Interview: Foundations for success navigating business and family

To mark Small Business Week, The Office for Small and Family Business in South Australia arranged for our CEO, Catherine Sayer, to sit down with two Family Business Accredited Advisors, Matthew Bartemucci from Hood Sweeney and Annette Bonnett from Rubix Advisory, for a discussion on the foundations for success when navigating family business.

Both Matt and Annette shared their experiences working alongside and supporting family businesses, offering practical tips and examples. Their chat covers governance, succession planning, Family Councils, Advisory Boards and so much more.

Key takeaways? Communicate, Communicate, Communicate. Document, Document, Document. And start early!

Watch the full interview on the Office for Small & Family Business Website. Click image above.

Thank you to The Office for Small and Family Business in South Australia for arranging this discussion for the benefit of small and family businesses.

View the transcript here: 

Catherine Sayer, CEO FBA
Hi and welcome to our discussion on navigating family business. I'm Catherine Sayer, the Chief Executive Officer of Family Business Association and joining me today we have Matt Bartemucci from Hood Sweeney and we also have Annette Bonnett from Rubix Advisory.

So Matt, we're going to start with talking about the common challenges for family businesses and how to navigate them.

Recently, some data shows that 36% of respondents said balancing family and business was a key concern, but encouragingly, 73% also pointed to strong family values as a major factor in their success.

It really highlights how closely those personal and professional dynamics are linked. What are some of the most common issues you're seeing among family businesses today?

Matthew Bartemucci, Hood Sweeney
Well, family businesses are pretty similar to normal business at the moment in respect to their dealing with business confidence, trying to get their strategy right, trying to get their business going in the right direction. They're looking at rising costs. They're not immune to increasing costs. So they're needing to manage their cash flow and be on top of their numbers, which good businesses always do. Demand, looking at demand for their product or their service. How is that going? How is that looking now? How is it looking into the future? It's always consistently on family businesses' minds. And people. People are raw for talent, trying to find the right people in the right seats is a challenge and trying to find that. So that's sort of what we're seeing for family businesses, as well as businesses in our area.

Catherine Sayer, CEO FBA
And interestingly, the stat that we use is that 70% of Australian businesses are family businesses and 50% of the workforce are employed by family businesses. So that's a pretty big proportion of our economy in South Australia that are family businesses. The other interesting fact that I found recently was there's an Edelman Trust Barometer that says basically 70% of consumers trust family businesses over any other type of business. So there's a bit of a unique proposition there, as well, when they're talking about family values as being important and then we're looking at what consumers actually relate to and I'm sure that branding of family businesses and the trust sort of come together. What are your thoughts?

Matthew Bartemucci, Hood Sweeney
Exactly, yeah. Businesses that do articulate themselves as family businesses, they've got it in front of them and they can find the right people when they articulate that 'we are a family business', 'we've got strong family values', they can see it, they know the owner, they know where the direction is, that they get the buy-in and like you said, 50% of the workforce work for family businesses. That's fantastic. So they can continue to do that and consumers, they want to buy from family local businesses. They love that. They love to see who they are and how they work and if they know that, they're going to come back and be repeat customers and that's exactly what it is but the business needs to tell their consumers and their customers, who they are and what they stand for, and that's when you get the buy-in.

Catherine Sayer, CEO FBA
Yeah. What about you, Annette? What do you think about that?

Annette Bonnett, Rubix Advisory
I think at the moment family business is a lot about community. So the community aspect of employing locals, delivering a product for the local community, is very high for a lot of these family businesses.

So, they want to make sure that the value obviously is there for their customer, to ensure that they come back into the door again. So extremely important to ensure customer satisfaction.

Catherine Sayer, CEO FBA
And of course here there's a lot of focus on buying local, buy SA, supporting SA, so family businesses definitely should take advantage of that.

Matthew Bartemucci, Hood Sweeney
Yeah, it's great seeing that sort of stuff around. That's perfect.

Catherine Sayer, CEO FBA
Annette, Typically in all businesses, but particularly uniquely, I think in family businesses, you see conflict. How do you avoid that conflict and how do you manage it?

Annette Bonnett, Rubix Advisory
Family businesses are very unique in trying to navigate how do we deal with our family away from the business, as well as how do we interact with them while we are trying to run a family business. It's very much about setting some ground rules. What roles, responsibilities should they be having and whether they should be documented. I would strongly encourage documentation of everything very early on in the process.

