Milaan Thalwitzer, Non-executive Chairman of The Bosveld Group, Citrus fruit producers in South Africa explains what it means to them to give something back. One of the family firm’s great strengths is its rootedness in its community. Many family firms turn their relationships into a unique competitive advantage, and take pride in the positive role they play in creating local employment, and supporting local communities. The Bosveld Group, of South Africa, is a great example. The company was founded in the 1960s, and is now South Africa’s largest private citrus fruit producer, exporting 5.5 million boxes of fruit to 50 countries across the world. Milaan Thalwitzer, is the current non-executive chairman, and three of his sons-in-law hold management roles, with one as CEO. Milaan was named National Farmer of the year in 2014, in recognition of the company’s commitment to land reform, and making the black empowerment agenda a reality. Bosveld committed to Broad-Based Black Economic Empowerment (or BBBEE) thirteen years ago, and is now involved in a number of pilot projects in which the company leases land from black communities on long-term contracts, and then pays rent from the proceeds of the fruit growing business. Training for local people is built into the scheme, so that the owners of the land get a chance to work on it too. “If we can get this right, it should be a win-win for everyone. Land reform is a complex and sometimes divisive issue here, but we can find a way forward if the farmers themselves play an active part in finding the answers.” Bosveld is committed to South Africa, because the family has always been committed to South Africa: “When people ask me why we’ve been so successful I say it’s down to three things: keeping pace with change, seizing new opportunities, and our commitment to this country. In the next five years our plan is to make the most of the energy the next generation are bringing to the business, and empower our local communities so we make a positive and sustainable impact. We have no plans to diversify our fruit production internationally. South Africa is a land full of potential and we must first invest in our own future and the future of our people.” And how does Milaan want to be remembered? “AS SOMEONE WHO WAS LUCKY ENOUGH TO COMBINE HIS GREATEST PASSIONS: MY LOVE FOR MY FAMILY, COUNTRY AND COMMUNITY, AND MY LOVE FOR FARMING.”

Hemsby Beach and the adjoining coastline is recognised as one of the most attractive in the UK and a coastline that is awash with family businesses. Second generation family firm Seadell Shops & Holiday Chalets is one of them. Whether building sandcastles, watching the waves roll in or going on a leisurely walk through the dunes, Seadell and their collection of holiday chalets affords a warm welcome to this part of Eastern England with a proud family heritage and a real passion for what they do too. Paul Andrews spoke to the family behind Seadell Shops & Holiday Chalets to find out more about their journey. The story began back in 1976 as Toni Reeve was moving towards the end of a career in the insurance industry. Having spent many years writing lots of agricultural insurance Toni and his wife Ann had lived all their lives in Norfolk. One farmer had previously offered some advice to Toni such that “You will never make money working for anyone else” and this was ringing in his head when Toni decided to buy their first ‘long-leasehold’ holiday property in 1976 as they embarked on the next stage in their journey. In fact, Ann and Toni are in agreement when they say that the purchase of the first chalet was the start of a new business that they felt was the route to retirement – building a business that they could grow, sell and retire on the proceeds in due course. At the outset, there was little thought given to building a business to pass on to the next generation as the kids were pursuing their own interests and not showing any desire to return to the coast. Over time, more ‘long-leasehold’ properties were added to the portfolio and the entrepreneurial couple also took over the running of the shop. Ann is the first to admit that taking on the shop for the first time was daunting. “I had never done anything that involved serving the public before, and when we took the keys to the shop Toni was still working in insurance. We picked up the keys, looked at each other and said let’s give it a go – it might be fun!” At the end of their first season they were informed that the landlord had sold the shop so they handed back the keys, only to be asked to run them again a year later as the sale had fallen through. At the end of 1986 Toni bumped into the landlord as he was coming out of the local Post Office and was asked if he wanted to buy the shop. Negotiations continued for a while, stalling as Toni wanted to ensure that parking rights were secured and was prepared to walk away from the deal had they not been included. As Toni continues, “the seller was not happy about giving up the parking rights but without them there was no deal, and finally, on 6 March 1987, the shops were ours too.” Seadell as a family firm was well and truly up and running but at a time of great economic uncertainty. “They were difficult times,” continues Toni. “Bank interest rates were at 17% and the economic climate was difficult too. Remortgaging the house was the only option, and a reluctant one, but we went through with it, but the mortgage was released a year later as the results continued to improve.” Fast forward to 1995 and son Stuart returned from his time in Australia and New Zealand where he had been working and travelling. Stuart worked hard in Australia to fund his travels as well as play football, but in his own words did what needed to be done. “I loved the variety of jobs that I had, from the chemical plant to the chicken farm, and the office life I had done previously in the UK was well behind me. I had a ‘moment’ where I realised the beauty there was I working in an environment that you love. When I returned to Norfolk, I never intended to join the business but as it is seasonal, I started work when I got back to the UK for one season and have never looked back. I love it and now truly appreciate that the East Coast of Norfolk is a great place to live and work.” Ann adds, “We never put any pressure on Stuart to join us and when we set out it was all about us, Toni and I, and our journey. Stuart joining us has scuppered our plans and we are now having to change the journey and are following an evolving plan.” This is an engaging and entrepreneurial family who have not hidden away from difficult conversations. “You cannot afford to shy away from things” adds Toni, “especially when you have put everything on the line.” As an entrepreneurial family, they continue to improve, striving to improve the service to their customers, creating a brand and a sense of pride underlines all that they do. Stuart has added a fresh perspective to the evolving business and has helped to introduce a consistent look and feel to the chalets that now have a fresher look. As Stuart adds, “Too many people fail to keep up to date and improve and I am fortunate that my parents realise that we have to change with the times, and encourage me to step up and make decisions too. We are on a journey which is exciting for all of us. I relish then opportunities going forward but we are aware of the success challenges but we are working through it, talking and making decisions. We are fortune that there are three voices so we always get a decision and can move on.” The business may be taking a turn from the original retirement plan that Toni and Ann set out to create but they are embracing the future, providing customer service at all times of the day and night and continue to create memories along this stunning stretch on the Norfolk coastline. Visit www.Seadell.co.uk to find out more.

