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.

Family businesses are certainly not immune to difficult economic times. But they usually have more options than publicly owned corporations. Let me share with you what some of my clients are doing to not just survive, but thrive, even in today’s business climate. A recent online Gallup article entitled “Building Engagement in This Economic Crisis,” quotes its chief scientist of workplace management, James Harter, Ph.D., saying, “In bad times, employee engagement is the difference between surviving or not.” But how does a family business keep employees focused and motivated? Rather than lay employees off (which reinforces the message of fear and uncertainty), many companies use downturns to create their own “stimulus package” to grow their businesses. Expand in a shrinking economy? Sounds impossible. But that’s just when you need your employees’ most creative thinking and loyalty. A policy of no layoffs in tough times (and I have clients who manage to do this) makes it clear to everyone that we are in this together. Another of my clients involves key employees in brainstorming sessions to create new opportunities for the company. This is not “make work” but truly helps the company take a fresh look at what its customers need and how to better meet those needs. The brainstorms have produced several ideas for new opportunity. Enthusiasm replaces hand-wringing. Positive attitude maintains an environment for growth and possibility. Think how strong that company will be when economic prospects do improve! A business plan is an excellent template for discovering new opportunity. Most family businesses don’t have a formal business plan. They can get by without it during the good times, but in difficult times operating without a plan is needlessly punitive. Formalising the business strategy sets you up for new options and renewed profitability. An effective planning tool I am familiar with for small to medium sized family businesses is the Jack Tesmer Institute’s Quick Plan; part on-line survey and part face-to-face discussion. The process helps focus the business on the market to evaluate your approach, organisational readiness and profitability. Another possibility is to work with a traditional business planner, such as John Pope, who works with family businesses to create a formal business plan. With a strategic business plan in hand, you have a better understanding about what to do, how to do it, when, with whom and at what cost. It could not only help you weather the current storm, but prepare you for an even brighter future. All of this discussion is about the business side. But what about the family side in rough times? Stress rises when any business struggles and it can go stratospheric within business families. Now is the time to reinforce and strengthen the family’s commitment to the business. Hold regular family meetings aimed at building emotional equity of your family and bond the family team. Family businesses traditionally spend a lot of time, money and energy building the financial equity of their business. In tough times as well as in good times, it is equally important—if not more important—to building the emotional equity of the family. Emotional equity in the family is the emotional connection, the emotional reserve and the sense of belonging we all need to get through the stress of tough times. Remember to celebrate family rituals and traditions. Keep up informal get-togethers where father and sons or brothers and sisters meet over a cup of coffee to support each other through stresses. One of the most difficult topics for any family to discuss is money. Start a series of family meetings that focus on money, on the family’s values regarding money, and money management and spending. Make sure your family’s behaviour is aligned around your family values. In a recent client meeting, a grandfather expressed his concern that stock market losses meant he could no longer continue to fund his grandchildren’s education at the current level. The grandparents were reluctant to raise the topic in the family. By not doing so, they were inadvertently creating tension within the family. Once the topic was on a meeting agenda the family was able to discuss and resolve it. Stress plummeted all around. Tough economic prospects do not automatically mean paralleling tough emotional and financial prospects. Opportunities can be found. Involve your employees and the entire family through family and company meetings. Share, brainstorm, and envision the future. It’s not a diversion, it’s an embrace that will certainly help the family and likely help the business. managing growth. About the Author - Tom Hubler 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. www.hublerfamilybusiness.com