It certainly makes life a lot easier for future family members to come in. And for those that are slightly larger, larger family businesses, it might be about multi-family members coming in into different areas of the business. So the idea of roles and responsibilities, job descriptions, clear understanding of what's expected from them within the family business, and doing that very early on, is extremely important. So, some family businesses do this very, very well. Others probably run a little bit behind in thinking that maybe because the surname's the same or there's some sort of connection to that business, that in fact the person coming in almost has an entitlement or a right within that family business. But in the long run, you only really sort of are setting yourself up to have some conflict and some problems if you don't get those early things dealt with.

Catherine Sayer, CEO FBA
So it's really good governance early, isn't it? And I think it's really important to get that governance right. And again, if you've got a founder, then you've got siblings or the kids in the business who are siblings, but then you might end up with cousins, etcetera. Have you got any war stories about anything around that?

Matthew Bartemucci, Hood Sweeney
That's when things get complex, when the cousins are coming in, because it's not the direct siblings and whatnot. So, yes, having those policies and those documentation, laying the foundation actually helps understand that, and so that all family members are clear on how their pathway through the family business can evolve.

Catherine Sayer, CEO FBA 
Have you got some examples maybe of, and maybe we start at the CEO level, whether a non-family CEO tends to happen a little bit more, potentially, than it used to? Maybe talk us through that sort of hierarchy.

Annette Bonnett, Rubix Advisory
Yeah, so we are certainly seeing that a little bit more now. It's a really tough question, to be honest, for a family business that has never employed anybody in a senior role outside of immediate family before to come to terms with. It does take a bit of a mindset change, and probably, a reality check as well that what's in the best interests for the business, rather than might be what's in the best interests of the family, so if you look it up purely from the business perspective, we often say to people, write out the position description and the job description for that position you are trying to fill. If you can do that and then realise that none of the existing family members can actually fill that position, you may be left with no option but to start seeking some expertise from outside of the family group. But if you can have family members that consider that they may be good, then you ask them to apply. Go through an application process, no different to employing anybody else in a senior position in the organisation and see how the family members sit.

It does also open up an opportunity perhaps for further development and education within family members, which may be something that is considered as well if you really wanted to keep that position in-house. But that's coming from the senior management sort of side of the business.

Catherine Sayer, CEO FBA
And Matt, often we see family businesses in their charter, because they're all well organised, that there might be a rule that you go away from the business or you don't start in the business and there might be an age where you can come back to the business or an experience level. What is your experience around that?

Matthew Bartemucci, Hood Sweeney
Yeah, it's getting those family members to go outside of the family business and actually get some different skills. Get some one life skills, but get some different business skills and they can bring and complement the family business when they come back in. And yeah, and some of them having a set two, three, five years sort of period. But when they come back, some of them, they need to apply for the job as well. It's not just the role they're waiting for them. They're to say, well, you need to apply and on your merits, if you get it, we'll employ you. That sits well with non-family member employees in there, they know that individual's actually gone out, got education, got some experience and they're the right person for the job. So it's on merit and that helps all members in the family and all employees sort of working towards a common goal.

Catherine Sayer, CEO FBA
I had an interesting situation recently where quite a large family business, the owner said to me, there is a job in our business for every member of our family. And I sort of looked at him and I went, that's an interesting way of looking at it. And he said, because it's a big business, a nephew who hasn't got the skills to be the CEO, never will be the CEO, actually is working in the factory. Picking up on your point, Annette, about the same surname, I mean, that would be a real challenge, I think, at any point in time. But again, I suppose it comes back to those family values and the heart of the family where some families say, well, it's not necessarily an executive position, and they're big enough, but we will always have a position for a family member. And that actually struck a chord with me as well because it's really looking after the family but actually still being quite fair in the structure of things.

Annette Bonnett, Rubix Advisory
And coming back to the DNA of a family business, really in a lot of cases, that they're there for the long term. They're building legacies. They are wanting to make sure that they are looking after the family and the business, and the intersection obviously of those two things. So trying to find ways that every family member can obviously be part of a business is a lot easier to do as those businesses get larger. But certainly a lot of businesses do work and family businesses do work that the business is here to help provide for the future of the family. And we're here to be a legacy. So we want to do whatever we can to ensure that success.