Blenheim Palace, the home of the 12th Duke of Marlborough is also a business, and the business has been transformed in the last 15 years under the management of its first professional CEO, John Hoy. Blenheim Palace is one of the most spectacular buildings in the UK and a World Heritage site. It was built to celebrate the battle victory of the first Duke of Marlborough, and 300 years later is still the family home of the 12th Duke, which makes it one of the most enduring ‘family concerns’ we’ve ever profiled. But Blenheim Palace is a business too, and over the last fifteen years the family and trustees have overseen the transformation of that aspect of Blenheim’s activities under the management of its first professional CEO, John Hoy. We travelled out to his beautiful workplace to ask about the special challenges of a position at the Palace. Why did the family decide that they needed a professional CEO and when was that decision made? The Palace is actually owned by a family trust, which has family members as trustees, as well as some high-profile external advisers with expertise in areas like the law and land management. About 15 years ago, the 11th Duke decided to bring in two of the younger members of the family, who had City and business experience. That was the catalyst, because they quickly realised that Blenheim needed to modernise if it was going to fulfil its potential, and generate the money needed to keep the palace in proper repair. Part of that modernisation was about changing the business structure, and part of it was bringing in different skills. That’s when they hired me. I had land management qualifications, and experience in running a big estate at Knebworth, and major leisure attractions like Madame Tussaud’s and Warwick Castle, so it was a great fit. And for me – a fabulous opportunity. What was Blenheim like when you arrived – what did you find? It was a tourist attraction, but I wouldn’t really call it a ‘business’. There was no budget process, no proper reporting, no strategy, no long-term plan. There wasn’t even a World Heritage site management plan, and you really do need one of those if you have that status. So there was a really pressing need to professionalise the way we worked. We didn’t do marketing or PR back then either – that was a hangover from the ‘70s and ‘80s, when sites like this used to assume that if you opened the doors people would just come. And yes, it did work that way for many years, but by 2003 that wasn’t enough as there was so much competition. So there were some big challenges, but there were big opportunities too. What did you do? We did a complete review, both of what we were doing, and how we did it. And right from the start, I had huge support both from the Duke and the trustees, and more recently from the 12th Duke, since he inherited. I couldn’t have made as many changes as I have without that degree of engagement. They supported me in instituting the professional business processes you’d expect from an entity of this size, and then I started looking at what we were offering people, because the first priority was the core activity – our visitor experience. We opened up more parts of the Palace, and built a new attraction called ‘The Untold Story’. We also changed the ticket pricing structure to make it more modern and flexible, and we introduced an annual pass, which was pretty ground-breaking at the time but proved to be a great success. A place like this can struggle to get repeat visits because people think they’ve ‘done it’ if they come once. So you have to find ways to tempt them back again; the annual pass was very good at that. We also extended our open season to almost the whole year, which, again, is quite unusual in our sector but allowed us to offer special events in the winter as well. We also completely overhauled the supporting commercial activities – much better catering facilities, and a superb new shop which is probably one of the best of its kind in the country. Having done all that, our next objective was to explore how we could diversify, and bring in new sources of revenue we weren’t tapping into. We’re bang in the centre of the country, with excellent transport links, and we have 2,000 acres of some of the most glorious grounds in the UK, but we simply weren’t making the most of any of that. We hardly ran any events, for example. In the last ten years all that has changed. We have events all year round, from celebrity weddings to huge public events like BBC Countryfile Live, which attracted over 125,000 people. We have sports events, and car rallies, and fashion shows, and contemporary art installations. The Ai Weiwei show in 2014 was phenomenal. Another case of people telling us ‘you can’t do that’, and us replying ‘yes, we can’. So there’s a huge amount going on, but it is working – when I first came we had around 300,000 visits a year. This year, we may well reach the magical million across all of our activities. Have you diversified in other ways? Definitely. The film location side is really booming – we were used for Spectre and Mission Impossible 5, as well as all sorts of smaller productions. And that involves a whole lot of new skills too – you have to balance the need to protect the fabric of the building (literally, in some cases) with what a film unit need to be able to function efficiently. Our head of operations is very good at this, and her team are very experienced, and as a result we’ve got a reputation for being good to work with. That’s essential. We also look at diversification in a wider sense – not just diversifying what we do at the Palace itself, but within the much larger estate, which is another 10,000 acres. For example, we invested in an industrial estate in Witney, to ensure we have a more even balance between industrial, agricultural, and residential property. Ironically enough, that same site used to be owned by the estate until the government compulsorily purchased it before the last war. We also have our own construction firm, Blenheim Estate Contractors Limited, which is building both commercial units and market/social housing. That whole area is very complex, with a lot of tax and planning issues, and we always have to decide if a particular development is the right thing to do with land that’s been part of the estate for generations. On the other hand, it can bring in vital revenue, and we’re looking to channel some of that into a new charitable trust, which will make it easier for us to apply for lottery funding for some of our capital and restoration projects at the Palace. At any one time there’s about £40 million of work that needs to be done, and at the moment we manage about £2 million a year which implies a 20 year cycle. But it’s like the Forth Bridge: by the time you finish you have to start all over again. Another diverse venture is Blenheim Palace bottled water. That’s fabulous because it gets our name out there in the sort of restaurants and hotels that our potential visitors are likely to use. We’re now exporting the water too, with an emphasis on China and Hong Kong. North America and China are the two most important overseas markets for us, in terms of our visitor numbers. How important is digital in reaching your visitor audience? Absolutely vital. We use everything – Facebook, Instagram, Pinterest. Everything. What role do you see the Palace playing in the wider community? There are lots of answers to that. On a commercial level, I see Blenheim as a lynchpin for tourism in the Oxfordshire region. It’s imperative that we all work together to maximise the value of the visitors who come here – we’ll all do better if we don’t stand alone. That’s why I sit on the Visit England Advisory Board, and why I was part of setting up Experience Oxfordshire, as well. Looking more locally, we take our responsibilities to the neighbouring area very seriously. The social housing venture is an important part of that, and the events we run can have a big economic benefit beyond the estate walls – we did a study of the last Game Fair at Blenheim and the wider impact was around £50m for the area as a whole and new events such as Countryfile Live will also contribute strongly to the local economy. There’s also our education work, and all the efforts we’ve made to improve our environmental performance. Things like reducing our waste, and cutting our energy and water consumption – all things that you probably wouldn’t think a stately home would be doing. All of this is part of the same overall purpose – the same sense of responsibility. This estate has been here for 300 years. We don’t just own the land, we’re part of the landscape. That’s why everything we do is driven by the need to be conscientious land-owners, and careful custodians of the family’s heritage, both now and for future generations. This feature forms part of the PwC Global Family Business Survey 2016. It has been reproduced with permission of PwC.

