A moving insight into what happens when your Uncle closes the doors and there is nothing you can do. Heather Leavens was a third generation director of the family business for 18 years until her Uncle decided to close the business. Powerless to do anything about it, Heather had to direct the winding down of the business. Paul Andrews spoke to Heather to understand some of the emotions involved in such a process. Heather Leavens joined the family business when her father asked her too, giving up her role in marketing and business development which at the time she loved to enter the fray. The business was formed in 1927 in Mississauga in Canada by her Grandfather and his two brothers, Art and Walt, in Belleville in Ontario, Canada. The original business began doing barnstorming, training pilots for war and mail runs to Pelee Island, Ontario. Great Uncle Art died in a plane crash and Great Uncle Walt left to pursue his interests in farming which is when her Grandfather took over running the business with his four sons and from a building in Mississauga, began to service and overhaul small aircraft like Pipers and Cessnas, maintaining a stock of spare parts and servicing specific plane parts too. Heather recalls her time as a child, way before actually joining the business when she used to work filing and cutting the grass. “My father got involved in the business as the second generation and growth came through diversification – first there was Leavens Boats and then a car dealership and even a business selling private jets,” she explains. “At the peak in activity there were operations in Mississauga, Montreal, Calgary and Edmonton with around 70 employees. We were not a large business but gave a lot of people work and the business afforded us a good lifestyle too. During this time, we also moved to a new building and the name of the company was changed to Leavens Aviation Inc.” Leavens Aviation was a good place to work and the employees enjoyed their time with the business. Many stayed for years and when the business eventually closed, a number of the staff leaving had worked for the company for over 40 years, something that Heather felt a certain responsibility for. “Our staff were part of the family really, an extension of who we are. They spent a long time with the company and it was sad that as well as the family closing the business, for many of the staff it was also the end of an era for them too,” continues Heather. For many, working towards a known outcome, the closure of the family business, is something that is planned a long time in advance. Not so for Leavens Aviation which at the time of the decision being taken was still predominantly owned by Heather’s Uncle, who at this time was approaching eighty years of age. “His daughter worked for the family business and it was obvious that the two of them had discussed the future of the business and come to a decision prior to us knowing anything about it” continues Heather. “In fact, my Uncle came into the office in the Christmas of 2010 and just told us that he was closing the business. It really did come as a shock to all of us, especially the three other family members working in the business that had no idea it was coming. We were all aware that there was no apparent fourth generation coming through to take the business on and that it was likely that it would have to be sold in the future, but we were all approaching our fifties and expecting to work towards building a nest-egg for our retirement through the business. Instead, we were suddenly confronted with a life-changing situation that we had simply not envisaged.” The next six months were not an easy time for the family as the assets were sold off and disposed of and eventually Heather found herself sitting in the car park on the last remaining chair waiting for the final customer to come to collect their goods. “At this time, I was not really sure what was going to happen” continues Heather, “I had no idea what I was going to do but I guess in the six months preparing for the closure I had time to think about the past and collect some of my thoughts, sorting out the papers and getting the practical things in order. What nobody can prepare you for is the last time that you close the door on a business that has been in the hands of your Father and your Grandfather, and for which you cannot help but having a feeling of responsibility for.” “Sadly, my Uncle had made his decision and we had to abide by it, he was the majority shareholder and we did not have the funds, nor the desire to take on any personal debt, to buy the business from him.” Hindsight is a powerful tool and Heather is now coming to terms with the reality of the situation. “I do get sad sometimes when I think of my Father and then the link to the business that is no longer ours, but am not naiive to think that running the business did not come at a cost. My father dedicated a lot of time to the business and as such had less time to spend with us as a family. However, the money has come in handy for the family and ultimately are well positioned and in a way, fortunate, to be able to take stock of our lives.” “Having said that, our building is now used as a furniture store and since opening, I have not driven past it once nor had any desire to go into the building to look around, it is all still a little raw and something that I just cannot bring myself to do,” continues Heather. Like other family business owners that have been involved with the closure of a multi-generational business, Heather is not alone in her feelings. However, she is aware more than many that life is short and that we have to make the most of things. “The day I left the building for the last time I went straight to the hospital to spend time at the bedside of a close school friend who was ill with terminal cancer and passed away nine days later. This was a tough time but helped to put things in perspective for me” she explains. Since the business closing, Heather sees herself as having been fortunate enough to take stock of her life, spend a year travelling and catching up with friends and is now about to embark on the next chapter of her life, life without the “burden of the family business.” Heather has always liked marketing, people and customer service and is keen to find a role that offers these opportunities to her. “In hindsight, we spent the last few years in the business trying to diversify and increase revenue, reduce costs and fight the recession, like many other businesses, but we were facing an uphill battle and maybe closing the business was actually the right thing to do. We had all become embedded in what we were doing, week in week out, and now we can stand back and consider the options before it is too late.” For Heather, it has been a difficult emotional road to go down but at least now she is able to look back and focus on the positives. “The burden of responsibility towards the family and the wider family, the employees and the community, has been removed and if I had to give any words of advice to others in a similar position, I would strongly suggest they consider their options, but closure or selling the family business is an option that may be necessary.” For Leavens Bros the outcome would probably have been the same in fifteen to twenty years time, an outcome that the third generation were quietly working towards without any thought of anything different, and then the ‘rug was pulled out’ and the family business came to an abrupt end. At the request of her Father, Heather gave up her own career to start in the family business and sacrificed a lot personally to manage the business for many years with her cousins. It has taken a toll, but Heather does have fond memories of the business, recognises the sacrifices that were made along the way, and although closing the business was probably the biggest sacrifice of all, is embracing all of the opportunities that it has also created for her now so that she can move forward and embrace life to the full.

