Thinking about going into business with family? In today's episode are joined by Russell Haworth, a specialist business advisor. Make sure to tune in to get tips on how to create an environment with your family within your business that can create success.
Being in business with family members can bring an array of challenges as a result of emotional elements and the sense of purpose that often come with it. We welcome Russell Haworth, a specialist business advisor who helps families to define what success looks like to them and then help to create the environment within which that can be achieved.
Russ Haworth’s Company - The Family Wealth Business
Russ Haworth’s Podcast: The Family Business Podcast
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Unknown Speaker 0:01 The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.
Christian Rodwell 0:19
Welcome to Episode 86 of wealth talk. My name is Christian Rodwell, the membership director for wealth builders. And I'm joined today by our founder, Mr. Kevin Whalen. Hi, Kevin. Hello, Chris.
Unknown Speaker 0:29
Good to be with you. Again, an interesting topic today.
Christian Rodwell 0:32
Yes, focusing on business pillar this week, and in particular families in business. And we know Kevin bobbsey, from our members that one of the main reasons for people wanting to build wealth is to build and leave a legacy for their family. So it's no surprise really that many businesses are with the involvement of the family. But that can be good sometimes. And also, it can have its downsides, which is what we're going to be focusing on today.
Unknown Speaker 0:59
Yeah, being in business with family is very popular, isn't it? I mean, the vast majority of SMEs, you know, evolve some form of familial connection. And it's easy to see why, you know, the husband or wife decides to set up the company, they want to get it started. So they rope in family members to do certain things. And then, you know, they often will continue in other family members join in because, as opposed to, they can easily do something when they're kids, and then they get involved in doing it as adults. But as we know, you know, they often say blood Blood is thicker than water, don't they? But part of the challenge with that is there's often no documentation at all. So you know, it's almost happens by accident, not by design. And as a result, it can be very difficult. If either values change, relationships change. You know, kids want to go off in different directions, or even want to build another business or a separate business, your attentions can can get involved. And I think that's what our guest today specializes in being more of a consultant to help businesses not just to defuse issues, but really to help them plan with great skill, not dissimilar, Chris, to the idea that we espouse in wealth program, which is the family wealth business. So creating an idea that you're creating wealth for the whole family, as opposed to it being a business in itself. So very similar things,
Christian Rodwell 2:36
I think. Absolutely. So our guest today is Russ Haworth and Ross has been working in family business area for 15 years now he really has a passion and holds the advanced certificate in family business advising. So certainly a man we've experienced and and has encountered all kinds of different scenarios. And of course, there's many issues when it comes to family businesses about you know how that would be passed on and best ways of discussing with the young generation, whether I guess they wish to continue with the business or whether you know, it perhaps leads to a sale. So many, many different areas that will be discussed today. Hmm.
Unknown Speaker 3:15
It's interesting to me, because that made me smile. And I thought, wow, there's a there's a proper qualification for this, you know, is almost like, a no, you and me like a good movie, Chris. So you know, when you think about family business, you think of movies like The Godfather? And, you know, they had a consigliere, you know, somebody who was a trusted guide. And I think that's kind of what Russ tends to do, isn't it sort of act as a guide, sort of between the family members, because he's not embroiled in the relationship, or even just involved in the relationship if there's no tension, but tension so often do happen. And I think he says, In the podcast, Chris, that often the starting point is there is tension. And that's why the family are asking for help.
Christian Rodwell 4:02
Okay, talking about relationships. We've had a wonderful review this week come in from Paul on trustpilot. So if I read this out, and Paul says, he's been a client of wealth builders since 2017, and he's enjoyed the great benefit of knowledge and education that he's been able to access during this time, not only from Kevin and the rest of the wealth builder team, but also from the fabulous content within the weekly podcast that he looks forward to each week. And he continues to say that my SAS pension is fully deployed and diversified. And in great health. I've actually just come off the phone with Kevin, who cared enough to contact me personally, to discuss a query that I posted on a group chat just last evening. Now that is what I call great service. Thank you, Kevin and the team, keep up the excellent work.