The challenge is to do all that’s required to pass the company on to generation two… A most challenging aspect of entrepreneurship has nothing to do with who started or maintains the family business, yet has everything to do with perpetuating it. That challenge is to do all that’s required to pass the company on to generation two. Over the past 30 years I have had many clients who did the technical things: created an ownership plan, formalised an estate plan and engaged with their family to perpetuate their business legacy. Unfortunately, in some cases, by that time the entrepreneur was ‘burned out.’ He or she had exhausted the energy and desire, and lacked the skills to devote to training and developing the business family’s next generation of leaders. A decision had been made to keep the company in the family, but the retiring generation was totally at sea about how to makes that happen with the ‘kids.’ While the situation can be frustrating, good results are vital if you are to successfully pass the business baton to generation two. A common interim solution is to hire a non-family person as president to run the company and train new family leaders. Many business executives are looking for just such an assignment. The trick is to find one suited for your family and company. Here are some tips to help you bridge the gap: Look for a person with a proven track record of business growth and success; ask for a bio or other proof of competence. Determine that he or she has the skills and temperament to train and mentor; if possible talk to individuals who have had them as a ‘coach.’ Determine how well the prospective candidate fits into your business family culture. For example, someone from large, public corporations may not comfortably fit in a lean, social, family work culture. Discuss mutual expectations with the candidate to clarify what success looks like. Include in these discussions your expectations for the next generation leaders. Thoroughly explain the family’s values, what you expect to see perpetuated in the company, and how the new non-family president can provide leadership. Set clear, formal boundaries for the working relationship that will exist between the entrepreneur and the non-family president. Write those rules down and also write down rules for company performance. Here, I suggest that the entrepreneur has regular meetings with the non-family president to stay informed about progress. Beyond an interim non-family president, an active board of directors can enormously benefit the entrepreneur in managing the leadership transition and training generation two. A strong, competent board can make it easier for both the entrepreneur and a non-family president who reports to the board. An engaged board of directors can broaden the entrepreneur’s perspective, reflect company/family history, amplify objectivity and enhance discussions about any potential shortcomings discovered in generation two. Prepare an employment agreement to memorialise the employment expectations for the non-family president. The agreement protects everyone involved and supports the president’s ability to monitor new family leaders and hold them accountable. Consult with your own adviser to help develop such a document that formalises expectations necessary for the continued successful operation of your family business. Business families are complex entities because they combine so many unusual characteristics—expressed and unexpressed. This does not mean that an ‘outsider’ is difficult to find or may be challenged to coach the incoming generation. In fact, the right candidate can simultaneously relieve the entrepreneur’s stress and launch the family business legacy into a strong future. About the Author - Tom continues his long-standing dedication to helping families of wealth and family-owned businesses succeed. He helps families develop a shared vision for the family and for the business; identify individual talents; tackle any unspoken issues; and create individual and organisational strategies to ensure a personally and financially rewarding business with a wealth preparation plan that ensures family values continue to emphasise a family culture of gratitude, philanthropy and purposeful living.