Advisers can help clients better secure their family business by asking them to address four key areas: legal structure, governance structure, policies and processes. Many traditional professional advisers and trustees are familiar with legal structure, but it is critical to address all four areas to help clients build a solid business foundation for the future. In this article, Christian Stewart explores the topic in more detail. Legal Structure The first question to ask is: what is the right kind of legal structure to secure the long-term protection of the family business? Should it be owned by a trust, a charity, a foundation or a holding company? Should there be a mechanism, such as voting and non-voting shares or a partnership structure, to separate control from the economic interest in the business? If it is going to be a trust structure, what kind of trust and what kind of trustee? In Asia, for example, trust ownership is not uncommon, but where the asset is the shares in a family business, an institutional trustee will want a trust structure that completely carves out and allocates responsibility for control of the shares in the family business to the settlor of the trust and their family. Alternatively, an institutional trustee may recommend a private trust company structure to be run by the settlor and their family, with the institutional trustee providing only administrative support. One reason for needing a legal structure to own the business is to consolidate ownership and prevent fragmentation of the shares. A legal structure is about allocating the benefits of ownership, and control. It should provide an ownership transition plan for the business, and the right one can also help to protect shares from creditor, divorce and illegitimate heir claims. A legal structure such as a trust can potentially allow the shares in the business to be owned by the family for multiple generations. Family meetings to explain the terms of the family trust or other legal structures will ensure there are no surprises in store. Governance Structure The legal structure is not sufficient by itself, so the next point to address is what governance structure would best suit the goals and objectives of the founder and their family. As a minimum, periodic family meetings between the business owners enable them to talk about the relationship between the family and the business. Family meetings should follow an agenda and rules, with someone chairing and another facilitating. These key roles can be rotated among family members, but a family new to formal meetings is likely to use a non-family facilitator. These meetings are not necessarily about decision-making but about ensuring that the family has a voice and creates a fair process. More formal governance structures are a family assembly comprising all family members; a family council, a smaller group that represents the family assembly; and possibly one or more committees of the family council, for example education and development, or career planning. If there’s a family office that manages the liquidity the business generates, it should be a structure separate from the family business, with its own organisation, officers and staff. The family office can help organise the governance structure, and support the activities and initiatives of the family council, which is responsible for ensuring control and overseeing the office. Part of planning the governance structure is reviewing the manner in which the family business has been governed: looking at the composition and the role of the board of directors of the business. There is often a link between the governance structure for the family and the board of directors. In practice, this may be achieved by having overlapping memberships or through arranging occasional meetings between the board and family council. Governance structures provide leadership and direction for the family and its business. They help ensure continued support and commitment to the business, and enable harmony because family members have worked out their differences behind closed doors. And if the founder or family’s goal is to continue the business for generations, there needs to be an organised structure and processes for the owners to make decisions together. Choosing Policies Policies regulate the relationship between the family and the business, but what kind do you need? A family employment policy, a dividend policy or a policy for compensating family members who work in the business? And do you need policies relating to the qualifications for acting as a director? Is there an exit policy governing how shares can be sold? Having the right policies helps avoid predictable conflicts and establishes boundaries between family issues and business matters. Policies make things clear, so everyone is on the same page. "Governance structures provide leadership and direction for the family and its business. They help ensure continued support and commitment to the business" It’s common for the family council to develop the terms of the policies, but it cannot make policies or decisions about the management or operation of the business. In these cases, it can develop and propose the policy to the board of directors, which approves it as necessary. Process Options Finally, there are processes, and which ones are needed to bring the family and business governance system to life. Consider the following example: a business founder sets up a family trust to own the shares in the family business. The trust is structured so the founder controls all the voting rights on the shares. It provides that if the founder dies or becomes incapacitated, control of the voting rights on the shares will pass to their surviving spouse. But what if the spouse does not know anything about being a controlling shareholder in the business? What if the spouse does not understand the trust structure and their potential role in it? What if there is a board but the spouse does not understand its role – that the members of the board could be their representatives in the future and that they have the power to change them? What if the spouse does not understand the strategy of the business or the risk profile of the business? In practice, this is a common scenario. The trust structure in this example may be a good legal structure and it may help the founder keep control and pass legal control to their spouse. It provides an ownership succession plan, but you can see this trust structure is not by itself going to teach the spouse how to be a good owner and business steward. You cannot rely on structure alone to guarantee future success. The types of ongoing processes that business-owning families implement can include education and development of shareholders and owners (whether that ownership is direct, or indirect through a trust), career planning and developing the next generation of family managers and leaders. As the future business will be a more complex environment than the business of today, the next generation need skills in important areas such as communication and conflict resolution, strategic planning and leadership. Different Approaches The traditional approach to selecting and setting up a legal structure for the family business has been to work only with the business founder. In Asia, for example, it is not uncommon to find cases where the legal structure is not fully revealed to the rest of the family members until the founder has died or become incapacitated. In practice, a different kind of approach is taken to design the right governance structures, policies and processes. The most common is either to form a family task force, which may consider options and give proposals to the founder, or to install a series of family meetings, which include the founder, their spouse and adult children, to discuss and design their own governance structure, etc. The founder can control these meetings, but by involving their spouse and children, the rest of the family can get a clear understanding of their goals, wishes and thoughts and they can all work together to develop an approach that has family buy-in and support. The most common approach is to combine the agreed governance structure, policies and processes into a written document known as a family constitution or a family charter. These agreements can be made legally binding but often they are not. The family constitution’s value and effectiveness come from the process of the family members working on it together, considering alternatives, and coming up with their shared understandings of how things should be done. If the legal structure is handled in the same way as the family constitution, the same benefits will be achieved: increased family buy-in, understanding and the ability to get feedback on the basic question of whether or not the proposed legal structure will be workable when the founder is no longer around.

