the most of opportunity.
If you’re running into difficulty in your family business, or have big plans for its future, talk to GECA and our family business expert, Giles Ellis. Together we’ll help make sure your business thrives while protecting your family harmony.