When it comes to family business succession planning, one thing is certain: Most family business leaders don’t do it, they don’t do it well, or they wait to do it until it’s too late. While the CEO longevity in non-family businesses is an average of six years, for a family owned business CEOs tend to stay for 20-25 years. Sure, that long tenure contributes to leadership stability and consistency, but it can also fuel flat growth, narrow business focus, and decreasing leadership drive. Additionally, when the CEO and other top level executive family members do not step aside in a timely manner, it causes a high level of frustration in the next generation who is ready to charge forward and make their mark. Once it becomes clear that the children might reach their mid to late fifties before taking over, it becomes hard to hold on to the ambitious ones. That’s why all family businesses need to have a solid succession plan in place—one that helps the senior generation leave with ease and welcomes the well-prepared next generation. While succession planning can happen at any level within the organisation, we commonly think about the top five to eight key positions for a written, structured succession plan. So as you plan your company’s future leadership, keep these points in mind. Think beyond seniority. Many family business executives choose their future leaders based on seniority (“She’s the oldest, so she will be our next CEO”). In some families, the next in line is the oldest male. Of course, a single owner can make the easy decision to pass the business leadership to the child of their choice. But this “easy” choice can backfire if the adult child or the one with the most seniority has not gained respect from other family members and employees. In other words, often the easy choice or the obvious choice isn’t the best choice. Therefore, be open to broadening your search beyond the next of kin. Embrace a more professional process of skill evaluations, performance assessments, and reviews of career history. The more thoughtful, objective, and inclusive the process of bringing on the next leader is, the more likely that the transition will be embraced. Succession readiness calls for a written transition plan and an individual development plan for the future CEO within three years of the planned succession date. Implementation of the plan may involve identifying other executive team members with succession needs, building a coaching plan, and providing stretch assignments in different functional areas of the company. Rank possible successors based on key criteria. Rather than just appoint the next oldest family member to the leadership role, consider creating a list of all the possible successors and rank them, from 1 to 10 (with 10 being high), in each of the following areas: Past work experience and advancement history Education Geographic mobility, if appropriate Learning agility Prior leadership positions—size and scope of leadership responsibilities Advancement potential Advancement desire Interpersonal skills Assessment of the individual compared to the company’s values and leadership competencies Past performance ratings The ability to take risks Decision-making ability Problem-solving ability Doing this for each potential successor will help you see which ones are best positioned to move the company forward. Finding a successor with the right mix of skills, attitude, drive, character, and experience that matches your business will ensure the family company succeeds for the long term. Groom the next generation. Once you have a successor in mind, offer him/her additional development through such things as job rotations, stretch assignments, additional profit and loss responsibility, and additional exposure to board members and customers. The more emphasis you place on prepping the next leader, the smoother the transition will be. Consider a non-family leader. When a family business member utters the words, “Let’s consider a non-family CEO,” the first reply is usually a colourful no! However, a non-family CEO frequently brings diverse, in-depth experience to drive business growth, bringing professional alliances, partnerships, and strategy opportunities. They can be a great mentor for the next generation of family leaders—often then known as a “bridge CEO” from one generation to the next. While the family may hold all the stock, it is critical to develop a performance incentive that will reward and retain the non-family CEO and an employment agreement that will fairly treat and protect the CEO. Choose Who’s Next Thoughtful, on-going planning for succession is a must for long-term business success and sustainability. Therefore, start now. Develop a clear plan about the succession of senior leader positions, including who will be next, when the transition will take place, and how that successor will be groomed to make the move smoother. The more planning you do now, the better the future will be—for you and your family business. About the author : Lois Lang is a speaker and consultant with Evolve Partner Group, LLC where she helps organizations become high performance workplaces. Lois works with clients on management succession readiness, organizational/team strengthening, executive coaching, executive compensation design, wage studies and mediated conflict resolution. Please visit www.evolvepartnergroup.com to find out more.