Buying well is key to successful art investment and is a delicate balance between aesthetic appreciation and financial savvy. Viola Raikhel-Bolot explains more. Investing in the art market can provide impressive returns, yet an even greater reward can be derived from an individual’s passion to acquire objects of great beauty. The benefits of investing in art include a low correlation with other asset classes. Economists have predicted that over the coming years a concern about future inflation or the return to financial instability may drive individuals towards increasing their portfolio allocation to art as an inflation hedge. In addition, the competition for artworks adds to the inherent scarcity to make art a desirable asset for investment purposes. Whilst anomalies can exist in the art market (as they can in any market), record prices, strong returns and increased institutional buying have sparked significant interest in art as an asset class. If one goes about investing in art with the right balance of aesthetic appreciation and financial awareness then you can ensure that what you have bought will appreciate over time. So, how does one know what the perfect balance is? To ensure you buy wisely, protect your asset and enhance its value we have compiled a short list of some tips for buying well: 1 – Identify the Seller It is important when considering an art purchase to identify who you are buying from. Auction houses, art dealers and art advisers are all incentivised differently. Understanding the seller’s motivation will assist you in making informed purchases. The objectives of dealers and auction houses is to sell consigned and existing stock, therefore advice from these parties can in fact be skewed with a focus on business profits and reaping in-house commissions. In contrast, the sole purpose of an independent art adviser is to identify the best source of works which suit their client’s collecting objectives without any bias. While auction houses charge both the buyer and seller a percentage on the same transaction and dealers sell at retail prices, an independent art adviser is able to leverage discounts for you in the market place and provide a completely transparent transaction. 2 – Do Your Research Discovering an artwork that appeals to you aesthetically is only one of the first steps in the collecting process. Ask yourself – does this piece represent the best possible work by this artist, within my budget? Researching the artist’s body of work will ascertain whether or not your selected Picasso, for example, is the best possible representation of his Blue Period. 3 – Provenance Another factor to consider is an artwork’s provenance. This can make a considerable difference to the selling price. In the current market, works from private collections with an excellent public exhibition history are in high demand and occupy some of the top lots by value at auction. While the prestige of being featured in an exhibition at a world-class institution adds to an artwork’s desirability and value, this is not to say that artworks kept out of the public eye are worth any less. A Monet painting, “Nympheas” (Water Lilies),1907, owned for many years by the reclusive heiress Huguette Clark and not publicly exhibited since 1926, sold at Christie’s in May 2014 for $27 million. 4 – Condition Condition is another very important element which can greatly impact the value of an artwork. It is essential to request independent condition reports before making a purchase. Similarly when identifying works privately or at auction, an independent examination of the artwork’s by your adviser with a UV light will immediately ascertain whether or not the existing condition report reflects the actual state of the work. 5 – Protection To protect your investment and ensure it appreciates in value it is important that your artwork is properly insured. If you have owned an artwork for several years, the initial valuation could now be out of date and not relevant for insurance purposes. Therefore it is recommended that an annual valuation is obtained to reflects changes in the marketplace. Where possible it is also recommended to identify if your artwork can be featured in public exhibitions as this will enhance the works future sale value and desirability. Buyers and sellers should always seek an independent and impartial adviser to undertake thorough due diligence at all stages of the collecting process. With an unregulated market, inflated prices and counterfeit works, a good adviser will ensure clients avoid the many pitfalls and potentially unpleasant surprises that can occur in the market place. This article was prepared by Viola Raikhel-Bolot, Director of International Advisory at 1858 Ltd Art Advisory, who is frequently called upon to assist clients when buying and investing in art. For more information please visit www.1858ltd.com

The Company was formed in 1889 and the Wright family have been involved in the making of quality ladies hats for over 300 years, making Philip Wright one of the oldest “blood line” hat manufacturers in the world. What does your family business do? The Company was formed in 1889 by Walter and Minnie-Susan Wright in Albion Road, Luton and our family have been involved in the making of quality ladies hats for over 300 years, making us one of the oldest “blood line” hat manufacturers in the world. In 1982, I joined the family business. As a result of the combination of the long experience of previous generations and his training under Madame Marie O’ Regan, at the London College of fashion, I have been able to bring the family’ firm into the 21st Century. How did you get involved? I was invited to learn about the value of pocket money by my Father, bless him, by working in the factory during the school holidays from the age of about 7 but my love and appreciation for the theatre of hats really started in a cafe in Greenwich when I was about 19. How I actually ended up in the business is quite an interesting story too – I was working in