Family businesses are a stable and often underserved market segment for
accountants. To provide comprehensive and strategic services to this market,
professional advisors must have a deeper understanding of the complex family
business landscape. This article will provide background and a recommended
starting point for strengthening an advisor’s ability to serve family businesses
more thoughtfully.
Becoming
Strategic Advisors
By Wendy Sage-Hayward and Michael Louie
The Complexity of Family Enterprise
Advisors who work with family businesses already know
how different they are from non-family businesses. The
family business environment is layered with complexity; it
is an environment that integrates the private, emotional,
and traditional world of family with the public, objective,
and adaptive world of business. Individuals who belong
to a family business wear many hats. An individual family
member can be a brother, boss, father, shareholder, director,
and CEO all at once. It can be confusing and difficult to
determine which hat to put on for each decision.
Despite their complexity, family businesses thrive all over
the world. In fact, research highlighted in the Journal of
Finance indicates family businesses outperform non-family
businesses in most countries. However, this complexity
also has its challenges – one of which is succession to
the next generation. Advisors to family businesses are
in a unique position to assist families in this transition.
However, it is imperative that they move beyond their
traditional, single-discipline approach and consider
becoming more strategic in how they work with families
in business.
their services from those of their competitors. To do so,
accounting professionals need to work to become a
client’s trusted strategic advisor. Strategic advisors offer
much more than the traditional services performed by
accountants such as preparing financial statements and
tax returns. Strategic advisors look and plan ahead rather
than looking to the past to address issues. However, this
represents a significant change in perspective for many
accounting professionals.
For accountants who have successfully established this
type of client relationship with a family business, being
a strategic advisor is professionally satisfying. More
importantly, this approach builds a long-term relationship
where the client will begin to request input and guidance
on aspects of the business outside of tax and accounting.
Moving from a Traditional Accounting
Role to a Strategic Advising Role
A framework that can help accounting professionals
shift towards this strategic advisor role is called the Three
Circle Model. Featured in the Family Business Review, this
framework is deceptively simple, yet offers an informative
starting point to lay out the complexity of the family
business environment. The circles provide an organizing
structure for the challenges of a family business operating
with three integrated and interacting subsystems: the
family, the ownership, and the business.
The business of accounting is becoming more competitive
in most markets. In order to flourish, both professionally
and fiscally, it is important for accountants to distinguish
Given their professional training, accountants typically
provide advice in one part of the family business system
– the business or ownership subsystem. When an advisor
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