Catherine Sayer, CEO FBA
That legacy piece is really interesting actually, isn't it? Because family businesses are not short-term thinkers, are they?

Matthew Bartemucci, Hood Sweeney
No, no. They're generally looking for the long-term because they want this business to be a around for many years, many generations to come, and they're not a CEO that's got a 12-month target or a 24-month target looking for a short-term bonus. They're looking for the long-term gain.

Catherine Sayer, CEO FBA 
Which then flips back into this whole conversation around succession, governance, planning, communication, and typically people don't start early enough, do they? So, you know, if you're talking about succession, which we know is a massive, massive issue, some families do it really well, some not so well, and some have to have some sort of crisis in their life.

Matthew Bartemucci, Hood Sweeney
They may have the right intentions, but they never get there.

Catherine Sayer, CEO FBA 
Give us some examples and talk about succession, and the what to do and the what not to do.

Matthew Bartemucci, Hood Sweeney
You've got to plan early. It's simple. It's key. If you don't plan early, and when we say plan early, five to ten years is sort of what you need to work out. You need to have that forecast of where it's going to go and what your family business looks like. Because if you don't, then that's when inconsistency happens or people unknown, and then they don't get excited about being in the family business and being able to help grow it and shape its foundation for the future.

So the plan early is one, always engage the next generation, ask them questions, seek their involvement, get their input, understand what their expectations are, what their goals are and what their objectives are because it's going to be different to the founding generation or the generation that's actually running the business at the moment. So it's really understanding what they are and then documenting things.

Yes, it's a bit corporatised at times. Yes, we're just a small family business but if you don't document it, one, you're not going to remember it and two, you can pass that on to the next generation and say, hey, our employment policy is around this or the way you get equity in our business is around this and this is the time frame. So everyone's got a clear understanding of where that is. It doesn't mean it has to step like that for stone. You can alter and adjust it over time, but you need to have a plan.

Annette Bonnett, Rubix Advisory
Embrace the uniqueness, I would say, of family businesses. We are very fortunate to ensure that family businesses have multi-generationals. So every generation is not going to think the same. Every generation is not going to behave the same. So embracing that uniqueness through having, whether it be a family charter, so looking at sort of the rules, the code of conduct, how family members are brought into the business, how they're remunerated, all of those things are extremely important. And give them a voice around the table. So there may be businesses now that are getting larger or to a point where considering a family council to bring family members into the discussions at an earlier age, give them an opportunity opportunity to have a voice to put their thoughts forward and then let the family obviously decide on where things move from there but I think having the ability to have multiple generations of voices around a table certainly brings some amazing outcomes and makes these family businesses very adaptable to change and can bring forward some skill sets that maybe other businesses are not fortunate enough to have.

Catherine Sayer, CEO FBA
And it's interesting, you talk about Family Council, and then there's the governance element. Keeping those two things separate, I think is probably pretty important too, isn't it, in the business?

Annette Bonnett, Rubix Advisory
Yeah, extremely important. So we've seen, certainly over most recent years, the governance or the word governance becoming a lot more important. Really in very simple terms it means rules and regulations, and requirements of what it is that we need to do to ensure that our family businesses are compliant and abiding by all the laws that they need to.

The next step, that sort of sits to the side of that, is the Family Council. The Family Council is more of a voice for all extended family members, may not be within the ownership necessarily of the business, may be involved in working in the business, or may not even be working in the business yet, but gives them the ability to be able to have a voice and be included. I think we're also seeing the Advisory Boards coming to the fore a little bit as well, as another vehicle.

Catherine Sayer, CEO FBA
Can you explain a little bit more about Advisory Boards because I think you're right. They're sort of appearing now a lot, but what's the difference between a Governance Board and an Advisory Board?

Annette Bonnett, Rubix Advisory
Yeah, so if you're on a Governance Board, you're generally within the Director's framework, I guess, of the running that business. So you can be held liable, obviously, if things go wrong, whether it be personally liable or the business itself be held liable.

