Deloitte Global report gives valuable insights for family owned ECEC small businesses
As major employers and contributors to Australia’s economy, local family owned businesses, including those who own and manage early childhood education and care (ECEC) services, face a range of issues that can impact on their success – in the immediate and longer term.
A new report, issued by Deloitte Global has explored 12 key issues relevant to family businesses, providing actionable insights into a range of topics including succession, social responsibility, assessing the health of family businesses, and innovation to the future of work.
Few family businesses in Australia survive into a third and fourth generation, Deloitte Asia Pacific Family Enterprise Consulting Leader Peter Pagonis noted, observing that misalignment between the goals, wants, and needs of the business and individual family members is often to blame.
Regardless of the location or type of business, and the markets in which they operate, Mr Pagonis said the findings pointed to one common quality – a sense of purpose beyond just being profitable.
“That doesn’t mean that making enough money to sustain a business isn’t important, but family-owned enterprises are also increasingly driven by more than this. Whether it’s a commitment to giving back to their community, becoming environmentally sustainable, or producing a perfectly crafted product, purpose resonates with many of their stakeholders and informs so much of what they do,” he said.
Three of the 12 issues, and the opportunities they present, are especially relevant for the Australian market, Mr Pagonis said.
- Good communication and good governance
“Communication is probably the single most important ingredient in building and managing a sustainable and successful family enterprise. By their nature, family enterprises are complex, and as they evolve past the first generation founder-manager, business and family issues become intertwined.”
Before effective governance structures can be put in place,he added, open and transparent family communication and the resolution of issues is vital. Business families often lack the skills and capability to navigate tough discussions together, particularly those that involve both business and family matters, Mr Pagonis said, however allowing management, succession, and ownership discussions to slide can place not only the business, but the owning family, at risk.
“Effective family communication can be learned, and more and more families are committing time and budget to facilitate and improve on this front.”
- Social responsibility
“At a certain point in the lifecycle of many family businesses, owners ask how they might be able to support their communities as the places where they have historical, economic, and social ties.Giving directly to charities and setting up foundations are traditional ways to achieve philanthropic goals. But family-owned businesses are also increasingly giving back through the relatively new phenomenon of social impact investing.”
Key considerations for any family business in this area should include being open to new approaches to philanthropy, setting up a mechanism to ensure accountability from the organisations being supported, and continually evaluating investments in terms of both return and impact.
- Succession planning
“Particularly in the context of such a continually changing business, technology, economic and political environment, many families are still not fully prepared to transfer their business to the next generation. A succession plan can’t be set and then put on the shelf. It needs to be updated regularly as company focus and strategy change, and key questions need to include is there a process to identify members of the extended family or professional managers who can be groomed to lead the enterprise, and ensuring that person fully aligned with existing plans for the business.”
To read the report in full, please see here.
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