Unknown Speaker 4:50
Very nice, very nice, Paul and a very nice guy too. So thank you so much to Paul for being so generous and sharing. And you know, it's interesting That, when you focus on the relationships with people not focus on the transaction, you tend to get this sort of comment down you because this wasn't born out of a need to make money on something, he posted something which I thought there was possibly an alarm bell that I wanted to raise to keep him safe, gave him the benefit of my knowledge on that subject. And I'm pleased to say he acted on that council that constantly arion me came through, and he decided not to pursue that action, which I think would put them in harm's way. So that's just as important, you know, not to do things as opposed to getting advice on what to do. So anyway, thank you, Paul. I appreciate it.
Christian Rodwell 5:46
Okay, so let's head on now. And listen to our conversation with Russ Haworth. Russ, welcome to our talk.
Unknown Speaker 5:54
Thanks for having me, Chris. How are you?
Christian Rodwell 5:56
I'm very good. Thank you. I'm really looking forward to today. Ross, it's a different topic that whilst we talk about this, at the beginning of our program, the seven steps to wealth, we talked about creating your family wealth business. Now, we're not talking about setting up a company or anything. But of course, in real life, this is the reality. Of course, many people either purposely set up business with their family or accidentally kind of find themselves in that situation. So looking forward to finding out about the complexities around this. And of course, you're an expert in your field, Russell, so why don't give us a little bit of background as to how you got going with all of this.
Unknown Speaker 6:32
Yeah, so I am a family business advisor. But I haven't always been a family business advisor, although I have always given advice to family businesses. So my background is I started in financial planning and wealth management, and did that for about 15 years, and found myself working predominantly with family owned businesses, because they make up nearly 90% of the UK SME market. And so just by default in the market, I was operating and I tended to work more with family and business, not what I found was there was an awful lot of work that can be done in helping business owners and family business owners become financially independent. But alongside that there is a need for them to also become emotionally independent of that business as well in order to allow things like succession planning to happen, where you're passing either leadership, ownership or management on to the next generation. And so I decided to write a book which has never been published. But it focused on the elements of succession planning that are often ignored, which has so many emotional elements, a sense of purpose, loss of identity, that kind of thing. And that opened up my eyes to a world of family business consulting. So I put myself through what's known as the advanced certificate and advising family businesses, which is a certification based in the States. And since then, so the last four or five years or so I've been giving, consultancy, advice to family owned businesses, as well. And come April this year decided that that would be my full time role. So gave up the financial planning side, and now focus entirely on working with families in business, and effectively helping them navigate the complexity that comes from being in business with your family, which, as you say, sometimes happens accidentally.
Christian Rodwell 8:27
Yeah, I guess, you know, many businesses are set up out of identifying a problem, right, that exists out there. So do you find that people come to Ross because they've got a problem, or they coming because they're understanding that, you know, they're going, they're entering into a long term relationship here in business, as well, as you know, in family, and they know that from the beginning, it's important to lay everything out so that in the worst case scenario, you know, they're not going to hit real issues later on.
Unknown Speaker 8:59
it more often than not, it's the first version they come in, because they've had a pain point. And they don't really know where to turn or where to look. And if you consider that you, you have a tax advisor to help you with tax stuff, you have a legal advisor or solicitors to help you with legal stuff, and you have financial advisors to help you financial stuff. There's not many of us that are out there to help advise on the family dynamics. And there's often the family dynamics that has a bigger impact on the other stuff than anything else. Because most of the other stuff is based in logic. So, certain share structure or certain legal arrangement will be based in logic. Whereas what we're talking about with family dynamics is based in emotion. And when those two collide, it can create challenges and tensions within the family business. And my role is to go in and facilitate those conversations that are perhaps too difficult to have on their own because all of that emotions involved so normally, it's a point where They have realized that there's this tension but don't really know who else to turn to. That being said, I am seeing more now that people are being aware of the challenges that can come from being in business with your family. And being more proactive around finding solutions for that. And something I think we'll get onto in in a bit is the role of governance in that, and families are starting to see actually, it doesn't mean we don't like each other or don't trust each other, if we put things in place that deal with the bad side of stuff, doesn't mean it's gonna happen. It's like having a will, just because you've got a will doesn't mean you're then gonna die. So it's the same sort of stuff, putting this governance stuff in places to help you performance and enhance your performance as a family, rather than create permission for things to go wrong.