London and was pretty bored with my job and I used to play ‘chicken’ with lorries on my motorbike and one day I lost and was involved in an accident. After discharging myself from Hackney Hospital I had to return to my family to mend as I was unable to walk much, and whilst mending I pottered around the factory designing and making a hat for a National Young Designers Competition. My entry did rather well and I really enjoyed the creativity so I left my job in London and started as a junior blocker at the factory in 1982. I learnt Model Millinery at the London College of Fashion and eventually bought out my father in 1999. What did you want to be when you grew up? You could say that I am still growing up today!! When I was at school I did not know what I wanted to do. I liked acting and entertaining so I guess I’ve landed the perfect job! What pressure does a 120+ year old family business place on you? Now, none! It did take me ages to break the pattern of my predecessor, my Father, the way things were done and the attitude which hindered my ability to fully embrace my talents and evolve into a very different market. I also associated the factory as a place of work and not of fun and creativity so again that hindered my real enjoyment and development. In hindsight, what I did was right at the time and I am still here… How do you embrace the heritage of the business and move into the modern era? BIG TIME!! I am proud of what we do and embrace the importance of that by not trying to change but to evolve. The past of selling vast quantities of quality hats to the High Street for me is over – if the department stores want to turn themselves into warehouses without any sales advisers then we do not want to be part of it – hats are not the same as socks and sell far more effectively with a knowledgeable member of staff to advise them on what hat to choose and how to wear it. As the big stores cut staff, and cut the hat departments too, there is an opportunity for us and I am ‘taking the hat direct to the people!’ What marketing activities do you do and how do you engage with new markets? These are important activities so I meet lots of people, I give lectures to various organisations such as the Womens Institute and we hold Open Studio sessions for past clients and their friends to help them ‘discover our world.’ We have also created numerous YouTube videos to demonstrate the diversity and range of what we do an I have even given a five minute cabaret act too!! Our business is all about profile, word of mouth and recommendations rather than expensive advertising campaigns that are forgotten the moment they stop running. Is there a next generation waiting in the wings? Maybe! When I arrived on the scene I made my contribution as the next generation so who knows… My daughter is learning the skills and maybe if and when she is ready she will join me, if the time is right and that is really what she wants to do too. Do you enjoy what you do? Yes, I love it! Words of wisdom – If you could change one thing what would it be? Not a great deal because everything that has happened in the past has brought me to this point today, which I am truly happy about. Nothing radical to change but maybe I should have hung around more fashionable bars and clubs in my earlier days, the extravagance and creativity would have been great inspiration and I may have influenced a celebrity or two to wear one of my hats and helped with my public awareness too. I do not beat myself up with hindsight although I’d love to meet Mary Portas! Today my heart is full and my suitcase is light!!

Oxfords Bakery was established by Frank Oxford in 1911 at Alweston, near Sherborne in Dorset. Today, fourth generation Steven is at the helm, a far cry from the DJ lifestyle in Ibiza he did before! What does your family business do? Oxfords Bakery is a 4th generation bakers, still making Traditional English bread and cakes using the same methods (and ovens) as Great Grandfather Frank Oxford in 1911. How did you get involved? I was always expected to join the family business, not by my family, but by all of our customers, suppliers and friends! Naturally this deterred me even more. I turned from music loving teenager in to a professional Nightclub and event DJ and, by my early 20’s had even established a name as an agent for other music acts. During a tour of New Zealand and, actually, right in the middle of a set I was playing during a street festival for Red Bull at the ‘Americas Cup’ yacht race in Auckland, I made up my mind that I wanted to not just work for the family business, but to develop it and make it in to what I believe it should be – the most popular bakery in our county, Dorset. So next time you see a ‘DJ’ at work, wondering what’s on his or her mind, it may not be quite what you’d expect!! What did you want to be when you grew up? An exact replica of my father! What are your first memories of the family business? The first memory of the family business for me was being allowed behind ‘the table’ to mould cottage rolls with my Dad at the Royal Bath and West Show when I was about 5 years old, and then while he was pre-occupied, one of the bakers lifting me up and out of the way to sit on the flour sacks as I was probably slowing up the works. This was the first feeling of burning desire to show what I could do for the business. Needless to say, next year as a great big six year old I was very visibly shadowing my father and helping bake whilst wearing a rather fetching t shirt my mum had provided saying :Get fresh with your local baker’ on it! The other memory that my brother and sister share with me though is the smell and clatter of the tins as we walked into the bake house when we would stay there with our grandparents. Its still the same sounds sights and smells today, but you don’t appreciate them until you’ve been away from baking for a couple of weeks. Good excuse for a holiday I suppose!! What values are important in your family/family business? Our motto has always been ‘quality