What’s Hot in the World of Family Business

Information about what’s going on in the world of family business keeps growing. Two Australian surveys have recently been released, the MGI/RMIT Australian Family and Private Business Survey and the KPMG/FBA Family Business Survey 2013 conducted by Adelaide University. The surveys are independent and address different aspects of family business, so reviewing the results in tandem leads to some interesting insights.

The top three issues identified in the KPMG/FBA study are:

1. Balancing family and business issues
2. Maintaining family control of the business
3. Preparing and training successors

These issues are consistent with 2 of MGI’s top 3:

1. Lack of growth & profitably (no different to any other post GFC business)
2. A lack of planning and corporate governance
3. Exiting the business is a major dilemma

family business

All of these issues obviously require attention, but as I’m a family business facilitator I’d like to focus on the issues that relate to the interaction between the family and the business and in particular those relating to business continuity, be it by sale or succession.

Some thoughts that occurred as I analysed the surveys:

• It is estimated that family businesses account for around 70% of all Australian businesses. The MGI survey has found that 25% of owner-managers are aged over 65, and that 37% of owners are in the 60 to 69 age bracket. This verifies what we already know. There is a baby boomer bubble that is working its way through our population which will impact on both the business and on the wealth and harmony of the family behind it.

• It’s been said that succession planning is viewed in the same light as diet and exercise – ‘great idea, I’ll get around to it one day’. This is confirmed by findings which indicate that though 65% of owners indicate that their businesses are not exit or succession ready, 56% don’t plan to do anything about it in the next 12 months! Unfortunately, like diet and exercise, succession is not something that will go away or be sorted overnight.

• The extent of business continuity planning is woeful. The KPMG survey highlighted that only

  • 10% have a strategic plan in place
  • 12% are preparing or training their successor
  • 10% have an ownership transfer or sale plan in place
  • 8% have a process for appointing a new CEO

Though many say that plans are being developed, it still looks like a lot is being left to chance.

• The KPMG survey found that 2/3rds of family businesses intend to pass the business to family members. This is consistent with the 44% that MGI found want to sell at some point. However the MGI study uncovered an interesting issue. 58% of respondents indicate that the younger generation are not as interested in managing the business as the older generation. So who will? Issues such as building effective management teams and identifying a non-family CEO whose values are consistent with those of the family business become major issues.

• 44% may well want to sell the businesses, but the question is – at what price? The GFC has depressed business valuations and it’s certainly not a seller’s market with so many wanting out. But here’s the dilemma. As mentioned above, 2/3rds of owners don’t believe that they are sale (or succession) ready yet more than half don’t plan to do anything about it!

• According to the MGI Survey 66% of owners believe that they have an adequately funded retirement program, however 1/3 of them are relying on the sale of the business, or ongoing family ownership, to provide the cash for retirement. So again, why the reluctance to act?

• From the current owner’s perspective there are a range of financial, emotional and control issues involved in stepping back. The GFC has impacted on superannuation and retirement savings, so personal financial security is a consideration and many are reluctant to let go until their coffers have been refilled.

• Letting go is also a daunting prospect for those on the brink of retirement. They currently lead a vibrant, purposeful and fulfilling life. Why should they willingly step into the unknown? Developing a life plan is crucial, yet KPMG found that only 9% of CEO’s have a retirement plan in place.

So what do we do with this information?

I believe that many family businesses are fast approaching the point of no return. Urgent action is required to plan for the future at a business, family and personal level. It may sound difficult, and it will invariably give rise to a number of contentious issues, but it is not as hard as it may seem. (To get you started we’ve attached a link to the FBRC Family Business Development Process below.)

As some of the issues can be difficult to address internally it’s a good idea to involve your trusted adviser. As KPMG point out, for most people developing a business continuity plan is a once in a generation event. Working with an experienced adviser who has seen it all before, and who can test your strategies and keep you on track will pay dividends in the long run, for both the business and the family.

To download the surveys click –
MGI/FBA Australian Family and Private Business Survey
KPMG/FBA Survey – Family Business Survey 2013
For a short video overview of the KPMG/FBA survey
FBRC Family Business Development Process or video

Harry Kras is a Family Business Facilitator with the Family Business Resource Centre – www.fbrc.com.au

 

Source: Business Leaders Strategic Thinking

iMindMap 7 launch offers extented to 19 December 2013

Get your copy of iMindMap 7 mind mapping software

IMindMap 7 thumbnail

Choose your device

iMindMap is the perfect mind mapping tool for all thinking tasks thanks to its intuitive workspace, unrestricted structure and lots of visual stimulation.

It is a joy to use and it really does encourage creative thinking. I can vouch for this personally.

You too can enhance your productivity, unleash your creativity and improve your quality of work by joining the millions already Mind Mapping.

Take advantage of the iMindMap 7 Launch Offers

Check out the special offers, which are worth $75 USD,

Launch offers have been extended to midnight GMT on 19 December 2013.

