TRANSCRIPT
Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.
2CC Canberra
Subject: National Family Business Day
Leon Delaney
Today is a very important day. It is the 19th of September, which happens to be National Family Business Day. And who better to celebrate family businesses than the Australian Small Business and Family Enterprise Ombudsman Bruce Billson. Good afternoon.
Bruce Billson
Woo hoo to you, Leon. What a day to celebrate National Family Business Day.
Leon Delaney
Absolutely.
Bruce Billson
We should get around it and recognise what a vital contribution family businesses make to our community and our economy. And today is the day.
Leon Delaney
Today is the day indeed. Of course, it's often said that small business is the backbone of the economy, but how many of those businesses are actually family enterprises?
Bruce Billson
Well, the rough estimate is around 7 out of 10 businesses. There has been some effort to refine the data collection on that, but that's the rough estimate. And of that, 40% are run by a couple. So, you can really bring the family into family business. And then we also recognise some of the businesses are quite substantial. When you think about some of the leading names, Smorgons, Linfox, you know, Cooper's Brewery, they're very prominent and very substantial family businesses. All the way through to, you know, a tradesperson on the tool and maybe the partner doing the books and the accounts contributing significantly recognised in our data. But in many other countries that contributing family member isn't cited, at least we recognise it. And that's an important economic unit, that family business.
Leon Delaney
I suppose it could be argued that the Murdochs are a family business, but that's kind of not the scale we're looking at, is it? We're looking more at the hard working mum and dad, aren't we?
Bruce Billson
Well, no, we're looking at both, but I thought I wouldn't go there to begin with, Leon. I thought there's so much good quality content for your listeners in that area. But what we've seen recently with the arm wrestle over the trust and who's got control as the leadership of Fox and some of the other businesses moves into the next generation. That's precisely, albeit on a very grand scale with lots of extra digits on the end in terms of the sums of money involved, but that's one of the big challenges that family businesses face. Succession planning. You see, the business leaders are thinking in a multi-generational way. They hope the next generation wants to be a part of that business and carry it forward. But you know, the contemporary questions are, will that next generation bring the skill sets? Are they interested? Are there things that the business might expect people do before they come back into the business? And then the other one is, what do you do with people who marry into the family. These are some of the really big challenges that go to the human nature and the relationship dimension of a family business. What's good for the business? Is it good for the family? Vice versa. And that's an interesting road to navigate.
Leon Delaney
Yeah, and of course, the other challenging one is what do you do when nobody in the family wants to carry on after you've gone? They think, no, I'm not interested in that. I want nothing to do with it.
Bruce Billson
Well, you and I've talked before about how, in a lot of cases, the generation that built and grown the business is hoping the next generation will take it on. In some cases, if you're a younger person, you're battling to find enough money to maybe get on the housing ladder, how are you going to find some funds to reward, you know, your parents for maybe 30, 40, 50 years of work? Do they just hand it over, or is there some recognition and some dignified retirement they can enjoy? Because that's another thing, too. We see people tend to stay working longer when they're in a family business. About 13% of workers aged over 70 are still busy beavering away and contributing to that family business. So, there's a lot in that. It's a deeply personal thing as well as a commercially challenging environment where, you know, the dining room table can become the boardroom table and some of those atmospherics might intersect with one another.
Leon Delaney
Well, that's right of course, family dynamics can be challenging. And then when you add business to the mix, that can be even more volatile.
Bruce Billson
Absolutely. And you touched earlier. What if some members of the family want to contribute but others don't? How do you manage reward and wealth transition? Or do you say, well, you sit it out, you sit it out. But if you want to benefit from all that the families worked for, how can we make sure that's fair so that those really driving the business see, you know, a reward for their effort. Whereas others, you know, may be cheering on from the sidelines, but less involved. How do you, how do you keep the family feng shui in a neat place when there's some, you know, really challenging conversations there? But that's the key, Leon, communication, these family businesses. And for us today, it's about celebrating that extraordinary contribution.
Leon Delaney
All right, but let me raise, you know, a fly in the ointment. In many family businesses, traditionally, members of the family have been expected to work in the business, sometimes with low or even no wages, just because they're expected to be part of the business. They're expected to make a contribution, and if cash flow's a bit slow, they're expected to take the sacrifice. Are business operators running afoul of the law if they expect their own family members to work for free?
Bruce Billson
Well, there's a lot in that because a couple of examples are where the family decides to all work together, but there's a single income stream coming in. And that's what that contributing family worker looks like. I mean, there was a, a convenience store network a few years ago that ran afoul of some of the workplace relations requirements. And then a couple of the kids put their hands up saying, hang on, I didn't get paid for mopping the floor at that business when I came in after school. So, it got a little bit, a little bit funky. But that's where conversations are so vital. You know, what, how do you explain to a young person, look, you know, you're investing a bit of time and gaining some knowledge about this business before having every possibility to be taking it over and running. I've seen examples where people just, into their teens are invited into the family business boardroom to understand what's going on, to ask questions. Clearly others are making the decision, but they're trying to build up that knowledge.
In other examples and particularly in Europe, they want the family member to leave, go and find their own way. So, when they come back into the family business, they're bringing new skills, new insights, new capacity, rather than just relying on the knowledge that's already in the business in a changing economic climate.
So, Leon, you're fly in the ointment. You are astute as always on this Friday afternoon. That is just one of a number of issues. But the upside is usually these businesses have a longer term planning horizon because they're thinking about the next generation. We often see whether it's ESG and other reporting requirements or that's already embedded in the family business because they are part of the community. They want to make sure the business is durable and they want people to see that they're making a valuable contribution to society as well. These are all part of some of the motivations and that's why family businesses deserve the National Day.
Leon Delaney
Yeah, absolutely. And of course, the other thing, of course, anybody running a small business might find themselves a little bit, well, they might find themselves a little bit isolated, might feel that they're in this on their own. And a family run business could also fall into that situation where they feel like it's them against the world. But fortunately, you've pointed out, there is an organisation called Family Business Association which also provides a sense of community for family business operators.
Bruce Billson
Oh, they do awesome work. And a shout out to the CEO, Catherine Sayer. They've got some great program to help navigate succession planning and some of those family dynamic issues. Another part of their work is to bring together, say, the chairman of the board or the chairperson of the board, to see how they're navigating those family dynamics and keeping an eye on the business. A lot of the very, much larger family businesses have set up family offices, almost like a separate entity that manages and runs the business and then the family members get involved in shaping strategy. That's all part of the learnings and insights that are shared through Family Business Australia. They're doing some great work there. But, you know, navigating a particularly unique set of challenges in what, for many, has been a pretty challenging environment.
Leon Delaney
Well, it certainly has. And Bruce, it's always good to catch up. Thanks very much for chatting today.
Bruce Billson
Great to be with you and your listeners, Leon. Have a super weekend.
Leon Delaney
Thank you. That's Bruce Billson, the Australian Small business and Family Enterprise Ombudsman, on 2CCC.