Our annual celebratory family business dinner is back and will be taking place in Central London on September 19. A drinks and networking reception will be followed by dinner during which there will be a number of short speeches and presentations. In particular, we will be announcing the winners and presenting them with awards for Next Generation and Lifetime Achievement, fitting accolades to be shared on a day that sets out to celebrate the contribution of family firms across the UK today. Join us in London for an evening of family business celebration as we come together to conclude National Family Business Day 2024. Check out some of the images in our gallery from the 2023 dinner:

Each year on the third Thursday in September the family business community across the UK comes together in celebration. The day was created by Family Business United to celebrate the significant contribution of family firms across the UK in terms of jobs provided, income created, wealth generated and all the charitable initiatives supported by family firms that make such a difference to communities the length and breadth of the country. A significant amount of the day plays out on social media and Family Business United provides a full marketing campaign pack to those who want to join the campaign that includes social media tiles, customisable news release/blog copy, suggested social media post schedule and plenty of ideas to get involved in advance of the day, on the day itself and subsequently too. 2024 will see a bigger and broader campaign with more details available in due course but for now, whether you are a family business who wants to get involved or a professional advisory firm that wishes to promote their involvement in the sector, sign up in order to receive your campaign updates, templates and marketing pack. Furthermore, the community is encouraged and supported in organising and promoting local events on the day itself and a national dinner takes place to conclude proceedings on the evening of National Family Business Day itself. National Family Business Day 2023 was incredible and a wonderful way to celebrate the sector on the back of a couple of difficult and challenging years and we have more ideas and plans in place to make the event in 2024 even more special. We look forward to your support and involvement in National Family Business Day 2024. #GBFamilyBizDay will be back on September 19, 2024 and we hope that you are going to be a part of it! As Paul Andrews, Founder and CEO explains: "Over the years the family business community has got behind National Family Business Day and truly embraced the opportunity to celebrate as one. The hashtag #GBFamilyBizDay has trended on social media platforms too. It is a pleasure to host this event annually and to shine the spotlight on a sector that does so much on a daily basis." Members of FBU receive a complimentary campaign pack as part of their membership but if you are not a member you can still get involved by registering for your marketing campaign pack here

Family Business Day is held on 19 September in Australia and New Zealand. It’s designed to recognise the invaluable contribution family businesses make to the economy, community, and culture and is organised by the Family Business Association. So many of the much loved and largest businesses across Australia and New Zealand are family owned. Iconic brands such as Brown Brothers Wines, Coopers Brewery, Akubra Hats, Haigh’s Chocolates, Bundaberg Brewed Drinks, Kennards Hire & Self Storage, Paspaley, A.H. Beard and Bakers Delight all started life as family businesses and many remain family-owned today. But it’s not just the large businesses that make a difference. The businesses you deal with everyday are likely to be family-owned businesses like: The local café where you get your morning coffee The vet you take your dog to for its annual check-up The plumber who fixes your leaking tap and blocked drains. National Family Business Day is a chance to celebrate family business in all its forms. From the very large brands you buy from every day to the smaller operators starting on the journey of building a future for their family. As a family business, you have a clear competitive advantage, customers trust family businesses. National Family Business Day is the opportunity for you to celebrate that. It’s more than a movement to buy local or shop small. National Family Business Day is about the heartbeat of business in Australia and New Zealand – family business. Find out more from the Family Business Association website here

Preparing to pass the business to the next generation is the toughest challenge for a family business. Roberta Fenech shares her insight. Preparing to pass the business to the next generation is the toughest, most critical and long-term challenge for a family business. Generational transitions bring about change at an individual, family and business level. The natural progression of a family business is that ownership becomes more diverse with every generation. It is never too early to plan for succession as this issue needs to be addressed before it becomes personal and emotional, and can therefore be addressed comfortably and rationally. Families approach succession in different ways – the strategically oriented family develops new behaviour and anticipates change, whilst the adaptive family acts as soon as change is signalled, on the other hand the reactive family is forced to change by events that have occurred. Transition planning needs to take into account business issues as well as the multiple roles and complex relationships within families. The application of justice in generational transitions is more complex in family than in non-family businesses due to the family component. Lack of fairness in transitions is a source of conflict. Fairness improves performance while also increasing