This year many small business owners and their families are wondering where things are headed with their business future. The drought here in Australia, changing industry and market profiles and rationalization are just some of the issues that need to be addressed. Many individuals amongst this group may be personally involved in decision making processes ranging from calendar, seasonal, project or major business planning processes. 

I will be as bold as to say that the current drought and associated adversity provides many businesses with the best opportunity in the last 20 years to make significant growth and changes for the betterment of their business. This time, is a good one to reflect on what it is that we want from our business and where to go from here. 

During last year (September 2006) I had contact with Brian, a farming client who wished to sit down with his family and have a round table management meeting to plan their future directions for the next 20 years. His comment was "The last drought was the best thing that happened to our business and I want this one to be even better". 

No it's not a strange comment as Brian's father did just that with his family, after the 1982-83 drought. Decisions were made to share farm and lease a neighbour's land rather than buy the next door farm which was on the market. As well they chose to use their over capitalization in a new grain harvester to join with a contractor, to their mutual benefit, and employ a full time operator for it, rather than over commit their own time. 

If you figure that you don't relate to farming then think again. Whilst this story is based aroudn farming it has ramifications for small businesses everywhere. 

Using the Power of Synergy  

Brian, his wife Judith, son Brett and wife Robin, daughter Susan and fiancé James, son Michael and wife Sally organized to meet for a weekend to discuss their individual family dreams and aspirations and how they could mutually assist each other and benefit from their collective skills and abilities. 

Brian is 60 and is looking at taking a step back from the day to day farm decision making; Judith is a very capable business administrator and is involved in local community affairs in a big way; Brett, a trained mechanic, and his wife live and work on the family farm; Susan was to graduate as a pharmacist and her fiancé James works as a pharmacist in a city hospital; Michael and Sally manage a capital city café restaurant; this makes for a very diverse group of skills and interests. 

Our first step was to discuss what prompted Brian to call the meeting and what it was that he was seeking to achieve. The current situation, the drought, was seen as a catalyst for succession planning, where Brian sought to participate in the growth of his family and their futures, rather than division of the spoils on his and his wife's death. Susan and James  were actually the cacalyst as they had approached Brian and Judith in relation to them supporting them financially in a new business venture.

I liken this process to that described as "giving with warm hands not cold ones". It's also about application of concepts such as synergy, leverage and strategy. Why not use the business's major capital asset value and marry this with your family's intellectual capacities to grow a collective business far stronger than the sum of the individuals.

The Role of Business Strategy 

The concept of strategic planning is ideal for assessing your business anytime you are experiencing or anticipate ...

• Significant transitions in leadership, ownership, management,
• Exit or entry of family members, or
• Threats to the well being of the family or value of the business.

Small businesses with the 'best practices' anticipate major events such as succession five to ten years in advance.

At this stage each individual family group completed a process of assessing where they are now and where they ideally would like to be in 5 and 10 years, both personally and business wise. They also completed a comprehensive analysis for what could be their ideal collective position.

After completing this step we worked through the outcomes of each individual family as well as recording a running total for the whole family group. This process highlighted an interesting series of points broadly covered by the fact that one family's business strengths (e.g. high cash flow) covered another's weakness (e.g. low cash flow). 

The rest of the day involved some in depth, thought provoking and at times heated discussions about what could be done with the information gained. 

Before we decided to call it a day we finished off with discussions about specific areas where the existing businesses were vulnerable, as well as strengths they could leverage to improve the strategic and succession readiness and growth. This discussion also sought to clarify those areas where there is significant and potentially crippling disagreement amongst family owners and members. 

To get an impartial and confidential look at the outcome of this discussion each person agreed to complete a business assessment questionnaire in confidence (on-line) and to meet again in the morning.

Using an Independent Assessment for Clarity and Discussion 

The Business Assessment process is a simple and inexpensive strategic and succession assessment process available to small business owners and was developed with input from specialists in the areas of business & marketing strategy, business management, finance, organizational development, corporate law, estate planning, taxation, psychology, and conflict resolution.

One of the key issues at this time is to find out the preparedness of founders, like Brian and Judith, to be able to step back from something they have invested their life into.

What needs to be assessed?

Many people think conducting an assessment means something is "wrong". Successful managers would liken it to getting the "best" outcome by rather than the "right" outcome. The concept of right and wrong is more a matter of opinion and it also leads to a win/loose situation rather than a win/win.

The assessment process, which Brian and Judy's family went through, measured sixteen key factors that covered four broad areas that determine a small business' success:

• Family Relationships
• Ownership Structures
• Management Structures
• Founder/s Readiness for Succession

By completing a review such as this your small business is rapidly provided with a real checkup on its condition.

The process is simple to use, and is unbiased and quantitative--results are based on the broad input of all participating family members and key staff.

As small business owners and managers you should be provided with points relating to specific issues where your business is vulnerable, as well as strengths you can leverage to improve your strategic and succession readiness and growth.

