Family Businesses
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According to The Family Business Australia Survey of Family Business Needs 2005, 30% of leaders of family businesses intend to retire within the next 5 years and another 27% within 10 years. Only 1.5% intend to close their business on retirement which means that 98.5% intended to either sell the business or to pass the business onto the next generation. The highest ranking family business concerns included the availability of willing and able successors and maintaining family control of the business. The greatest challenge was listed as “increasing profitability”.
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Where the owner is vital to the profitability of the business, the lack of a successor, a lack of adequate business-process documentation or inadequate performance management and reporting systems will cause the potential income and value of a business to be adjusted down come valuation time.
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Owners and managers of successful family businesses know about the importance of implementing strong policies and procedures and infrastructure systems. It is this infrastructure that allows them to rise above the pack and build a sustainable business that will deliver them greater profit margins and ultimately allow them to achieve a controlled exit at valuations three or four times that achieved by their competitors.
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The problem facing most family businesses however, is that no matter how much time and effort seems to be put into developing business-process documentation, there never seems to be enough time left in the day to do everything else that needs to be done.
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As family businesses focus on bringing their core product or service offering to market they often have limited resources available to dedicate to:
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- track their legal obligations
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- translate them into documented policies, and then
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- effectively communicate these policies to their employees.
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It is, in fact, the small and medium sized enterprises in Australia that bear the brunt of costs associated with non-compliance. Fines, penalties and legal fees are just the beginning. The real costs of non-compliance are often hidden and include management downtime, business disruption, reputational damage, loss of key staff and increased insurance premiums.
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We all know of businesses that have been knocked sideways by a serious workplace injury, a dispute with a senior employee or a breach of their operating license conditions. Many business can get away without incident for long periods of time, however, the longer you are in business and the larger your business becomes, it is generally not a matter of "if" an incident will arise it is a matter of "when".
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One thing family business owners can be certain of is that if they seek to sell their business or introduce professional investors they will be subject to due diligence and the due diligence process will focus on the adequacy of business process documentation and reporting systems.
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Nova Solutions™ provides the ultimate infrastructure solution for family businesses. Protect your investment! Nova Solutions™ assists family businesses to reduce adverse risk events, reduce business complexity, increase productivity and increase shareholder value.
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