commitments and the satisfaction of family members. There are a number of positive contributors to generational transitions such as- good relationships between the current leaders and successors; a strong and involved board of directors; the wholehearted commitment of the current leaders and willingness for succession on the part of the next generation. The engagement and involvement of all stakeholders in discussions, the ability to manage conflicts, the way stakeholders learn and work together, and the willingness to unlearn current behaviour to embrace the new, also have positive effects on change. The work of the next generation both within and outside the family business is another important factor that contributes to effective succession. The communication between generations supports the clarity about the process of transition and increases the awareness amongst the current leaders in the family about the next generation’s perceptions and interests. As the family gets larger, the need for higher shared goals, the appreciation of the validity of different realities and communication all gain in importance. Professional help may be needed for deep-seated issues in the family. Setting up a task force to specifically address succession may be a way forward for family businesses who commit themselves to planning for succession. The succession planning system needs to be tailored to the family business culture, strategic plan, the skills required by leaders and the operating environment. Within the family system, the family council, family meetings and family constitution all contribute to laying out the ground rules that include succession and therefore minimise the threat of the family business being damaged by conflicts within it. Transitions are a long process that require policies stating when and how family members become eligible for employment as well as the level of required commitment that must be made. Without freedom to choose the successors are less likely to make a strong commitment. A personal development plan for successors is recommendable. This is a road map that describes the skills and attributes the successors already have, the skills and attributes they need to develop and the programme for acquiring such skills, together with a means for measuring progress. As the successors take the role of managers they must demonstrate an ability to assume responsibility as well as supervise others. Strategic planning in this stage of the transition process is a key developmental tool. When the senior generation retires, the task of transforming the entrepreneurial vision into a shared mission that can inspire others is in the hands of the successive generation. Family businesses reap the benefits of succession planning ensuring its continuity with minimal disruptions. The next generation have time to adjust whilst current leaders make retirement plans. The role of the senior generation is crucial. Top executives always remember how much work has gone into building an organisation, but they often forget that the same amount of effort is necessary to ensure organisational survival when it comes to pass the baton to a new group of leaders. Recommendations to the senior generation could be- to define one’s goal for the family business; recognise and openly praise the accomplishments of the next generation; encourage learning; increase responsibility of the next generation; make an early announcement and plan for one’s retirement. The latter is feared by a number of leaders who have a negative attitude towards retirement. Retirement is a taboo subject in some family businesses. On the other hand the next generation is encouraged to foster change whilst preserving the past; take responsibility for their own education and development; set aside parent-child relationships in relating to the senior generation; and feel empowered to build skills, credibility and cohesiveness.

Family Business United is once again devoting a week to celebrating the contribution of family firms to the Scottish economy. 2024 sees the return of Scottish Family Business Week which will run from September 23 to274, incorporating a number of events during the week, including the Scottish Family Business Road Trip. During the week the Scottish Family Business Road Trip will see the sponsored car visiting a number of family businesses, getting behind the scenes and showcasing what they do on a daily basis, where they do what they do too. Each year this is a real journey of discovery and we know that 2024 will be no exception. Further details will be announced in due course but if you are interested in a visit please do get in touch. We will also be hosting a networking/drinks reception in Glasgow which will see the family business community come together and a dinner in Edinburgh too. Throughout the week we will be sharing plenty of news and insights on all manner of family business topics and engaging with as many family businesses as possible too. As Paul Andrews, Founder and CEO of Family Business United explains, "We have a significant number of family business members across Scotland and it is always a pleasure to visit as many of them as possible. Family businesses are at the very heart of the Scottish economy and it is a pleasure to champion them. As an organisation we have published the only report into the oldest family firms in Scotland and also reports into the contribution of the top 100 Scottish family firms too, and with family business at the centre of all that we do, we are looking forward to getting back on the road and uncovering some more great Scottish family business stories." "Scottish Family Business Week is always inspiring as there are so many great family firms with strong narratives, a real sense of purpose and deeply rooted entrepreneurial spirit that gives a nod to the past with eyes firmly focused on the future."