and tradition’ I think if we maintain these two things then the actual boring business side of things are much the same as most other businesses. It is those two things that keep us unique. There are a few good bakeries I can think of that only have one of these attributes, and no matter how hard our competition try, it is impossible to emulate what we do. (Unless you also have an original Victorian/Edwardian bakery to work from!) What is the best thing about being a family business? The support framework when things get , inevitably, tight or don’t go as planned. We don’t set ourselves many targets for success as a family business, we do , however, know how to celebrate our achievements though. An invite to ‘Oxfest’ would prove that to anyone!! And the worst? Imagine putting in the best financial year in 100 years, exceeding all expectations, growing and developing at a faster rate than you could ever have expected… and then find a post it note with a complaint from your own Mum because you’ve lost a petrol receipt or because your office looks a bit messy! For me, that is about as bad as it gets though – I’m afraid, there are no horror stories here! What is the best thing about your working day? Seeing somebody walking down the street clearly enjoying a product from an ‘Oxford bag’. Also, hearing a tale from a customer who says that one of your products is their ‘favourite food’. I only need to hear that once a year to get me out of bed in the mornings. A real pleasure. What is your proudest family business achievement? Our centenary year has to be up there. Shared by all of us proudly, as you can imagine. My father decide that he wanted to take the business to 100 years, come hell or high water. This doesn’t sound like a great ambition until you realise he decided that 51 years ago!! I had the good fortune to meet Richard Branson last year and even he said: “ now that is a real achievement” You can’t argue with that really! Is there a next generation waiting in the wings to take over? Ha Ha, there is now but only just as they have only just been born but there is absolutely no way on earth that I would ever pressure or even suggest my children be involved in the business though. Look forward to teaching the values of hard work, finance and reward, but they are way down the list after things like messing about, laughing, running around with your arms out like an aeroplane for 3 hours solid etc as life is there to be enjoyed first and foremost. What do you see as the biggest challenge facing family businesses? Copy cat businesses is a real threat to our sector as there isn’t much legislation as to what real bread actually is. Despite the Real Bread Campaign doing a good job of promoting small and honest bakery businesses, they are dwindling. In fact, there were approximately 20,000 small bakeries in the UK 25 years ago and there are now only about 3,000 left. Supermarkets can use words like ‘fresh,’ ‘craft’ and ‘wholesome’ at will! We have some local competition that even has a sign in the window saying ‘traditional artisan breads’ yet they are made on a plant/production line!! It does grate a bit when you have given up nearly every Friday night of your life to actually do it properly! Rant over! What words do you associate with family businesses? Passion. Values. Ethics. Tradition. Words Of wisdom – What piece of advice would you pass on to someone thinking about joining the family business? DADS ARE ALWAYS RIGHT!!! Knowing when they are not, and being able to make subtle changes, is the key to success.

Kinloch Anderson, an Edinburgh family company since 1868 are renowned experts in kilts, tartans and all aspects of Highland Dress. Deirdre Kinloch Anderson married into the family firm and shares her thoughts. What does your family business do? Scottish Clothing and textiles, renowned for kilts and Highland Dress, also wholesale and skirt production, tartan design and Brand Development in Japan, Korea, Taiwan and China. How did you get involved? Married into the 5th generation What did you want to be when you grew up? Initially the first ever lady mounted Policewoman! Then social worker. Then working with publication of Children’s school books in foreign languages. What are your first memories of the family business? My husband was dedicated to making it ever more successful and wanted me to be interested and involved when appropriate. What values are important in your family/family business? To be a role model for Scotland, upholding the highest principles of integrity and service. What is the best thing about being a family business? For us, personally, the lifestyle that goes with it, the places we go to and the people we meet. Commercially, when we have made a decision we can go ahead and do it. And the worst? The demands and pressure of the ultimate responsibility. What is the best thing about your working day? Working with a great team of people in our Company. There’s always a new challenge. What is your proudest family business achievement? There have been so many over the 145 years: Queen’s Award for Export in 1979, Douglas Kinloch Anderson OBE in 1983, Award for Business Excellence Scotland 1999, Deirdre Kinloch Anderson OBE 2010, but most important is always thinking ahead. Is there a next generation waiting in the wings to take over? 2 sons: 6th generation in the Company in their early 40’s. One is Chief Executive and the other is Director of Brand Development. What do you see as the biggest challenge facing family businesses? Same as for other companies, the challenge and competition of the workplace. What words do you associate with family businesses? For us: Scottish, Authentic, Creative, Experienced, Enterprising, Discerning, Dependable, Global Words of wisdom – What piece of advice would you pass on to someone thinking about joining the family business? First take time to learn as much as you can about our Company. Then always look for new opportunities, new developments so that we can remain world leaders in our niche market.