Take a look at some of the smart features of iMindMap 7

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Multiple Platforms

There is no need to be tied to one device. iMindMap works on all platforms:

  • Desktop
  • Web
  • Mobile, both Apple and Android devices

Use Mind Maps to prepare and deliver presentations

My blog post “tips on how to prepare and deliver a presentation” shows one of several smart ways you can use iMindMap.

AISEC Social Media Presentation Mind MapA mind map is a more than just a powerful tool to help gather and organise your ideas.You can also use the mind map to deliver your presentation. Using the mind map helps keep you on track and reminds you of the main points you want to make. If you cannot simplify what you want to convey into a few key messages, your audience is likely to get distracted.

iMindMap Trial 

Launch offers have been extended to midnight GMT on 19 December 2013. Get your copy today!

Simon Fawkes CaricatureSimon Fawkes
Accredited Mindshop Facilitator
Business to Markets Ltd

 

How reliant are you on myths for running your business?

Myths are an important part of every culture

59 Seconds” by Professor Richard Wiseman dispels many business myths and presents scientifically proven techniques to help people identify and achieve realistic goals. Too much of the “self-help” industry peddles “facts” which have no foundation.  Wiseman takes aim at the “Yale Goal Study”, which is often cited as proof that writing down specific goals will have a dramatic impact on the success you achieve in later life.  This is also known as the “Harvard Written Goal Study“. They share common features which some will find disturbing:

  • What amounts to a ritual incantation of “Yale” or “Harvard” to add credibility to these spurious claims.
  • “If you hear something often enough, you start to believe it to the true”.
  • The way so-called self-help gurus and supposedly reputable business consultants quote one or other Goal Study as a reason why you should pay good money for their particular blend of modern-day snake oil.
  • Lastly, the extravagant and unfounded claim that the 3% that had specific written goals had accumulated far more wealth than the other 97% combined.

Don’t imagine being fit, imagine how you are going to get fit

Self-help can lead to disappointment, in particular if you spend time day-dreaming about what is probably an unrealistic achievement. Wiseman advises to concentrate your energy on how you will achieve your particular goal.

Don’t let yourself be conned

Business myths

Self help or self delusion? Be on your guard!

One important distinction between the con man or con woman and some self-help gurus is that the con artists know they are deceiving you. Some self-help gurus are deceiving themselves and may well be sincere in their attempt to help their clients or customers.

Don’t underestimate the placebo effect.The pill makes you fee better because the act of taking the pill changes your expectations.  You think you are going feel better and before long you actually are.

Dan Ariely tells a very amusing story about Airborne in “Predictably Irrational”. He was understandably distraught when his placebo was taken away from him.

Another “myth buster” is Stephen Briers in his post “Top 5 myths of self-help”, where he dissects the worst clichés of the Me Generation.

Words of Wisdom from the man himself

The first point is to review all advice in a critical way and this does include advice from me!

Having a postive self-image and feeling confident are important. We all have our rituals that make us feel better and they are effective becuase we believe in them.  This does not mean that these rituals have any instrinsic merit and what works for one person may not work for another.

Be on your guard if you hear someone making extravagant claims, in particular if they are part of a sales pitch.  Forewarned is forearmed!

What Business Myths have you encountered?

Please feel free to share this post and you are welcome to add your comments.

 

Simon Fawkes CaricatureSimon Fawkes
Accredited Mindshop Facilitator
Business to Markets Ltd

Why Results and Motivation beat Features and Benefits

Understand the pain of each customer segment first

Start with the results and motivation

Features are important, but they come at the end and not the beginning.  Puzzled?  Read on and this will become clear. The key points are:

  1. Results and Motivation define the problem
  2. Features and Benefits define the solution.
  3. The problem must be your starting point.

The image shows the relationship between each term.
Business Motivation
There are many ways to define a customer segment and there is no single right answer.  “It all depends” does sound vague, but the longer version is clearer: it all depends on the type of problem you think your product or service can solve.  A customer segment is more than a demographic profile. Whether you are selling to businesses (B2B) or consumers (B2C), the main steps are the same. For simplicity, let’s just call then customers.

You need to understand and describe both the pain (problem) and the intensity. The latter is shows a willingness to pay money to address the pain.  One way to do this is to pose two questions:

  1. What results are these customers looking for?
  2. Why do they want these results? What is the main motivation that drives them?

It may help to think of specific customer types and put yourself in their shoes.  As you build you list of results and motivation, different customer segments should emerge.  For this exercise, if different types of customer share the same problem, they really belong to the same customer segment.

You are now ready to look at features and benefits

Now that you are clearer about the problem, you can look at your solution and how best to articulate the value proposition.  The degree to which your solution addresses the problem has a material impact on the value to your customer. A mouth-watering dish of oysters has no value to someone like me, who feels sick at the sight of an oyster!  There are now two further questions for you to ask:

  1. What are the most important benefits that your customer will recognise as matching the desired result?
  2. What are the most important features that will offer these benefits?

