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Business Advisory Boards
Their role in the family farm
Bill Winter
Boards in Family Owned andFarming Entities
Help or Hindrance ?
SAMPLE
• Agribusiness - Dairy, Piggery, Cattle• Regional Food Company • Rural Engineering Company• Sand and Soil Supplies• 8 x Regional Business $5 – $20
million• Regional Construction Co
Farming Families
“WE ARE THE CUSTODIANS FOR FUTURE GENERATIONS”
Only one third of family business use a formal board of directors or an
external advisory board
(survey KPMG/FBA )
“THOSE WHO HAVE AN ADVISORY BOARDOUT PERFORM THOSE WHO DON’T”
PwC / MGI / FBA
Why a Board ?• A board of Directors is defined by its legal
responsibility
• Section 198 of the Corporations Act 2001 states “the business of a company is to be managed under the direction of the directors”
• The responsibility is shared by all directorsAre dad and mum on the board ?
Your sister or your kids?
Your mates ?
It does not matter what size you are. Or, if you are an active or a passive director
The Corporations Act 2001 applies to all directors
Shadow directors ?
The Key Challenge for External Advisors
How do you help implement governance, compliance and business disciplines and still maintain the family vision,
culture and core values that got them to where you are today ?
FAMILIES IN BUSINESS
BOARD ADVISORS STAFFOWNERS
A BETTER CHANCE OF SUCCESS
Four key essentials for family business long term success
• Business advisory committee
Four key essentials for family business long term success
• Business advisory committee
• Succession plan
Four key essentials for family business long term success
• Business advisory committee
• Succession plan
• Business plan
Four key essentials for family business long term success
• Business advisory committee
• Succession plan
• Business plan
• Buy & sell agreement
WHERE will you bein the future?
HOW do we get there?
What will you look like ?
This is what’s known
Strategic or Business
Plan
Review Measure Change
Dealing with boards does not come easily to most family business founders
A board will inhibit their ability to make
decisions
They cannot come to terms with the changing
business compliance and risk management
environment of the 2000’s
AREAS OF CONCERN
•Corporations Act 2001
•OHS legislation
•Fair Work Australia 2009
•Competition and Consumer Act 2010
•Privacy Act
•Environmental Protection Act
•ATO
•Industry Code of Conduct
•ASIC
•Dangerous Good Act
•Equal Opportunity Act•Disability Discrimination•Race Discrimination Act•Equal Opportunity for Women•Sex Discrimination Act•Health Records Act• Human Rights and Equal Opportunity•Whistleblowers Protection Act
Family members don’t take kindly to advice
from outsiders
Family and business issues should not be
shared with
nonfamily members
Case Study
Quote : “Why We Recruited NEDs”
• Good governance
• Umpire
• Ensure sustainability of our business
• Transparency
• Attractive to prospective employees
• Flexibility
Benefits for the 2nd Generation and Beyond
• Wise counsel – Impartial
• Ask the hard questions
• Focus on issues not personalities
• Long term strategy planning
• Credibility with financiers, Govt, marketplace
Non Executive Directors
What have they brought to our board?
• Can be more objectively critical
– Can be critical on family performance - family can be protective of each other
– Can provide opinion that is solely in the interests of the business and not influenced by family matters
Non Executive Directors
• Specialist skill sets we needed
– If you’ve got a Non Exec of the right skill set, can provide knowledgeable, clear and sometimes alternate thinking
• Added expertise in our core business
– Added an outside experienced view to our internal views and experience
– Gave us a foot in the butt when needed
Non Executive Directors
• Sounding board for ideas
– Family can use to think through ideas – are we getting carried away with ourselves?
– Very helpful in strategic planning
• Assistance in family conflict
– An independent thought in family discussions
– Family reporting to family,
i.e. performance reviews, salary reviews, promotion, career planning
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