Written by LHW Financial Planning based in Blackrock, Dublin.
We understand it is the strength of family relationships that helps sustain these businesses and makes them a success. However we also understand the special challenge of succession planning and the important role good personal financial planning plays in this process.
Disputes over succession planning can lead to bitter family feuds. The latest high profile case is the O’Gorman family that controls the Kilkenny Group. This business itself spun out of an earlier high profile family feud involving Blarney Woollen Mills in the 1990s. In Dublin the Coman family of Rathgar was almost completely destroyed by their fight for control of their pub business. Most dramatically of all, the battle between siblings Ben Dunne and Margaret Heffernan for control of Dunnes Stores had huge implications for not only the family and the business. Famously the dispute changed the Irish political landscape forever due to Ben Dunne’s connections in high places.
In LHW we understand it is the interplay of close personal and professional relationships that is both the strength and the potential weakness of family businesses. Businesses that have agreed and communicated a robust succession plan are far more likely to succeed both in the medium and long term. The annual PWC report of this sector shows that currently only 14% of family businesses have such a plan in place. Other than highlighting the importance of future succession planning, the PWC report focuses on many other important steps in the process and is worth a read. Let us know and we can email you a copy of the 2016 report.
Where we at LHW can be of assistance in the succession planning process is by ensuring the current business owner has complete clarity on their own personal lifestyle and financial plan. Most business owners put all their energy into the running of the business and rarely reflect on if the business is serving their overriding purpose in life. In fact very few have every really thought what that purpose is and why they are working so hard in the family business!
Asking these tough questions and helping businesses owners to answer them is the first part of what we do. We actually wear 3 hats;
- Life planner: we help you clarify where you are at and where you want to get to.
- Financial planner: analyse assets, liabilities, incomes and expenditures. Using leading software we highlight strategies to help you achieve your goals.
- Financial product adviser: where required will we then advise on funds, investments and financial products.
It is common sense that business owners cannot seriously consider exit and succession planning until they have clarity on their own personal plan first. In the many family businesses we have seen succeed and endure over the years as clients of LHW, we believe the above process has been an important contributory factor.