New research for the Dying Matters Coalition shows that the majority of people in Britain have not discussed or made any plans for when they die. As a result, they are risking not getting appropriate end of life care and making it harder for their families to deal with bereavement. The British Social Attitudes (BSA) research found encouraging signs that older people are increasingly taking action to make their end of life wishes known, but that most people are leaving it too late to face up to their own mortality. This is despite the fact that almost two-thirds of us have been bereaved in the last five years. The study revealed that although 70 per cent of the public say they are comfortable talking about death, most of us haven’t done anything to discuss our end of life wishes or put plans in place. It also found that only just over one in three people have a will, down on 39 per cent in 2009, with the impact of economic pressures being a possible cause of this decline. Fewer than a third of people have registered as an organ donor or have a donor card – although the number of organ donations after death has risen by 50% since 2008, more than 1,000 people on the transplant waiting list die each year. Only 11 per cent of people have written down their funeral wishes or made a funeral plan. Despite heightened public anxiety over care of the dying, including concerns about the implementation of the Liverpool Care Pathway, and the Francis Inquiry into failings at Stafford Hospital, the British Social Attitudes findings reveal that just one in twenty of us has an advance care plan, which sets out how we would want to be cared for if we couldn’t make decisions ourselves, for example, would we want to be resuscitated. The research also revealed a major mismatch between where people want to die and where people do currently die. Latest NHS figures show that more than half of us die in hospital. Yet today’s research shows that just seven per cent of us would prefer to die in hospital, compared with two-thirds who would prefer to die at home. This is the first time the authoritative British Social Attitudes survey has asked these questions about dying, although comparisons can be made with similar research carried out in 2009. This shows that older people are becoming more likely to make their end of life wishes known. If applied to the whole British population, today’s findings show that an extra 200,000 people aged 55-75 reported feeling comfortable talking about death in 2012, when the BSA research took place, compared with 2009. It also shows that 400,000 more people aged 55-75 have discussed their end of life wishes or have some written plan for end of life in 2012, compared with 2009. Eve Richardson, Chief Executive of the Dying Matters Coalition and the National Council for Palliative Care, said that while the findings were encouraging, it is clear more needs to be done. She said: “It’s encouraging that older people are becoming more comfortable discussing dying and their end of life wishes, but as a nation too many of us are still shunning the conversations that can help avoid heartbreak and regret at the end of life. You don’t have to be ill or dying to make plans for your future, which is why we are calling on people across the country to take practical steps by writing a will, recording their funeral wishes, planning their future care and support, considering registering as an organ donor and telling loved ones their wishes.” Professor Mayur Lakhani, Chair of the Dying Matters Coalition and a practising GP, said: “There are powerful benefits of having early conversations with people who are approaching the end of their life, as it puts them in control and gives a chance to resolve any life issues. It also means that plans can be made for people to get the care and support that is right for them.” “While more of us than ever are living to a ripe old age, people are also living for longer with dementia and other life limiting conditions, which makes it especially important to talk more openly about the care and support we would want. It’s only by having the conversations that matter and planning ahead that care of the dying will be improved and people will get their end of life wishes met.” Penny Young, Chief Executive of NatCen Social Research, added: “The findings are an excellent example of what the British Social Attitudes survey is for. Most people in our study have discussed dying and many have strong opinions about the end of their life, yet very few have taken any steps to prepare for death. Understanding public attitudes and behaviour around this important public policy issue is essential for organisations like the Dying Matters Coalition if they are to raise awareness and influence policymakers.”

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.

Latest research from KPMG in Singapore identifies the challenges facing family firms. This landmark study of family businesses in Singapore by KPMG reveals several interesting findings about how they see themselves. While some findings contain new insight, there are some which are less surprising. Preparing and training a successor was the most important challenge for family businesses. Other ‘top of mind’ concerns for family businesses in Singapore included choosing the right successor, resolving potential conflicts among family members and maintaining family control of the business. We have observed that many family businesses did not have a clear succession strategy. They should therefore start planning and grooming their successors early. However, 9-in-10 participants of the survey indicated that dealing with the issues of running the business was more critical than family disagreements. When asked about the major causes of conflict within family businesses, nearly a fifth cited the competence of family members working in the business. Nearly a third indicated they had no formal processes to resolve conflicts. While they face many challenges, family businesses are also able to count on strengths such as the ability to win business or customer loyalty, opportunities for competitive pricing or strong brand presence. A significant 9-in-10 considered governance structures to be an important element of the family business. Surprisingly, close to half of those surveyed said their current structure was optimal, with another 29 percent indicating that some minor tweaks might be required. In our experience, many non-listed family businesses are in need of change in this area. Download and read the full report below:

