Peter Sarandopoulos (RSM) shares 10 tips for family businesses

Family businesses are the backbone of Australia's economy, contributing half a trillion dollars to the national economy and responsible for a huge portion of the workforce.

While they hold a remarkable position in Australia’s entrepreneurial landscape, Peter Sarandopoulos, a partner at RSM who advises family businesses of all shapes and sizes, acknowledges that running a family business isn't always easy.

“Balancing the dynamics of family relationships with the nitty-gritty of daily operations can be a juggling act. The office doesn't always stay in the office; it often spills into family dinners, weekend gatherings, and even holidays.”

“There is so much that to be considered when it comes to launching, growing, maintaining, and exiting a family business. But ultimately, much of it boils down to a handful of key ingredients that we see time and time again in the most successful family businesses we’ve worked with over the years.”

Sarandopoulos shares 10 tips that can help family business leaders ensure their long-term success:

Effective structuring
Be it a sole trader, partnership, company trust or combination, the right structure is vital to ensure tax efficiency, protect assets, and enable smooth succession to the next generation.

Care about cashflow
Like any business, it's imperative to know your numbers. Don't let your accountant be just for annual tax compliance – have them develop a three-way budget forecast regularly so you always know your financial position and are optimally positioned for opportunity.

Treat your business like a business
While you may be skilled in your profession, you either need to invest in building business skills or surround yourself with those who have them. Take the time to establish good governance and implement quality systems, and actively seek ways to drive efficiency and profitability.

Start with the end in mind
What exactly do you want your business to achieve? Is it to provide an immediate source of income, or to build real wealth and leave a legacy? By being clear on where you’re headed, you’ll be more confident when making the decisions that will lead you there.

Document everything
From policies and processes to buy/sell agreements, absolutely everything in your business should be documented. This not only makes everyday management simpler and supports growth activities, but can prevent family relationship breakdowns in serious situations.

Hope for the best, plan for the worst
Try not to put all your eggs in one basket (your business) by diversifying your wealth using clever strategies around asset protection, superannuation, and other investments. Take out sufficient insurance so you have peace of mind that if the worst did happen, your family is taken care of.

Don’t make the business a rite of passage
Expecting children to enter the family business at a certain age, or allowing them to regardless of their skills, can lead to all sorts of issues. Instead, encourage children to explore their own career path and, if their choice includes your business, encourage them to gain qualifications or start out small and work their way up.

Cultivate respect and open communication
Having genuine respect for each family member, and actively listening to their views, creates a strong culture that can withstand even the greatest challenges in running a family business. If the founders lead by example, every generation who enters the business will follow suit and contribute to building a powerful legacy.

Look beyond your business
A family business can take on so much more meaning when the family unites for causes that extend beyond the core enterprise. Be it community involvement, charity or philanthropic initiatives, the drive to do more together for the greater good leaves a lasting impression on everyone involved.

Engage good advisers
Many of the most successful business owners can attest to the fact that a good adviser is worth their weight in gold. Their objectives are very simple: help you achieve your success by being a source of valuable insight and guidance, and a trusted confidant you can rely on at any stage of your business journey.