Reputational risk is a key concern for many family firms. Alistair Morgan explains some of the considerations as to how families can manage their reputations. Setting The Scene Many wealthy families “trade” on their reputation, which has often taken years, decades or even centuries to develop. However, thanks to social media and mobile technology, we now live in a world where reputations can be won or lost in a matter of seconds or minutes. Taking the middle ground – maintaining a reputation – is far from straightforward, and is an ever-evolving task. The reputation of a person or entity is, quite simply, an opinion which is often formed as a result of social evaluation by one part of a community or the public generally. A positive reputation can present opportunities; negative reputation on the other hand can be extremely damaging, and in the worst cases, highly disturbing. Managing reputation is a complex business on a number of different levels. The purpose of this article is to explore how wealthy families can manage their reputation, including the role of philanthropy. Central to these matters is the role of a wealthy family’s private office. Social Media, Mobile Technology And The Internet We have witnessed a cultural shift in recent years whereby the public demands more intrusive and intimate information about those in positions of power or celebrity. The private and financial affairs of wealthy individuals and families, entrepreneurs and well-known companies are ripe for public discussion and criticism, particularly if they touch on the controversy of the day. The structuring of wealthy families’ tax affairs is a notable example – more on this below. Malicious and intrusive publications, notably online, can cause significant and lasting reputational damage. Negative publications can be devastating and wreak havoc on personal and business relationships, profitability and investment opportunities. Once images and information have been publicised across different platforms, the task of completely removing it can be almost impossible to achieve. The old adage that “prevention is better than the cure” is particularly apt when advising wealthy families on how to manage their reputation. Challenges Faced By A Family And The Role Of The Family Office The structures that hold and administer a family’s wealth are often far from straightforward. Such families often have an array of trusts (both on and off-shore), companies (private and public), partnerships, charities and foundations. Each of these vehicles will inevitably have an ongoing, typically annual, compliance obligation which can take the form of tax returns, annual accounts and annual returns, to name but a few. It is common for families whose affairs involve such a degree of complexity to have their own private family office. A popular misconception about private family offices is that they are simply a private investment office with an administrative function attached to it. While these services often form a part of the overall service function for a wealthy family with complex wealth arrangements, a private family office should also seek to provide families with strategic advice about many different aspects of their private wealth arrangements, and ensure that such advice is implemented appropriately. Set out below is a number of issues that the private office of a wealthy family need to address in order to manage their reputation: Compliance (fiscal, regulatory, accounting) The work can either be undertaken in-house, in which case it will need to employ the appropriately qualified and experienced staff to do this, such as an in-house director of tax, head of compliance or chief financial officer. Alternatively, the work can be outsourced to a third party, but the family office should coordinate and drive the process. The “Smell Test” Some, or even all of the activities of a family’s wealth structure may not fall under the supervision of a regulatory body such as the Financial Conduct Authority, or have a statutory need to be audited. However, in the absence of statutory or regulatory obligations, a family may want to ensure that all of its private wealth arrangements are governed and operated in accordance with “best professional practice”. As a result, a private family office must aim to operate such that its policies and procedures conform to the standards required if it were under the supervision of a professional or regulatory body. One way to achieve this is for a private family office to establish an Audit and Risk Committee (ARC), which can also be used to monitor a family office’s obligations when it does fall under the supervision of a professional or regulatory body. Ideally the ARC should be chaired by an independent individual who is neither a family member, nor an employee, either within the family office itself or in a business owned by the family. Furthermore, families can elect to have their entities audited by a professional auditing firm in the event that there is no statutory audit requirement. For example, an offshore family trust structure may have greater complexity, quantum of wealth, and number of financial transactions each year than a company listed on the London Stock Exchange, and the latter would need to have a full statutory audit. The audit of a private trust structure can help to provide family members with an additional level of comfort that their affairs are being administered in a way which is unlikely to have an adverse impact on their reputation, with the full support of a professional firm’s report. Security Having a robust security plan is integral to maintaining a wealthy family’s privacy and reputation. Intrusion, for example through a breach of an IT system or as a result of an employment matter, can have a detrimental impact on a family’s reputation. A private family office can develop a coordinated strategy for them in order to help prevent, detect and respond to a breach of security. Public Profile For some wealthy families, having a public profile is inevitable and simply unavoidable. This may range from a family member being the CEO of a public company, to being the family of a well-known sporting celebrity. A private family office may need to engage a consultant who can advise them on how to manage their public profile, and by implication their reputation. Such a consultant will also be an integral part of any exercise that is required to manage an attack on that reputation, irrespective of whether there is any truth behind allegations made by an unscrupulous third party. Crisis Preparation How to react when disclosure is threatened or a breach of confidentiality occurs. The previous points all confirm the need for a family office to have a clear strategy and plan to deal with a “Crisis” before one actually occurs. This then needs to be integrated with a disaster recovery plan for the private family office in order to deal with events such as, inter-alia, the death of a key (and probably publicly well-known) member of the family, the broadcast of a story or event in the public press, or a