According to recent research from Barclays Wealth, 40% of the UK’s high net worth individuals do not trust the next generation to protect their inheritance. Key Findings include: 37% of wealthy Britons have experienced family conflict as a result of family wealth Earned, as opposed to inherited, wealth is key to financial happiness 40% of the UK’s high net worth individuals do not trust their children and stepchildren to protect their inheritance The report, The Transfer of Trust: Wealth and Succession in a Changing World, is based on a global survey of more than 2,000 high net worth individuals. It provides an in-depth examination of wealthy individuals’ attitudes towards wealth transfer and succession planning, as well as offering insight into what the future holds for the next generation. Interestingly, it reveals how wealth in many cases can act as a double-edged sword, leading to distrust and conflict. Globally, developed countries display higher levels of uncertainty when it comes to trusting their children and stepchildren to look after their wealth. Respondents in Australia (59%), North America (61%) and Europe (62%) show lower levels of trust in their children and stepchildren when it comes to money management and protecting their inheritance, in comparison to the Middle East (78%), Africa (77%) and Latin America (75%). Experts featured in the report have partly attributed this lack of trust in the future generation to the changing structure of many UK families. As second and third marriages become more common, this is thought to lead to more complex relationships with both children and stepchildren in relation to wealth and inheritance planning. David Semaya, Head of UK and Ireland Private Bank, Barclays Wealth, said: “This report provides an in-depth study into the attitudes of high net worth individuals towards succession planning. It is clear that with wealth comes an increasing complexity of choice, and in some cases this can result in concerns about trust and conflict when considering the inter-generational transfer of wealth. Understanding options for succession planning in advance, and seeking professional advice can help address these fears and provide confidence that your wealth will be wisely managed in the future.” Wealth, Happiness And Family Dynamics Parents want to pass on their material wealth to their children, as well as a roadmap for a happy life, but the report reveals some interesting paradoxes about inheritance and succession. Source of wealth is seen as a key determinant of financial happiness, with earned wealth much more likely to result in happiness than inherited wealth. However, wealthy respondents in the UK remain committed to passing on their wealth, with 94% of respondents intending to do so. However, an unfortunate drawback of wealth is its ability to cause conflict – and in the context of succession – family conflict. The report reveals that 37% of wealthy individuals in the UK have had direct experience of family wealth leading to disputes. Accentuating this conflict, the report reveals that the risk of disinheritance increases in line with wealth for high net worth individuals in the UK. Whilst five per cent of those with wealth levels of between £1m and £2m have disinherited someone or cut a family member out of their wills, this rises to 13% among those with more than £10m. Catherine Grum, Director, Wealth Advisory, Barclays Wealth, commented: “In the case of wealth that has been inherited, tensions around entitlement may lead to disputes. However, it is surprising just how many wealthy respondents report experiencing such conflict and the impact that source of wealth can have on this, with wealthier respondents more likely to have encountered such conflict.” Despite all the potential tensions associated with succession and wealth, the report shows that the UK’s high net worth individuals remain committed to passing on their assets to the next generation, with only six per cent of UK respondents believing that this should not be the case. Globally, 60% of respondents say that they require a significant level of professional advice when deciding on an inheritance plan for their children and stepchildren, emphasising the need for expert advice to guide them through this decision-making process.

The family constitution is a written document that lists the mission, vision, and purpose of the firm. It also spells out the family commitment to business continuity. For example, does the family intend to pass the business on to future generations or sell off at a profit? The family constitution lists responsibilities of ownership, conflict resolution procedures, as well as company policies and procedures on such important issues as family member employment, hiring, retirement, and terminations. The constitution includes items that can often be disruptive or loaded with the potential for conflict such as the role of spouses in the business and what should happen with shares in the case of a divorce. In addition, the document is where policies and procedures are created for when a family member develops a drug or alcohol problem or becomes disabled. The critical function of the constitution is to foster family discussion and agreement, and to create guidelines on key issues before being forced to make a difficult decision on a moment’s notice when emotions are likely running high. Interestingly, the vast majority of family businesses do not have this important document. In addition to the previously mentioned items, the family should discuss the following for possible inclusion in a family constitution (not an inclusive list): 1. Why is the family in business together? Should the business stay in the family? 2. What is the process for succession (choosing the next leader)? 3. A share liquidity policy, including buybacks from family members and dividends. 4. A family compensation/remuneration policy. 5. A procedure for making decisions (e.g., consensus, or vote), who will make the decisions? 6. Corporate officer roles and responsibilities. 7. A family member entry policy. Is a university education required? Should entering family members be required to work elsewhere and find success on their own first? 8. A family member exit policy. 9. What is the process for terminating a family member? 10. The role of non-family employees. 11. Establishment of a board of advisers or directors and their roles, and the number of times they will meet annually. 12. Establishment of an annual family retreat. 13. Number and role of family members on the boards. 14. Establishment of a family council and its responsibilities and roles. 15. Educational reimbursement policy. 16. A policy for settling disputes or conflict among family members specifying who will settle the dispute, such as the outside board of advisers or the family council. 17. Reporting structure for family members. Should family members report to family or to non-family members only? 18. Charitable giving goals. 19. Investment policies and procedures. Should the firm support younger family members in startup businesses of their own? 20. Procedures for developing and training the next generation of leadership. It will take several meetings to create a document the family can agree with. Many families agree it is time well spent and important to discuss before serious issues arise. The constitution is commonly an agenda item at the annual family retreat. The document should be considered a living document that can be reviewed annually and updated as necessary. Reproduced with permission from Keanon Alderson and The Press-Enterprise (www.pe.com) Keanon Alderson Ph.D. is an associate professor in the Robert K Jabs School of Business, at California Baptist University in Riverside CA. He can be reached at kalderson@calbaptist.edu