Those areas where there is significant and potentially crippling disagreement amongst small business owners and members are also highlighted.

The completion of the questionnaire went well and we got a great picture of their views about family relationships, ownership structures, management structures and what role Brian and Judith may play in the future and how ready they were to accept this change. 

The time spent separately in activities such as this serves to allow each family member to focus on where they believe the current situation is and to have some anonymous input into the future direction.

The following morning each person was provided with a copy of the compiled report and overview graphic. This formed the basis for the days opening discussion. 

What transpired was that there was 100% agreement that Brian and Judith needed to make a conscious effort to step back from the day to day farm work, and whilst this wouldn't be easy, it was now recognised and could be addressed. 

Michael had spent a lot of time overnight, following a phone conversation with me in the evening after the meeting,  to come up with a broad proposal, which was very innovative, that every one agreed was a great starting point to move forward from. 

What resulted was at the end of the day a proposition for a totally new business structure with its own management, separate from any day to day operational management. 

The proposal was that a new business structure would be formed to hold all the capital assets of the total family group; it was proposed that each family would transfer their real estate assets into this new entity. Three operating entities were to be formed to run the day to day business of the farm business, a pharmacy (Susan and James were interested in purchasing in a regional center) and a hotel/motel (Michael and Sally were keen to move on sooner than later). 

Each of the three sibling groups was to operate their businesses on a day to day basis with each reporting back to the Advisory Board that they formed part of. The Board also included some outside resources, not including their existing advisors (accountant, lawyer etc). 

Interestingly many of the ideas about management structures gave Brain and Judith potentially new roles to explore and develop in the new family business structure. It also gave them an ability to conduct a support role for each business, the children and their grandchildren. 

Whilst this outcome may appear a radical move in such a short space of time the key points that we used at the start of the two day process, and agreed upon by all, formed the basis for the shift in thinking. 

• That each individual and couple agreed to lay all their cards on the table, without fear of being judged.
• It was agreed that the process was not aiming to get the correct decision the first time. This was to be the first step of the process not the last.
• That they were aiming for the best outcome for all, not the perfect outcome for some.
• Everyone had to have something to loose, that would hurt them, if the process failed.
• Each family group would have some "give and take" to wear in the short term.
• Individuals' skills (formal and informal) were to be recognised and documented.
• Maintenance of day to day management individuality, whilst joining forces, was to be protected at all times.
• No idea, however strange, was to be considered right or wrong.
• That each individual was equal in the process.

Arriving at this position was made much easier with these points agreed at the start. When working through this type of process, it is preferable to have someone independent and outside the family circle to oversee it. This ensures that personalities and positions of power do not take over the process. 

Where to from here?

In utilising this system what has come to my notice is that ......

• many managers aren't aware of what can be achieved in an open planning process such as this;
• many business founders feel they will loose control, when in actual fact they don't;
• many advisors feel that by allowing an external facilitator access to their clients they are showing signs of failure;

Traditionally accountants and lawyers advice has been based largely on a "we've got all the knowledge ... you come and get it" basis rather than "why not develop some possibilities and options and then we'll look at the ramifications".  

The family agreed that Brian and Judith would discuss the matter with their accountant and lawyer and that there would be another get together in a fortnight. 

It was decided that for "homework" before the next meeting, each would bring some ideas in relation to ..... 

• Exit strategies for each family group should they decide to leave the new proposal.

• How initial input into the new entity would be valued?

• What formal operational procedures would be required?

• Any refinements that could be made to the initial plan.

Before leaving I spent some quiet time with Brian and Judith chatting with them about their feelings, how the 2 days had gone and how they saw the future. Like their children they were apprehensive about what had transpired, but felt exceedingly empowered at what their family group had achieved. 

They recognised that the process from here wouldn't be easy, there would by necessity be many alterations to this plan following their formal discussions with their accountants and lawyers, but it would be tremendously rewarding for all.

Why conduct a Business Assessment?

Small business is the foundation of the business landscape of many communities worldwide, but is currently facing great stress. The major stressor has arisen as the concept of adopting a "division of the spoils" approach rather than "growth of the family by means of collectivity". Society has focused on the individual at the expense of the family over recent times and is it any wonder that many exceptional business enterprises have been gutted by the "me generation" focus.

Anyone in the small business can start the process of a new direction simply by taking the first step. Accountants and other advisors in their work with small business owners/managers can call independent facilitators in to assist in the assessment process or to be an active participant in your small business restructuring. The choice is yours.

What happens after we conduct a Business Assessment in our business?

There is no right or wrong way in all of this, opening the lines of communication and formalising the procedures is a great place to start.

It was agreed by all that we would meet every month for 6 months and on an as needs basis thereafter to work on refining the processes and holding the group accountable for their actions or inactions.  

As I shook Brian's hand he commented about his father's words some 20 years earlier ... Out of adversity comes opportunity.