Christian Rodwell 10:52
Okay, so before we dive into some of those areas, then Ross, just so our listeners understand, you know, what the issues are, if they don't address these, I mean, you've been in this business for 15 years now. So
Unknown Speaker 11:05
that the primary or the biggest example, I guess, is succession planning. Now, when you talk to a lawyer about succession planning, they're talking about when you die and pass on and what happens to your estate, succession planning within a family businesses, what is happening to that business, whilst you're still alive, hopefully, because you don't necessarily want it to be left until you die, because then it's out of your control. It's left to whatever's happened in your world, when you're not there to kind of enjoy the fruits of your labor so much. But But in terms of succession planning, for example, a prime example is saying, Let's lump everything in together when we talk about succession. So are you taking on the ownership of that business? Are you taking on a management role in that business? Or are you taking on a leadership role in that business as part of your succession plan, and very often, they're all lumped in together. And that can be really complicated to deal with. Because ownership means something different to management. And there's a really handy model, which is difficult to articulate on our on a podcast, if you imagine a Venn diagram with three circles. So the first two circles are present within any owner manage business. And you've got an ownership system, which is where you're making decisions as a business owner. And then you've got a management or business system where you're making decisions as an manager or director within that business. And sometimes they overlap and create conflict, because what's right for the management side of it might not be right for the ownership side of it. So that that creates some complexity that needs to be managed. If you overlay that with a third circle, which is family circle, and not the box of biscuits, you get out of Christmas, but a family system that sits over the top of those two circles, you've gone from a model with three sections and a degree of complexity to a model with seven sections and a far higher degree of complexity. So you might have non family si family members who don't own or work in the business, who are able to influence that business. So spouses, for example, of people who own and run family businesses can influence those businesses and having a set of rules that governs that family system that says this is why we own the business, this is what it is intended to do. Here's who can own shares, here's a route to management, you know, you have to go through a particular Management Development path to get to that level within the business. That's what we refer to as governance in the in the family business consulting world, having those in place helps to smooth out the potential for tension within that family business. Because otherwise, a lot of it is based on assumption. A lot of it is based on the informality that exists around families when they're managing wealth or a business. And so having it written down kind of takes the personal side out of it a little bit, because you're not pointing fingers at each other saying, Well, I think this should happen. I think that should happen. You're having a discussion and creating it one instruments called a family charter, which documents everything that the family stands for, what their values are, what the vision of the business is, who can own it, all that kind of stuff is included in a family charter. So having the things in place again, doesn't mean that you know, someone's going to come in and stop people doing what they want to do. It just formalizes and enhances what's going on within that business.
Christian Rodwell 14:34
Yeah, so I like the sound of that. So it may well be people listening right now, Russ, who, you know, may just be husband and wife in business, you know, that that kind of situation and everything's taking along perfectly well, so far, you know, what would be just the minimum steps you would say to someone like that right now, just to make sure that they've got a document and that, you know, some kind of agreement what would be those first steps.
Unknown Speaker 15:01
So typically, with a husband and wife team, what would generally happen is you'd have a 5050 split on those shares, because that makes sense from a tax perspective, because you can split dividend and income from that business. But what's important to have is a shareholders agreement. So their shareholders agreement formalizes how people can get rid of shares, for example, and puts a formal legal structure around the ownership, what happens to those shares on death, what happens to those shares on divorce, things like that, because otherwise, again, it's that lack of formality that often exists at the early stages of a business, because let's face it, you've got far more important things to be dealing with, than creating formal legal structures that deal with when things go wrong. You've got a business to build, you know, you're doing it out of a passion, you're doing this out of something that's driving both of you been having those discussions around a shareholders agreement, which be with your lawyer, to formalize that structure means that you're then protecting yourselves against future disputes. A prime example of that is, again, it's very stereotypical, and it sounds very sexist, but it is very common is a husband will start a business, and the wife will be a 50%, shareholder. And then if later on 510 years down the line, there's a divorce, those shares should be split 5050. Now that can have very damaging effects on the business itself, because the the business assets might need to be sold in order to pay out those shares. You've got to create that kind of thing. And it can be really troublesome. So it's, it's having those conversations at the beginning to say this is what if we hope nothing bad happens, but if it does, let's have an insurance policy against it. And let's have have something formal in writing that outlines how it's all dealt with the benefit of doing that whilst things aren't going wrong, if rather than looking at it from the point of view of Oh, he or she doesn't trust me, which is why we're having this conversation. Look at it from the point of view, as we trust each other implicitly. That's why we're having this conversation. We're having this conversation because we really trust each other. And we know that we're going to enter into these agreements in good faith. And therefore it helps to make that a smoother process as well. But I in those early stages, I would get those formalities done. What one other thing on that side of it is, I would also suggest that you create clear boundaries between your business and your relationship. Because it can be again, really easy if you're in business, with your spouse, for everything to just be taken up by the business. And that's, you know, that can be damaging over the long term to relationships and people's perspectives. If you're just talking about business 24 seven, then you're you're forgetting all the other important stuff.