A further refinement is to rank these features on a scale of 1 to 10.  A score of seven or less means that the feature is not that important in the eyes of your customer.  Your marketing collateral: text and images on your website, brochures as well as advertisements and posts on social media all need to address one or more of the “hot buttons”.  This means they show how your product and service will achieve the desired result and they take account of the underlying motivation.  Images are a very effective way of striking the right emotional response.

Let’s look at a simple example of a car

What might seem as the same benefit of “fuel efficiency” may not have the same value for each customer segment.  The budget conscious family wants to save money, whereas the “wealthy greenie” is more interested in saving the planet.  The engine is a feature as this is the “means to an end”.  You need link the benefit of fuel efficiency to both the result and what motivates each customer segment.  The last step is to give evidence that supports your claim to deliver the desired result.  This is where you can use images to resonate with the motivation.

 

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So how can you put this into practice?

Start by looking a product or service that you are familiar with.  It helps to choose something that is of interest to you or your business.

Then try doing this for one of your main products or services.  It is difficult to do this by yourself and you really need input from prospective or current customers.  What do they really value?

Do look around for examples of companies that do this well or badly.  You can learn from both.

You are welcome to add the ones you like best or hate most as a comment to this post.

Simon Fawkes CaricatureSimon Fawkes
Accredited Mindshop Facilitator
Business to Markets Ltd

 

Will new technology endanger your business?

WHEN will new technology endanger your business?

If you hold to the belief that new technology does not pose a threat to your business, you are likely to suffer the same fate as Pony Express.  The most you can hope for is to go down in history as a spectacular failure.  This is unlikely to be of much comfort to you,  your shareholders or creditors.  The impact of new technology is more likely to be WHEN, not  IF.

So what lessons can we learn from the Pony Express?

Why did a young company called Reuters in London ride the same technology storm ten years earlier and flourish to become part of Thomson Reuters?  You need to scroll down to the very bottom of their company history.

The short story of Pony Express

Business and technology

What did the Pony Express rider cry out?

I use the expression “short story” to emphasise the short life of this company.  The entry of the State of California to the Union and the gold rush created a new opportunity to connect this new state to the rest of the US.  Two external factors caused the rapid demise of Pony Express:

  • The Federal Government awarded the contract to a rival company.
  • The American Civil War closed the stage route.

There was another direct threat from new technology in the form of the intercontinental telegraph, which is now known as Western Union.The telegraph service had existed 10 years before Pony Express was founded. Riders saw telegraph lines being put up along the way, but the owners took no action.

My explanation for this is that the owners saw themselves as being in the “express pony” business. Their focus was on becoming “best of breed” – excuse the pun. This narrow view defines the business as WHAT you do and not on the WHY.  The service you offer and the reasons why you give value to your customers. In the blinkered view of the owners and managers, their focus was on what they perceived to be their direct competitors: other companies using men and horses to provide a courier service.  This blinkered view, if you excuse the second pun, led to their hasty demise.

Reuter: from carrier pigeons to multi-national

Paul Reuter was born in Germany. moved to London and founded the Reuters News Agency in Aachen, which used carrier pigeons to transfer messages between Brussels and Aachen, which was the missing link to connect Paris and Berlin. At the time carrier pigeons provided a faster service than the post train, but in 1851, the new direct telegraph link superseded carrier pigeons. This was some ten years before the demise of the Pony Express.

Reuter changed the way he provided his news service by adopting new technology.  He clearly saw his company as being in the “news” business, hence the name.  He did not see the company as being in the “carrier pigeon” business and therein lies the fundamental difference between the two companies.

What lessons can we learn?

The most important lesson is the importance of how you view your company and the value you offer. The more you focus on the features of your product or service and the way to do this, the greater the chance that you will lose sight of the value you offer your customers.

You need to keep an eye out for new technology and spot major shifts, such as the way free Internet services have decimated the market  for international toll calls.

Lastly, you need to revisit the question: what business are we in? The pace of technology change is likely to become even faster.  You need to become more alert and responsive to change.

Think of your industry and the sectors you service

There are two sets of risks here. The first is the direct threat to your industry. New technology could affect your competitive advantage and in extreme cases, endanger your business.  The second is the indirect risk that the sectors you service suffer from new technology.

Print media is an excellent example and the parallels with Pony Express are uncanny.  Newspaper and printed directories, such as Yellow Pages, are well aware of the Internet, but very few companies have found ways to embrace this. The purchase of New Zealand company Trade Me by the Australian newspaper company, Fairfax Media, was a case of “if you cannot beat them, buy them”. Online platforms were decimating classified adverts, which used the be the “bread and butter” of newspapers.

Do share this post and I encourage you to respond to the caption.  There are two ways you could answer this:

  1. What do you think the Pony Express rider said to the worker erecting telegraph poles?
  2. What question should the Pony Express rider have asked?

    What’s on your technology stop doing list for 2014?

Simon Fawkes CaricatureSimon Fawkes
Accredited Mindshop Facilitator
Business to Markets Ltd