transaction involving one of their business interests. The plan should also include a set of procedures to deal with a third party seeking to tarnish the reputation of a family. In advance of such an event taking place, the private family office will need to consult with them about their views on the extent to which they would want to trace and bring to account a perpetrator of an attack against their reputation. Attitudes To Tax Much has been discussed and written about attitudes to tax in recent times, both nationally and internationally. Popular themes and their respective drivers include: The national deficit – political pressure to generate sufficient revenue from taxation in order to pay for the cost of providing public services. The on-going search for someone to bear the responsibility for the 2007/08 financial crisis. Bankers have taken much of the pain, coupled with the perception that they were the main promoters and users of aggressive tax avoidance schemes that have cost the Treasury access to many billions of pounds of taxation revenue. The moral argument about tax avoidance and the blurring of the lines with tax evasion. A wealthy family’s approach to taxation is therefore a critical aspect of how they manage their reputation. As has been recently seen by the string of celebrities embroiled in suspected tax avoidance schemes, it is not possible (not least from a legal perspective) for wealthy families to simply leave it to their tax accountant “to get on with it”. Each family member has to take responsibility for the management of their tax affairs – to do so otherwise could have a serious detrimental impact on their reputation even if they were simply following the advice of their professional adviser. Failure to comply with these obligations could result in a public trial and prosecution, bringing with it the inevitable impact on the family’s reputation (irrespective of the eventual outcome). A private family office can assist with this by dealing with the following issues: Tax Compliance A private family office may be mandated to maintain all of the personal financial records of the members of the family. The office may also maintain the accounting records of the entities (corporations, trusts, partnerships, charities etc.) that exist within the family’s private wealth structure. Typically the data produced and maintained by the family office will be presented to their tax accountant to enable them to prepare and submit tax returns. The late or incorrect submission of a tax return can result in negative connotations for a family. While such a submission may not become public knowledge, a wealthy family’s relationships with taxation and regulatory bodies are critically important to the successful administration of their wealth. It is therefore imperative that a family’s private office is structured and managed in a way that will enable the tax compliance obligations to be met accurately and in a timely manner, working alongside the professional tax community where necessary and appropriate. Transactions A private family office is likely to be involved with the planning and implementation of transactions on behalf of the family and their wealth structures. It is highly likely that any such transaction will have a fiscal implication, and so the manner in which the process is driven and organised by the family office will potentially have an impact on its outcome. The senior family office executives need to work closely with the family and its professional advisers to identify the key tax issues and risks, to give them clear and definitive advice on the potential implications of the transaction. The Role Of Philanthropy Wealthy families engage in philanthropy for a variety of reasons, including a moral desire – people who may feel that they would like to contribute more may make philanthropic donations of their own choosing rather than contribute to the public purse. Or they may simply wish to continue their family’s history of philanthropy. One of the many advantages of being involved in philanthropy is the positive effect that it can have on a family’s reputation (whether such attention is desired or not). Executed well, philanthropy can present them with a favourable public image. However, get it wrong and the negative impact can be disastrous. It is therefore imperative that a wealthy family’s involvement with philanthropy is properly managed and administered, and their private family office should play an integral role in this by establishing the appropriate governance structure for their philanthropic interests. The private family office can also help to bring cohesion to this matter by delivering a consistent set of policies and procedures to the governance of the family’s interests generally. Typically, a wealthy family’s involvement in philanthropy will take the form of a charity that is specifically incorporated to pursue their philanthropic interests, which I will refer to as a “Family’s Private Charity” (as opposed to a “public” charity, such as the Charities Aid Foundation. The issues that a wealthy family need to be mindful of when involving themselves in philanthropy include: The public perception as being an ineffective funder if a grant made by the Family’s Private Charity is misused or the charity folds. Grantees could perceive the Family’s Private Charity as being an inefficient funder if it rejects requests for subsequent grants, or withdraws a commitment before full payment is made (for whatever reason). Conflicts of interest need to be handled appropriately, particularly where a family has many diverse interests aside from their philanthropic pursuits. For example, difficulties can arise if a business that is owned and operated by one family member appears to pursue activities that are contrary to a Family’s Private Charity which is run by another member or branch of the same family. Compliance with charitable legislation and regulations appropriate to the charity’s activities, such as those issued by the Charity Commission. Internal financial controls – if a Family’s Private Charity is managed ineffectively, it will reflect badly upon the family, particularly if one or more of the family members are involved in a commercial enterprise (“they should know better” syndrome). Conclusions Managing the reputation for a wealthy family is far from straightforward. There are many pitfalls, but there also a number of proactive steps that can be taken to mitigate these risks. A well-organised private family office, which operates with clear policies and procedures, is a good method of enabling them to be strategically advised on these issues. Philanthropy is an integral part of managing a wealthy family’s reputation. However, a family’s interest in philanthropy should be led by their philanthropic interests and objectives, rather than a means of managing their reputation. About the Author - Alistair Morgan is CEO of Mayfair Private. This article was first published by Familia, the official magazine of the Family Office Council and has been reproduced with their permission.