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Protect and Preserve

I recently visited and observed a once vibrant and profitable business that had descended into mediocrity...

24 August, 2022
Family Business Advisor, Article
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I recently visited and observed a once vibrant and profitable business that had descended into mediocrity. l worked with this business over 15 years ago and seeing this decline saddened me. It attacked my positive memories and highlighted how easily the capital in a family business, which grows over time, is difficult to accumulate and sometimes articulate, can so easily be frittered away by incompetence, lack of awareness and a skill deficit.

For example, when a business has a “marketed image”, customers have a perceived expectation of what type of premises, service, price, cleanliness etc., they will receive. Sadly, in a changing of the guard situation, the marketed image or perception does not live up to the customer’s expectations by the people delivering it. Protecting that is ultimately – capital and is the responsibility of all delivering owners and employees.

When the value of a Family Business is positively influenced by the “goodwill” it has created, there is an expectation it should transfer over the generations or even to new owners.

It is often assumed that the next generation will automatically, genetically, or by means of osmosis, understand the goodwill capital of the business. It must be lived and learned from working in the business and is often only ‘discovered’ when brought to their attention.

I often see neglect and hear comments like: “she’ll be right”, “near enough is good enough”, “this will do”, and “no one cares about that stuff anymore”. These are the very things that strip away the capital value and goodwill elements.

The buildings may remain the same, but the loss of the value of the intangibles like culture, referrals, the confidence of referrals, pride of the community, customer service and often price will strip away more value than a disaster like a fire, earthquake or more recently floods.

When these have been lost, regaining the ground can take three to five years and then add another five to rebuild. Ten years to get back to scratch after what can be many, many years of running a successful business. All are lost simply because of the lack of understanding regarding goodwill or market capital.

The time spent building and measuring these intangibles and correcting any negative trends is undoubtedly the responsibility of all family leaders as they build succession planning into the future.

Simple steps like measuring progress or decline require budgets and benchmarks of standards. Regularly reporting and feedback can help the discipline of a business. In succession planning, honest and forthright assessment should be the springboard to action. At the same time, the next generations all have different approaches, the underlying core values of the business and what made it successful are not to be overlooked. Backward steps can happen without you knowing, but steps forward are hard-earned, action built.

The key is to - Protect, Preserve and Grow.

Written by Bevan Roberts

Bevan Roberts - FBANZ Accredited Adviso

Bevan is engaged in multiple discussions each week with business owners around the value, worth, saleability and readiness for sale of their businesses, he is a trusted advisor working with families and corporates as they wrestle with generational change. Seniority has provided him with extensive experience across many sectors.


The views expressed in this content are those of the author, who is also responsible for any errors and omissions. Family Business Australia and New Zealand provides this article for your information only. The content of the article should not be taken as advice. If you wish to explore this topic, please consult an advisor who you consider to have the expertise to provide specific advice in relation to your family business.