Christian Rodwell 17:51
Yeah. Now, one of the other most wonderful tools in the wealth building toolbox is SAS pensions, which I know you're familiar with, as well, Ross. And of course, you can have, you know, your whole family and as trustees there. And so perhaps, you know, if we could touch on some of the areas, perhaps around governance, around SAS as well, Russ,
Unknown Speaker 18:12
again, is a big sweeping statement. But something like a family charter or family wealth charter is dealing with wealth rather than than a business just kind of outlines. It's not legally binding. So it's not something where you have to have all the legal wording, it can be in the family's own words. And it just outlines why you're doing something. And it sounds very straightforward, but 510 years down the line, it can be really easy to forget why it was that you went into this in the first place, be that assess be that a business be there any form of collective activity with the family. So by having something like a family chart or family wealth chart that outlines why something exists, what happens if, who do we include as family, for example. So our spouses family, our adopted children, family, our stepchildren family? You know, family situations are getting more complicated anyway, because there's an increase in numbers of divorce and remarriage is and blended families and things like that. And rather than allow, you know, chance to happen, where there could be some conflict, laying it all down in a document means that actually you you've dealt with it, and it's a living thing, you refer back to it and go well, actually, our family wealth charter says only family members direct bloodline can be trustees on this or only bloodline, or everyone can benefit from the sort of production of this wealth. And so having those discussions is the important part, not the actual document. It's the discussions it's opening those up and if it's too difficult to have in person, just one on one or the family all together. Having those facilitated makes a big deal. as well, because it removes some of that tension.
Christian Rodwell 20:02
I'm talking about discussions. Ross, I know you have your own podcast, and the family business podcast. So are there any recent discussions that that have stood out for you, and maybe one that you could share for our listeners?
Unknown Speaker 20:15
Yeah. So there's one that I actually recorded last night. So it's not come out yet. But But I'm sort of teasing it. It's a guy who has released the world's top selling family business book. And his argument is, you should never ever gift wealth. And there is a very compelling argument when you listen to what he says is, for example, with a family business, if it's been passed down through generations for no real consideration, it's just the shares are passed on in an efficient way, or they're dealt with in an efficient way via the legal and tax structures. His argument is that you lose the drive and impetus to try and get that business to succeed, which is why family businesses have allegedly very poor succession rates. Now, we ain't got time to get into a debate on the succession survival statistics on family businesses. But the there is the statistic that there's 30% make it from first to second 13, from second to third and 3% from third onwards. Now, you compare that to any other business, and they don't tend to survive more than 100 years anyway. So it's not a direct comparison in there. But in order to help businesses survive, have that conversation around should we sell the business to the next generation at full market rate? or sell it to an external? buyer? That's it. That's his argument. And it's a really interesting conversation that's coming out on the 18th of December. So depending on when this one's released, either keep your eyes open for that one, or go back and check it out. But yes, it's it's a really interesting discussion around gifting wealth
Christian Rodwell 22:05
through that sounds great. And we'll we'll definitely share that one for a Ross. So you talked about selling there. So do you get involved up to the point where there are some businesses that you know, they simply just want to sell? And what's your relationship in that part of the process?