Advisory Boards is like a Board that can be set up specifically to outsource some of the work that a Governing Board needs to do. So it might be project work, or it might be looking to expand into a different market or a different opportunity. Those Boards generally come together by experts from a whole variety of areas, maybe lawyers, accountants, industry experts, for a specific purpose. So they're there to look at something that is extremely important for the family business to move forward, but doesn't really sit on the agenda for the Governance Board to deal with. They would normally make recommendations then up to the Governance Board for the final decision.

Catherine Sayer, CEO FBA
Yeah, it's an interesting one, isn't it? Because it has a purpose and a defined period of time often, which is great for the business because they can bring in these experts. And so I think, you know, it's a great addition to that overall governance structure of a family business as well.

Annette Bonnett, Rubix Advisory
We're seeing a lot more of them probably in that view of succession and wealth transfer because of the multi-generational aspect, obviously. Every generation wanting to have representation around that table. So it does mean that you can bring in people that are there, they're independent, they're experts in their field, so they can very much have that overarching, sort of, responsibility then to be considering everybody's viewpoints and bring that back then to hopefully a workable solution.

Catherine Sayer, CEO FBA
A much richer discussion, isn't it, when it's that multi-generational input?

Annette Bonnett, Rubix Advisory
Yeah, definitely.

Catherine Sayer, CEO FBA
So maybe... Can you think, both of you think of a really good succession story and one that will send shivers down everybody's spine?

Matthew Bartemucci, Hood Sweeney
Yeah, the one where the generation that's looking after the family business now just doesn't have the time to think about succession.

They're putting it to the very bottom of the pile, putting it to their kids or their nephews or whatnot that, you know, we're not, yep, we'll get to it, but I'm too busy running the business at the moment. 

Catherine Sayer, CEO FBA
And they're getting older and the kids are getting older and closer to retirement age themselves.

Matthew Bartemucci, Hood Sweeney
Exactly right. And then an unfortunate event might happen where there might be a death in the family or whatnot, and it hasn't been discussed, and they didn't really understand what the views were of the person that passed away, how they were going to give their shares and it's left in a Will that was done 20, 30 years ago.

So that's an example where things have gone wrong because they just don't have time and they're too busy working in the business instead of on the business and the family.

Catherine Sayer, CEO FBA
And I think the really interesting point then is, if someone in the family dies in your family business, they're family. And so you've got the trauma of a death in the family and you've got nothing to work with in terms of any documentation or, as you say, wishes, because it was always taboo, never discussed. It's a terrible situation for any family business to be in because it's really that double whammy, and I think that's very sound advice.

Annette, have you got a good or a bad story?

Annette Bonnett, Rubix Advisory
I've got a good one. I love the good stories. So when it works well, I think it's the idea that everybody's views can be put out on the table through that succession planning process. There is no defined timeline around how long succession should take. So it's really as long as the family want to take it. I've been involved in one that's been sort of ongoing for quite a number of years now. But in getting the next generation a bit involved in it, we've come across that a lot of them are more environmentally conscious. A lot of them have some philanthropic community needs that they want to ensure are looked after, so that can then form part of the succession plan. When you know these things early enough to be able to put them into place, it makes the whole process a lot, lot easier.

Setting up education trusts for grandchildren, setting up trusts that can be used for future generations, diversifying out into completely new industries and new areas so that the family is not entirely reliant on one business as being the source of family wealth. Because as we know, once you get multi-generational, and I always like to refer to it as more branches on the tree that every now and then you need to cut a few branches off or work out how it is that the extended family can obviously be provided for. Putting things on the table and working out what's important for everybody during that planning stage does certainly help.

So we've ended up with Education Trust, as I said. We've ended up with Philanthropic Arms, so organisations now setting up completely separate entities where they can, obviously, assist in the not-for-profit sector, give back to community groups that are important to them. So, definitely make sure you get those succession plans and start it early and then give everybody a voice to have their opinion around the table. The outcome is so much more rewarding.

Matthew Bartemucci, Hood Sweeney
History tells us that, you know, the family businesses that do that have got a greater chance of success as they go into the third, fourth, fifth, sixth generation. Families that have gone on because they've had that engagement with all stakeholders and all family members.

Catherine Sayer, CEO FBA
Start early, communicate, communicate, communicate.

Matthew Bartemucci, Hood Sweeney and Annette Bonnett, Rubix Advisory 
And document! and document! and document!

Catherine Sayer, CEO FBA
That's just the tips and tricks, isn't it?