Make sure you plan so your estate ends up in the right hands. Penny Lovell shares her thoughts. Have you prepared a will? Have you made sure to plan your assets so that your estate will end up in the hands of the right people should anything happen to you? These may be personal questions but they are important ones that more of us need to ask our loved ones. Talking about death is uncomfortable, particularly with those we care about. However, making sure that your estate is in order could save a lot of money and heartache in the long run. New research from Foresters Friendly Society and ICM has revealed that almost two thirds (61 per cent) of us don’t have a will. On top of this one in ten of those who do have a will have told no-one else where it is. If you’re in either of these groups, and there’s a good chance that you are, you may find your money and possessions may not end up in the right hands after your death. All too often there are headlines about people who have died without a will, and sadly, while in many cases they would have preferred to have left their affairs in order, the result is far from ideal. A very good example of this is Stieg Larsson, author of the Millennium Trilogy books, who died intestate. As a result, his entire estate went to his father instead of his long term partner, who in turn has not benefitted at all from the worldwide success of his books and the subsequent films. Without a will or effective estate planning you don’t get to control where your assets go. Your estate will be divided amongst your relatives in accordance with government regulation and could even end up with the Crown. You may be under the impression that wills don’t matter if you are married with children and plan to leave everything to your spouse. However, your husband or wife will only receive the first £250,000 of your estate. After that they have a right to an income, but not the capital, from the remaining estate. This is the default position and one very few people would actively choose. If you fail to update a will post a break-up, despite being in a subsequent relationship, your estate might end up going to the wrong person entirely and cause great upheaval amongst your loved ones. Bob Marley died in 1981 without a will and, 30 years later, disputes are still raging with new claimants still appearing out of the woodwork. In addition, if you leave dependent children under 18 behind when you die then you may not have control of who looks after them. Instead, the courts may decide who is appointed as their guardians. This alone should be enough to encourage anyone to make a will. Worryingly the Foresters report also showed that more than three-quarters (77 per cent) of parents with children under the age of five have not made a will with nearly half those who have (46 per cent) not reviewing it in the last five years. This means that they have not appointed guardians or ensured their children’s inheritance is secured. Again, a famous example of this is what happened to Heath Ledger, whose will was not updated to include his daughter Matilda. Of course the older we get the more important a will is. Despite this nearly half (46 per cent) of those aged between 55 and 64 have not made a will with more than a fifth (22 per cent) having never thought about making one. One in eight (13 per cent) rely on self-written wills, the validity of which is more likely to be challenged upon death. March is ‘free wills month’, an initiative that brings together a group of well-respected charities to offer members of the public aged 55 and over the opportunity to have their wills written or updated free of charge. This is done using participating solicitors in selected locations around England and Wales. Whatever your background or situation it is important to have effective estate planning and a current will in place. This will ensure that you have control over your assets and make sure that your wishes are carried out if you aren’t here to control the situation. Making a will can also provide an opportunity for you to think through whether your beneficiaries require financial education. There are so many stories about people who inherit wealth without any financial training and therefore struggle to protect the assets for their own lifetime and for future generations. Financial training can help prevent this potentially challenging and unhappy outcome. Finally, there are many of us who wish to leave assets to charity and making a will is a great opportunity to explore the best way of structuring your gift.

An interesting and thought-provoking insight into Asian family business owner thoughts about succession and the next generation. I was having breakfast recently with an accountant from the UK and with an old friend from the trust industry in Hong Kong. The trustee commented that she had a client who ran a family business in Asia who had just done the thing that many Asian father’s seem to do and called his son back from studies in the UK to come and start working in the family business. The English accountant automatically said: “What a bad decision – he should let his son make his mistakes somewhere else before he comes to work in the family business!”. From an English or American perspective there are many good reasons why the next gen should go and get outside work experience before coming and working in the family business. However when discussing this issue with business men and women in Asia I do get a lot of resistance to this “Western perspective”. Some of the explanations that I have heard from different families around Asia include: “I need my sons there because who else can I pass on the work to.” “I need to make sure that my sons enter the business because if they decide not to join then how can the business continue?” “The best person the children can learn from is their own father or mother.” “They should learn their family values directly from the source – from their own parents.” “You need to bring them in early so that they can bond with the non family executives that in the future they are going to lead.” “If I don’t bring my son into the business now his cousins are going to be there and get established before he will have any chance”. Other friends that I have discussed this issue with have basically responded saying that they have observed many successful second generation business leaders from Asian families who went to work straight after finishing their university and who have been successful in business and in their personal life. This leads to the most difficult Asian response to argue with: “This is what my father did with me – are you saying I have not been successful!?” I think that at the heart of the American thinking on this topic are the concepts of: adult developmental stages as articulated by Daniel J. Levinson in The Seasons of a Man’s Life (and later also The Seasons of a Woman’s Life); and the need to differentiate from your family. (The term “differentiation” comes from family systems theory. It should be compared to the term “individuation” which is the term used by Carl Jung in his discussion of the adult life cycle.) Under Levinson’s framework for men, the ages of 22 – 28 is the stage of “entering the adult world” and if you can be independent of your family during this key period it is very valuable in becoming emotionally distinct from your family. American culture is well understood to being an individualistic culture and Asian culture a collective culture. However is the concept of differentiation relevant for Asian families? The answer to this question seems to be a clear “yes”, but perhaps with some modification. One Asian academic has written that she has found that “a healthy family system correlates with a healthy family business”. Is it important for business owning families in Asia to give their next gen the best chance to differentiate? While this does not appear to be intuitively accepted in Asia I believe there are some sound arguments why this is very important. First, many Asian families do believe in the concept of human capital and intellectual capital as being important components of the family wealth. To give your next generation the chance to become mature adults is an investment in human capital. An Asian father (or mother) thinking about whether to pull their young adult back from school and into the family business should ask themselves the question of which is more important to you? The good of your business or the good of your son or daughter? If you value the well-being of the next gen, give them a chance to find maturity away from the family. Second, while you hear of many Asian families where the next generation successor came back straight from school and started working in the business and all went successfully, you also hear of cases in Asia where the successor later drops out and leaves the business – or they wait until the father has died and then they sell the business! Giving them that time away from the business so that they come back in as mature adults will likely mean the decision to join is a mature decision that they will not lightly go back on. I have to admit that my first two reasons are still very American in logic. This leads to my third reason which I think is very specific to the Asian context. The third reason then is that in many traditional Asian families, in families with a strong family hierarchy (“Confucian families”) the siblings often do not find it easy to work together collaboratively once ‘Dad” has gone. The siblings carry over their birth order and family role ways of relating to each other into their adult working lives. The more differentiate one of the siblings the better their ability to define a new adult self, and a new adult working relationship with their siblings. In short, the more maturity they will have in their interaction with their sibling partners. So if you send your next gen away to get outside work experience first, and to give them a chance to differentiate away from the family business, when they come back they are going to be much better business partners with their siblings and it will give the family business greater immunity against family conflicts. About the Author - Christian Stewart helps enterprising families around Asia work together, by facilitating family meetings and as a process consultant, helping the family to develop their own family governance structures.