Unknown Speaker 22:21
So so what I do is I work with the family system. So that will be everyone that works, who is a member of the family who works in a business owns a business or can influence that business. So that means if it's owned by same mom and dad, and has been passed down from their parents, and they've got three kids, and they've got spouses, I work with all of those individuals to help improve their relationship with that family business and communications are a key factor there, in that they will invariably not have the right communication forms in place to make sure that there's again, no Chinese whispers or he said, she said stuff going on within the business. But But in terms of the sale, I can then be involved after the sale in helping them decide what to do next. So what what do they want to do as a family? What do they stand for as a family, what impact they want to have with the proceeds from that sale, if they're financially independent, as a result of that sale and want to do something different, that gives them a sense of purpose and a sense of well being, then we discussed that as well. So although there's a business at the center of this, and I'm a family business consultant, I work with the family system to help them understand what it is, it's really important to them in owning either that business as an asset or something else as an asset.
Christian Rodwell 23:47
And Russell, with this being such a personal relationship based business, I'm keen to understand how has this year affected that we've obviously us not being able to get together, you know, in person?
Unknown Speaker 23:59
Yeah, I mean, it's had an impact. I can't deny that. But the beauty of technology as it is, and and the beauty of human endeavor and ingenuity is that we will adapt to most situations pretty quickly and pretty well. So I've moved a lot of my consulting to online using forums like we're using now, which is zoom, or teams or Skype, or whatever the technology is there that can be used to help facilitate those discussions. And whilst it's not as good as being in the same room, looking into each other's eyes, we are still able to see facial expressions and movements and body language to a certain extent. So that helps in in some ways. in other ways, it's actually enhanced what I do because I've now had people get in touch from Australia, from Kenya, from America, who are saying, Well, if we're gonna have to deal with somebody online that expands where we can do our market research anyway. So there's no reason To stop us, if it's in, you know, 500 yards down the road or across the other side of the world, we have to use video communication. So we might as well look beyond our own doorstep. And that's helped in in some ways. But hopefully there's a light at the end of the tunnel. And we'll be back to face to face stuff before we know it. But for the time being, the technology is allowing me to do what I need to do.
Christian Rodwell 25:23
I guess then to summarize, Russell, if there are some top tips to leave listeners on, when it comes to the subject of families in business, what would those key areas be?
Unknown Speaker 25:33
So probably two main key areas, the first one being communicate, make sure you communicate with each other. And if there are taboo subjects, if there are elephants in the room, if there are things that you are concerned about raising, because you don't want to upset or don't think that there's this sort of safe environment to be able to do that, without a causing tension, look to an external facilitator to help come in and host those. So communication is a very, very big tip, make sure that's effective. The second one is to ensure that there are the relevant boundaries between family and business families are a very precious unit, they're a very special thing we don't get, you know, another chance to come back and have a different family. And some people might think that's a good thing or a bad thing. But generally speaking, your family is a very, very precious unit. And letting a business or an element of worth getting in the way of that can be very damaging. And it's often not until it's too late, that people realize that they focused on the wrong thing. So make sure there's relevant boundaries in there. And you have time as a family doing family things, rather than just focusing on the business or the wealth side of things.
Christian Rodwell 26:48
Thank you for being a great guest today, Russ, and if someone wants to check out your podcast, or follow some of your, your writings online, where's the best place for them to go.
Unknown Speaker 26:57
So the podcast is called the family business podcast, it took ages to come up with the title. But if you search on iTunes, or Spotify, it's on there. And that is supported by the Institute for family business. In the UK. I also have a website, which is family business partnership.com. And there's details on there. There's a guide to governance and a guide to consulting on other people download and have a read of. And if you want to get in touch with me LinkedIn or Twitter, I'm more than happy to have conversations there, too. Thanks. Cheers, Chris. Thank you.
Christian Rodwell 27:34
It's very interesting speaking with Ross there. And matching. Kevin, it's, it can be very difficult when you start a business to think about the end, because who knows where that business might be in five years, 10 years, 20 years. And of course, if you're starting a business in your younger years, you may not even have a family yet. And so while starting with the end in mind is always good advice. Kevin, I can see the complexity here with the family businesses.