So I often hear family businesses say, you know, we feel so alone, and then... you know, selfless plug, they get involved with Family Business Association (FBA) and they go, I found my tribe, that I'm actually with the people that understand. You could have the biggest business in Australia almost, and the smallest family business, and they talk to each other at various events and activities. That whole community is a very special community. What sort of things do you think are available for family businesses out there?

Matthew Bartemucci, Hood Sweeney
Get involved, like FBA and that sort of stuff because like you said, big business, they're not a small business, but they have common issues. Common issues around family issues, around business-related issues. So having to bounce that off each other is actually a great network that they've got and if you consistently invest your time and go to those events, you'll see them consistently throughout the year and throughout the years, and they build good, strong relationships. And they're like little mentors there for them to go back to and bounce ideas off with. And if they get involved in Forum Groups that FBA has and that sort of stuff, that's when it really elevates from there.

Catherine Sayer, CEO FBA
Maybe, Annette, expand on a Forum Group.

Annette Bonnett, Rubix Advisory
So I'm very fortunate at the moment, I'm a facilitator for a Forum Group here in Adelaide. We meet on a monthly basis, family business owners from a whole variety of industries and different generations, as well within those family businesses, and we talk about the real things. We talk about what's happening in these family businesses on a day-to-day basis. So it's what's keeping them up at night. It's what they might be worried about for their next generation, their own kids. From a parent's perspective, it might be what does my retirement look like or my transition to retirement look like, and having those various generations around the table that can speak under Chatham House rules we can have very frank conversations and learn from each other's experience. It really is invaluable.

Catherine Sayer, CEO FBA
Fantastic and I suppose you know, of course, in South Australia we've got the Office for Small and Family Business, and a whole lot of resources within that Office. In fact, Matt, you and I were involved in some of the short courses that were delivered by FBA for the Office for Small and Family Business, around Governance, and Legal and Succession so there's the office as well. We've also got our education piece, which, again, helps people structure their succession, their governance in a way that then they go to Advisors. And, of course, we have Family Business Accredited Advisors at FBA, and so those people actually really understand family businesses. So that whole network is fantastic and it's a really nice synergy. We've got the Office for Small and Family Business, we've got FBA and between us, we're kicking goals, I think.

Matthew Bartemucci, Hood Sweeney
Yeah, I encourage family businesses to get involved in those because you're not alone and having those discussions and hearing opportunities, and events, and meet the owner, and you hear sort of the issues, it's not just all about the good things, there's actually a few of the challenges and the hurdles they've had to get to over the time and they are invaluable discussions and the learnings you can get.

Annette Bonnett, Rubix Advisory
Yeah, it's important to realise, you may recognise a brand, perhaps, when you go into a supermarket and think that's a very well known, that's a big brand, and behind that brand often is a family. 

I think that's a realisation that by being part of FBA and being part of the extended tribe of FBA, you realise that these families are no different to any other family in business and they have the same issues. They just may be dealing with them on a bigger scale. So it is amazing, the camaraderie that we have at events and social functions is great and just gives you the reassurance, like Matt said, that you are not alone, and you have other people that have expertise in this area or have been through exactly what you're going through.

Catherine Sayer, CEO FBA
So, Matt and Annette, thank you so much for a very interesting conversation. If there was one key takeaway that you could provide our audience today, what would that be?

Matthew Bartemucci, Hood Sweeney
Definitely plan early.

You've got to start thinking about this earlier than you think and start engaging, start working with someone, whether it's an advisor or whether a mentor of yours. Start to think about it, start to plan. And like I said, give yourself a runway. You need your five plus years to work on that. So that would be my key takeaway.

Catherine Sayer, CEO FBA
Thanks, Matt. And you, Annette?

Annette Bonnett, Rubix Advisory
Documentation would be mine. So it doesn't matter what form that documentation takes, but having things written down always gives you something to go back and review and look over. If there's any issues that come up, you've always got a document you can refer back to on how to deal with those particular situations. The last thing any of us want in a family business is to be unprepared and an unfortunate tragedy or trauma event to happen within the family and no one knows what to do. Then you're left scrambling around completely unprepared, so ensure that things are documented and you know where to go to find them.

Catherine Sayer, CEO FBA
Well thank you both very much for an excellent conversation on family businesses.