Dr. Joseph H. Astrachan, Executive Director of the Cox Family Enterprise Center at Kennesaw State University, speaks on on the topic of Building a Family Business That Lasts and provides viewers with four key points to walk away with. Video published courtesy of Business Families Foundation.

Fracino is the UK’s only manufacturer of cappuccino and espresso machines and associated equipment and was 50 years old in 2013. Managing Director Adrian Maxwell shared his thoughts with Paul Andrews. What does your family business do? Fracino is the UK’s only manufacturer of cappuccino and espresso machines and associated equipment. We are celebrating our 50th anniversary in 2013 and are very proud to have been awarded the title of the UK’s top manufacturer and the UK’s Outstanding Export award from the manufacturer’s association the EEF. How did you get involved? I’ve been involved with the business ever since I was a baby when my dad, Fracino founder Frank Maxwell, took me in a carry cot to our customers in Leicester and Birmingham in the heady 60s before we’d started manufacturing and were repairing machines. After leaving school at 16 I went to Rolls-Royce for four years and completed my technical apprenticeship and HND. I next took on a couple of jobs which included manufacturing and selling agricultural gates and fittings before joining Fracino full time aged 23 as a service engineer. At that time dad could not complete the volume of work on his own and there were just the two of us compared to the 40-strong team we employ today. What did you want to be when you grew up? I always wanted to be an engineer from a toddler. Our house, garden and workshop were always heaving with cars and machines being repaired which would drive my mum to distraction. I loved learning how to take things apart and reassemble them. We must have been the neighbours from hell with all incessant hammering and banging at all hours of the night! What are your first memories of the family business? My first really clear memories are going with dad when I was about five years old to see long standing customer Geoff Rossa at Cafe Bocca in Leicester in our new – well new to us – Morris J4 van. Geoff has been a valued customer and friend for 50 years (as long as we’ve been in business) and I would happily sit on top of his counter changing the steam valve washers. What values are important in your family/family business? Trust, respect, transparency – and openness. My respect for my dad Frank is enormous – and he is my business hero. As a family we value our hard work ethos and quality driven culture – always striving to do everything to the best of our ability. What is the best thing about being a family business? Being united in a common goal and supporting each other while sharing our business experiences as a close knit family unit which is always travelling in the same direction. And the worst? The fact that we never escape from our work and find it nigh on impossible to switch off when we’re at home. I’m the biggest culprit by far! What is the best thing about your working day? Getting up for work – every day I’m excited about what the day will bring even though many of them are hijacked before they get off the ground. No one day is the same and I relish the opportunities and challenges each one brings. What is your proudest family business achievement? Being awarded the EEF’s UK’s Winner of Winners Award this January this year. It’s the highest honour the EEF can bestow on a British manufacturer and reflects how, in four years, we built a global export business which now exports to over 50 countries. Is there a next generation waiting in the wings to take over? Definitely – outside of Frank our founder and Marion my wife who is our credit controller, our daughters Rebecca and Katrina work as service coordinator and purchase ledger respectively. Our son David is currently training to be an engineer at Leeds University and works with us during his holidays. What do you see as the biggest challenge facing family businesses? Succession planning is critical – as is keeping things on an even keel and identifying and managing any potential sibling rivalry. We wholeheartedly believe in the adage that ‘the whole is greater than the sum of its parts’. What words do you associate with family businesses? Unity, trust, hard work, stability, reliability, tenacity, transparency and quality driven for starters. We’re all in this together which has proved a powerful formula for our success. Words of wisdom – What piece of advice would you pass on to someone thinking about joining the family business? Join it for the right reasons, not because you feel obligated – the worst possible reason. Also, if you do believe its right and it does not work out then bow out gracefully and move on as opposed to being miserable. We only have one life so it’s vital to be fulfilled by what we do for a living.