Unknown Speaker 28:01
You're absolutely right, Chris. And I think probably the point at which it makes sense, to begin to start a chart what what Ross calls the governance, but body really means is a set of rules and principles and documents. I think it's when you create that separate legal entity. You know, because when you most successful family businesses and you know, I'm assuming we can we can just list a few of those, you know, St. Louis was a family business. Marks and Spencers was family business, wasn't it. And you've also got Kellogg's, that's a family business. You know, many family businesses have continued on today. But they not owned and operated by the members of the family, they become very sizeable businesses and those who go on to do that they of course, it was their PLCs they have to have governance because it's required by law. But when you've got successful businesses that are doing well, but they're not going to be publicly quoted, then it's more difficult. But I would say that as soon as you've got the limited company status, you know, you've created the limited company and you've created the separate legal entity, then that's the time to put the shareholder agreements in place. And I like what he said about you know, the difference between you know, the relationships of owners of the business managers of the business and influences of the business not least you know, spouses and, and children as they grow up and so on. So, yeah, I like the sound of almost being kind of flexible, like we are with the family wealth business and create a charter, a story in your own words, you know, without the legal formality. But I think it goes without saying, and we teach us in our foundation when we talk to people on their wealth journey at the beginning, Chris to put their roof in place, you know, their wills, their trust the powers of attorney and sometimes they They look at us oddly and say, Well, why would I do that now, before I'm wealthy, we really got to do it now. So it's watertight. And then you build a stronger roof as you build your wealth. And this is, I think, the same way. So soon as you've got a limited company, take some time to talk to somebody about the creation of a set of rules around shareholders, and owners and influences and you know, how you're going to interact with each other? I think that's very, very wise counsel on behalf of us really,
Christian Rodwell 30:32
yeah, I can definitely see the reflections of what we teach within the wealth program as well, you know, there's rust talking about a business built on the values of you and your family and a deeper sense of purpose. And, of course, we've been trying the values within our document, which is the new declaration of financial independence.
Unknown Speaker 30:51
Exactly right. And the other thing, which you pulled out, Chris, and I think that was smartview, as well, was the concept of the SAS pension, you know, the thing that our members work and learn about so well, that language of the small self administered scheme, which is a family pension, so instead of a traditional pension, a vehicle for one person, you know, a canoe paddling against the tide of the stock market, you've got a multi purpose vehicle, a high powered vehicle, which involves the whole of the family and you know, up to 11, people can be involved in the SAS. So you got a real powerful way to build a multi generational tax free legacy, you know, that's tax free money as well, all protected, ring fenced from the company, separate from the company, but it can support the directors, it can support the owners, and it can support the family, because of the flexibility to lend money back to the company in, in whichever way chooses to use those funds. So it's very powerful things that perhaps some business owners don't know that they can build a whole Trust Fund, a huge Trust Fund, you know, a million pounds, give or take for each person in the family, you know, can be built through the use of the knowledge of SAS. So I hope that's a lesson that he would share more willingly, I guess, and also that our listeners pick up on.
Christian Rodwell 32:19
Now, Russ focuses his time helping others in business. But of course, he's running his own business. And it was interesting there at the end just to hear how he's pivoted this year with the conditions of the pandemic. And because it's such a relationship based business, he normally obviously sits face to face and mediates. But that's all done online now. And actually, he said that that has now helped open up opportunities across the world for him.
