families in business
agribusinesses and families
Many agribusinesses are family owned and operated. In the family context, it’s important that businesses look and plan beyond the near future – families last for generations! Indeed, in the agriculture industry many successful family-owned enterprises are multi-generational and this is especially true in the food and fibre sector.
In a family enterprise, as with any business where there is a generation gap, there are different levels of knowledge, skills, experience, business acumen, as well as a diverse range of emotions and different individual aspirations.
The family business has the added complexity of a blurred line between relationships and business dynamics. Everyone can become too close to the issues, making it difficult to make objective and informed decisions. Family outcomes and business outcomes are also often different and hard to separate.
Top 10 challenges
Ten challenges for family company leaders as described in the Australian Institute of Company Directors magazine:
The line between family and business is often blurred, leading to disputes.
In-laws and extended family can add another layer of complexity.
Meetings can be too informal. The kitchen table decisions can be a problem.
Companies owned by different families can find it hard to achieve a shared vision.
Family companies may not always know what they want.
Succession and transition to the next generation can be a huge issue.
Some founders of family companies resent advice from outsiders.
Baby boomers typically have a higher need for control and won’t let go.
Some business owners struggle with more formal systems and structures that advisory committees bring.
Some are reluctant to remunerate external board/panel members adequately.
Benefits of an advisory panel
Only 40 per cent of all family-owned entities in Australia have a formal family advisory panel. Yet there are good reasons to implement an advisory panel or committee. Its role is to assist with decision-making and be a key resource with specialist skills missing within the family leadership group.
The skills and knowledge needed in businesses of the future include:
Workplace relations
Workplace safety
Financial understanding and competency
Governance and legal
Compliance and risk management
Conflict resolution
Succession/transition planning
Based on the experience of hundreds of regional Victorian family-based agribusinesses, the key recommendations are:
Establish an advisory panel.
Have a succession and transition plan for the next generation.
Develop a meaningful business plan with a clear and concise vision for the future.
Set up a buy and sell agreement between family members and stakeholders.
Where to start
An advisory panel as a starting point (as against a board, which comes with director obligations under the Corporations Act 2001) provides knowledgeable, clear and sometimes alternate thinking. The Agri Collective has skills in this area and we can help each other with ideas, advice and panel members.
While bringing an independent view, advisory panels also reinforce and add to the skills around the table. Preferably not the kitchen table!