The enterprising family office

http://www.ifb.org.uk/ London is becoming home for an increasing number of family offices. A family office generally refers to a private company that manages investments for a single wealthy family. The company's financial capital is the family's wealth, often accumulated over many generations.

At a recent gathering of the IFB Family Office Forum owners were privileged to hear from author and consultant Mark Daniell who wrote Strategy for the Wealthy Family and other acclaimed books. One of Daniell’s themes is why only one of the 30 wealthiest families in the first edition of the Forbes “Rich List”, the Rockefellers, is listed today whereas the other 29 families have dropped away.

At the heart of growing the family’s wealth, and not just preserving it in the family office, is the need to maintain the entrepreneurial zeal and appetite to innovate and grow in each generation. Keeping this flame burning begins by instilling behaviours into the next generation that will encourage them to take entrepreneurial risks and make their own mark. The best family offices foster core values in the family such as dignity, accomplishment and responsibility.

Whether family office investments are made up of operating, or financial assets, the key to longevity is the positive engagement of the next generation. If the family business has been sold there could, of course, be a loss of identity so agreeing common values among owners and a shared mission becomes critical in order to retain unity and a sense of purpose. Recent IFB Next Generation Forum speaker Ben Goldsmith, who now chairs his family office, also highlighted the importance of strong leadership as another vital ingredient.

On September 28th when the IFB hosts its annual Family Office Forum Roundtable families will share their own experiences on how enterprising businesses manage to keep the entrepreneurial flame burning and grow their wealth. The debate goes on….

Family business entrepreneurs: the pros and cons of family support

http://www.ifb.org.uk/ The recent sell-out IFB Next Generation International Convention on entrepreneurship was a tremendous success as 185 young delegates from 25 nations listened to inspiring speakers on starting up companies, intrapreneurship in an existing business and emerging social enterprise models. The consensus seemed to be that today’s young family business members want to make their own mark in the early stages of their careers, either by working in a non-family company, or increasingly by setting up their own business. Choosing the entrepreneurship route is becoming more popular; it gives the young person more independence and is a great way to prove yourself, at a stage in life when there is often little to lose.

One of the most active questions discussed was the pros and cons of having “family support” when starting a new business. Advantages include access to capital, ready-made networks, other support that the family (and perhaps its business) can provide and the pressure to succeed. On the downside many felt that using family resources including funding could lead to a lack of independence and thus a loss of freedom for the entrepreneur.

Lara Morgan, founder of toiletries success story Pacific Direct, told the story of how she broke away from her father’s firm at 23 and never looked back eventually selling her business for £20M. She argued strongly in favour of having full control over one’s destiny without anyone looking over your shoulders. Others argued that family entrepreneurs should welcome family support. If a family member starts a new venture family capital and networks can be invaluable; but if the family are investors care needs to be given to the governance system that should give the entrepreneur the freedom to manage, with a good board in support.

The virtues of long-term business planning

http://www.ifb.org.uk/
French author and entrepreneur Jean-Louis Servan-Schreiber writes in a new book Trop Vite! (Too Fast, Albin Michel, 2010) that our world has become too short-term. Horizons have shrunk in every aspect of society whether it’s politics, consumer behaviour, or in business as the pace we live at has accelerated. The consequence is that the long-term is pushed into the shadows - we live for today.

Twenty years ago Michael T. Jacobs predicted the shift to short termism in business when he wrote in Short-Term America that the US would not be able to retain leadership if it continued to focus on quarterly results. Since the economic crisis, siren voices around the world have started to denounce short-termism and its negative consequences. Fresh research from the Hudson Center for High Performance concluded that short term business measures taken to meet performance targets fail to produce lasting results.

Servan-Schreiber, also noting the negative impact that the short term pursuit of shareholder value can have on companies sets out some principles for rebuilding a longer-term focus. He advocates progressive human relations policies that reflect the company’s values and provide genuine development opportunities for employees. A commitment to training employees helps them develop their talent, leads to higher levels of motivation and a greater sense of purpose.

Family-owned businesses are often regarded as being able to take the long view and are keenly aware of the importance of handing their firm on to the next generation in a healthy state. They often consider all their stakeholders, not just a selected few, and make employee motivation a priority. Now we are beginning to see non-family firms following this lead, with the best balancing the short term imperatives of performance and survival, with a focus on a long-term vision, and a genuine sense of stewardship that takes into consideration the interest of all stakeholders.