"It's all about the balance between continuity in the business and harmony in the family"

The strength of family business and its importance to an economy is widely praised. The family business is a success. But what about the 'behind the scenes' of all these success stories? What is 'the real story'? Because where people work, there are strong emotions.

It seems that within the family, the emotional factor plays an even greater role than in a non-family business. Emotions can be a source of strength, but also a source of conflict. Why is one family business able to handle these emotions, whereas another family business becomes a victim of their emotions? In short: what is the psychology behind the family business? Joost Vat, Family Business partner at BDO, gives us an insight, in anticipation of the BDO Family Businesses Congress taking place on October 13 at Theater de Kom in Nieuwegein, the Netherlands.

"Nationally, 60% of companies are family businesses and in the Dutch horticultural sector, the percentage is even higher. BDO has been established for 80 years now and has largely focused on family businesses," begins Joost. "We can, of course, address the issues that arise within families in a very substantive and technical way, but if we were to focus only on that, we would go wrong. Then you disregard the dynamics of a family business with its family bonds and emotions. Therefore, it is always an important skill when working with family businesses to find the balance between the continuity of the company and the harmony in the family."

"Characteristic of a family business is that it does not look at the next quarterly figures but to future generations. That makes you look differently at things like land holdings and investments. On the other hand, you see that in many family businesses, they say they are looking at the long term, but that they don't talk about things like succession. In practice, they often leave it too late. That may be because they find they are having too much fun to think about it, sometimes with the result that they are hit with a succession of health problems. Or sometimes they talk so much about succession that children have to fit in with it or so little that children no longer identify with the business," says Joost.

"The situation that the successor is not considered as capable is another classic example. These are very difficult cases, in which a conflict of roles occurs between the director of the company who is also the father of the son or daughter," continues Joost. "Also, partners often play an important role in a family business. They have no blood relationship, can sometimes view other things as more important and are also often seen as troublemakers. At the same time, the family must also realize that partners do not just present problems. If the children are the future of the business, they are, after all, also the children of the partners." 

"We always recommend making such difficult issues discussable so that the family can form an opinion. This can be done by a family agreement or mission statement about the company and the relationship between the family and the company. It sets out how the family views the sale of the business or the role of family members in the business. If a situation then arises, you can fall back on the agreement, rather than the emotion of the moment in order to come to a decision."

"Our role in this is not to say what should or shouldn't happen, but to put a process in motion, so there is a certain development in the process. We can even create a certain objectivity in what the company needs and if that is feasible. These can sometimes be painful questions. The trend is that there are far more family-controlled enterprises emerging, in which the family owns the business, but does not actually run the business, instead of the family-run enterprise like we are used to. But that also brings with it new challenges."

"During the BDO Family Businesses Congress on October 13 - aimed at all of the family, the family behind the scenes and directors of family businesses - we will not talk about technical or fiscal issues but rather about such sensitive issues. Speakers are Koos van Oord of dredging company Van Oord and Risco Balkenende (non-family member) from the company Breman. These are two wonderful examples of family businesses that have a clear vision translated into structures and agreements, resulting in calmness and clarity," says Joost, enthusiastically. "Last year, we published a book about the oldest family businesses in the Netherlands, which had already passed on the baton to the next generation ten to twelve times. This year, we have published a second book about the DNA of the biggest family businesses and that will be launched during the congress.

You can still sign up for the BDO Family Businesses Congress via www.bdofamiliebedrijvencongres.nl. You can also find more information there about the complete program and the speakers.

For more information:
Joost Vat
BDO
Partner
Organisatie Advies/ Adviesgroep Familiebedrijven
Tel: +31 (0)30 284 99 60+31 (0)30 284 99 60
Joost.Vat@bdo.nl