Family and Family Business Plans

“If you fail to plan, you are planning to fail!”

Benjamin Franklin

Plans identify where you’re going; when you’re going there; how you’ll travel; what it’s expected to cost, and everybody’s role and responsibility on the journey.

Lack of agreed plans is the single greatest cause of conflict and failure in Family Business.

You actually need 2 separate plans AND they need to complement each other:

  1. Family Plans to focus on family needs.  Long term horizons:  25 to 100 years.
  2. Business Plans to focus on commercial and operational needs. Shorter time horizons: 2 to 10 years for strategy; 1 year for operations.

Values, Visions & Goal Setting

Values are the underlying drivers that make us want to do | what we do | the way we do it.

People, families and businesses who do things the way they believe they should be done have their values (intentions) aligned to their cultures (how they do things).… And that feels good.

Goals describe what we want to achieve in the future, and identify how we know we’ve succeeded (score).

Visioning uses values and goals to create a believable picture of where the Family and the Business want to be, and how they’ll look when they get there, sometime in the future.

Family Plans

Family Plans are long term (25 to 100 year) plans that describe:

  • What the family intends to do and what it wants to achieve over time.
  • Why it intends to do it – reason and mission.
  • How it will do it.
  • Everybody’s individual role, responsibility, authority and accountability.
  • What’s in it for everyone – as individuals, and as a family group.

Plans should be developed collaboratively, in inclusive workshops that develop understanding and buy-in from all key family members, including spouses, partners, significant others and next generation members of sufficient age and maturity.

Once you’ve promised to make changes, Plans must be created, agreed and implemented.  If the promise is broken, family trust will go backwards, in a big way.  It’s the primary task of the Family Council to ensure this doesn’t happen.

In addition to regular reviews by the Family Council, progress against Family Plans should be reviewed at least annually, at the Family Forum.

Business Strategy Plans

Strategy Plans convert agreed commercial Values, Visions & Goals into high level directions for business activities.  Major milestones, and quantifiable commercial targets, such as gross revenue, net profit and return on investment (“ROI”), are used to measure progress.

Strategies work best when they engage everybody who: (a) can make a meaningful contribution and (b) need to know, understand and support the plan – to maximise its prospects for success.

The Strategy Planning process comprises one or more facilitated workshops that encourage everyone to work collaboratively and to think constructively, creatively, and commercially.

Business Operating Plans

Operating Plans translate Strategy Plans into detailed revenue projections, monthly budgets and cashflow forecasts.  They are all supported by Activity Plans that assign specific tasks, responsibilities, authorities, timelines and accountabilities to individuals, to help ensure that everybody knows and understands what is expected of them, and what they can expect from others.

Nobody has anywhere to hide when Business Plans are created and used properly, as they generate hard numbers that are pure arithmetic, and aren’t negotiable.  Accounting and Management Information Systems measure and report on the financial performance of the business, against planned results, showing whether things are up, down, or sideways.  Responsibility for those results should be clear.

Business Plans help managers to run the business efficiently and profitably: “if you can measure it, you can manage it” (to invert Peter Drucker’s well-worn quote).

Business Planning is an intense exercise that should be completed, Board-approved, and formally adopted before the commencement of each financial year.

Succession Plans

Succession is the process of replacing existing leader(s), owners and/or managers with a new generation of key players.  It’s a challenge that can, and usually does, place enormous strain on individuals, on the family, and on the business.

Regrettably, succession is often poorly planned, or not planned at all, which explains why it is so frequently botched, and why it is one of the main causes of tension and conflict in businesses generally, and in family businesses, in particular.

The natural Circles of Family and Business Life require constant regeneration and renewal.  Individuals age and fade, whereas families and businesses can go on forever – if they build on past success and learnings, and use their resources wisely to make each generation stronger than its predecessors.

Succession should be included in Family and Strategy Planning processes.  When handled like any other complex organisational challenge, rather than as a fiercely personal existential threat, logic may prevail over emotions.