At Cropwell Bishop they believe in keeping things in the family. That is why, from their creamery in the beautiful Vale of Belvoir, they have made mouth-wateringly delicious Stilton for more than three generations. Today, cousins Robin and Ben Skailes oversee the day-to-day running of the cheese dairy along with their fathers, David and Ian. Using traditional methods passed down by their grandfather, they continue to produce award-winning Stilton of the very finest quality. Robin spoke to Paul Andrews and shared his thoughts on the family firm and his passion for their product. What does your family business do? Makes handmade Stilton cheese and other handmade blue cheeses from our family farm. How did you get involved? I always loved the cheese so it was easy for me. What did you want to be when you grew up? A Racing Driver What are your first memories of the family business? Being forced feed Stilton at 4 years old! What values are important in your family/family business? Responsibility towards the local community and protecting traditional cheesemaking. Our creamery plays a big part in Cropwell Bishop village life. Most of our employees live locally, and some of them have been with us for more than 25 years. Some have even worked under Robin and Ben’s grandfather. That is why we trust them to maintain the highest standards of cheese craft; and why we regard them as part of the family. Our strong family values extend to our suppliers, too. We have hand picked some of the best milk suppliers in the region: small, family-run farms whose expertise, like our own, has been passed down through generations. And in return for the exceptional milk they supply, we make sure our farmers are paid a price that they deserve. After all, we’re likely to need their milk for several generations to come. What is the best thing about being a family business? To plan for the future and the long term. And the worst? Having my father as my boss! What is the best thing about your working day? Tasting Stilton! It is something that I will never tire of either! What is your proudest family business achievement? Being shortlisted for the Midland Family Business Awards and winning the 2013 Family Business of the Year Award. Is there a next generation waiting in the wings to take over? Yes, I have 2 young sons who already love Daddy’s cheese. What do you see as the biggest challenge facing family firms? Competing with much bigger companies as more consolidation takes place. What words do you associate with family businesses? Passion, fun, long term. Words Of wisdom – What piece of advice would you pass on to someone thinking about joining the family business? Work for someone else before joining the family firm.

Preparing to pass the business to the next generation is often seen as one of the biggest challenges facing the family business, resulting in changes both for the family and the business. In addition, there are issues that need to be faced such as the fact that the current leader is getting older, and getting closer to ‘death’ which is a topic that is not often up for discussion, and there is the matter of the next generation waiting in the wings, some willing and able to take the helm and others quietly hoping that they will never be asked. Sadly, doing nothing does not make the succession challenge disappear as it will inevitably happen one day. So, it is not easy to plan for succession due to the emotional and relationship aspects that need to be addressed, but successful family businesses mitigate the risk to both the family and the business by planning for the future and therefore being in a position to address the topic in a much more rational and business-like manner. As Howard Hackney, family business consultant and experienced family business adviser explains, “Succession planning should always be on the agenda for any business and cannot really start early enough. Businesses that plan to succeed reduce the risk of problems further down the line.” “Although it does not eliminate the risks completely, holding a rational, sensible conversation about what the business needs from the leader going forward and evaluating this against the potential in the next generation in a clear and practical manner, undoubtedly provides a greater platform for success going forward.” With that in mind, the succession planning process can be broken down into seven key steps, helping to engage the next generation in the conversation: 1. Preparing Attitudes It is important that the next generation understand the nature of the business, and the values that are important too. Many of these will be derived through contact with the family business as they grow up, summer work experience, listening to conversations, visits to the office etc and these are important so that they gain a feeling for ‘what the family business is all about.’ 2. Entry Into The Business Clearly, the next generation need to want to work for the business, have the right skills and competencies and entry into a role in the family business will provide them with this opportunity. It is important that they enter a role for which there is a need and are not simply recruited as they are related and there needs to be a clear job description and role for them, just as there would be for any other new inductee. It is also important to ensure that they are given the necessary training, orientation and assistance in developing relationships within the business with other employees, managers and directors too. 3. Developing Their Understanding Once the next generation have gained a footing in the business and are performing a role, the next stage in the succession planning process is to develop and cultivate the skills required to lead the business in the future. Initial understanding can be derived internally but external inputs may assist in the process through mentoring, leadership programmes and university educational programmes too. 4. Leadership Development As the next generation get older, and the existing generation have aged too, there will be a period when the leadership skills of the next generation are developed, preparing them with the skills that may be required to run the business in the future. 5. The Selection Process Selecting the next person to run the business is not an easy decision, and there may well be more than one candidate to consider from within the family as well as outsiders. It is important that the selection process is clearly understood by all concerned and that the process is adhered to in order to reduce the risks going forward. The process may involve selection by the incumbent, the family executive team, the board of directors or general consensus between the family, board and executives. 6. Transition Once the successor has been appointed there will be a period of transition where they become involved in the strategic decision making processes and the development of their own management team too. Over a period of time, key relationships are transferred and naturally the incumbent will do less and the successor will do more. 7. Starting Again Although unlikely to commence straight away, when it comes to leadership of the family business, succession planning should always be on the agenda and consideration should always be made to the next generation and developing the leaders of the future. As Howard explains, “All too often family businesses leave the decisions until it is too late – the incumbent passes away suddenly and the next generation are left to pick up the pieces, at a time when they are emotionally hurt and grieving and planning in advance can help to reduce the burden at that time.” “Furthermore, failure to address the issues on a timely basis may result in the next generation forging a career outside of the family firm and then decide that they don’t want to come back to the family business so communication between the generations is vital to ensure the right outcome overall, for the family and the business.” Succession planning does not happen overnight but clear and open communication over the years can certainly help to provide a framework within which to operate, with everyone knowing where they stand and understanding what the business needs and the skills that the next generation need to lead the business going forward too.