Unknown Speaker 32:46
Well, I think it's appropriate isn't it? If you think about families now, they could be family members who are the influences could be in a different country, if you've got a very successful family led business, you could have holiday homes in different places. And you could have family meetings on zoom instead of family meetings together. So I think you know, that's entirely appropriate, I believe you're off to the Canary Islands on you for 10 days to enjoy a pre Christmas warm up. But you'll still be doing, you know, some work on zoom in the normal way. So it's all about one of those freedoms, Chris has no freedom of location, freedom of relationship, all of those good things. So I think using technology to get leverage on that is good once you've got the trust. You know, I don't think there's any problem with that. And just talking about the pandemic, Chris, I think a brief reminder, because we've had some great feedback, haven't we, on the latest output we created called wealth in the second wave, so might be useful. I think, finally, I guess this is the last time to mention it before Christmas, then just let people know that they can download a copy if they haven't already done so. Well, I've just printed
Christian Rodwell 33:54
off the 47 pages, so I can read it on the fly, Kevin. So if I hadn't, I haven't taken in the lessons already, I certainly will have by the end of that slide. So yes, we've put together pretty extensive Guide, which covers all seven of the wealth pillars, and plenty more. And you can download a copy of that for free by heading to wealth builders.co.uk forward slash wealth guide, and we've had loads and loads of fantastic feedback. So I'm really pleased to hear that you're enjoying it. And it's seems to be really going down well. Hmm. And
Unknown Speaker 34:27
bombshell though I heard from Mr. Haworth, very interesting. That was a bombshell wasn't it? Never gift, the business. That's gonna stir up a bit of a hornet's nest for you business owners out there with your families. Because often the thought isn't it, that you build up money, you then pass on the money. And then the next generation enjoy the money and say thanks very much in the next generation, spend what's left and after three generations, it's all gone. And there's so much evidence to support that. I've talked about this before. Even different countries have different language for this shirtsleeves to shirtsleeves in three generations clogs to clogs and three generations, it tends to be an established rule, that if you give something that gift will dissipate over time, and will no longer be the family legacy that you'd intended if you were the pioneer and creating it. And I think there's something to be said about not gifting, but transferring wisdom, so that the family can either invest in the business continue the business so that they, they see themselves as a continuation of the value, you know, again, the set of rules and the set of guiding principles. And also to recognize that family members are never going to pay you a premium for the business. So in some cases, it's better to think about selling the business, either because the family members don't want to continue it, or they don't want to buy it, and then you get the premium. And then once you've got a premium, because an acquirer will pay a premium, because they want the value in their existing business, family members will never give you a premium. And then that premium means you've got more money, that you can either help people create a new business for themselves, or you can help create, you know, that new legacy where the substantial sum of money, which is often the biggest check anybody will get will be the sale of a business, particularly if that business is focused on a high level of recurring income, a very strong and identifiable niche, and the ability for the business to work without the family members. So the family members don't need to be working in it. And often, that's what's missing, isn't it there isn't that transfer, have the skills and making the business be able to work without the owners. And as a result, the family members kind of have to step in. And that can be a source of a challenge. So I would encourage family business owners to think about that. And as they're thinking about exiting at some point, you know, what's the best way to do that, and it might not be just to transfer the ownership to the next generation.
Christian Rodwell 37:12
I'm talking about next generation, Kevin, over the coming weeks, we certainly will be reaching out to the younger entrepreneurs out there, and those that are really trying to make a change in that world to bring financial literacy to, you know, teenagers, and we've talked about this on podcasts over recent weeks. And we've had lots and lots of interest. So we'll be inviting various guests over the coming weeks to to explore this further.
Unknown Speaker 37:38
Yes. And I think in our I suppose in our range of connections, now we've seen clients who've been touched by us in some way, Chris, one of our clients has written books for children of five to six years of age, almost financial fairy tales, to bring some lessons others have written materials for the sort of, you know, the, the 11 to 14 year olds and others for the 14 to 16 year olds in the best part of foremost is an extension of the the curriculum, isn't it the PS AG, if I remember the language, and so we're going to be bringing some people on for interview who are very passionate about giving children an alternative route to a career rather than the tried and tested assumption that you work hard in school, you don't cheat by sharing with anybody, you know, you do everything on your own, you then get a good job, or go to uni, get a good job, hopefully. And then you stay in a job, which nobody ever does anymore. And you build your wealth that way, when in fact, there's a whole way to build wealth isn't there entrepreneurially and teach people some of the entrepreneurial skills that they don't get taught in school at all. So we're hoping to be part of that movement. And if you're interested in that, let us know. So if you've got a particular skill or a particular interest, or you know, somebody who's interested in that, nudge them in our direction, tell them about this podcast, or the next ones coming up. And we'll be happy to build that library of good information to give your kids an alternative because not everybody's an academic and not everybody sees themselves in a job. So looking forward to those episodes coming soon.
Christian Rodwell 39:29
Sure. And if you have any questions at all from listening to us today, then send us an email Hello at wealth builders co.uk or join us in our free Facebook community. Just head to Facebook and search for wealth builders. And of course, if you're enjoying the episodes, then perhaps we would love to read out one of your reviews in the coming weeks and it's really easy to leave a review just head to wealth builders.co.uk forward slash reviews. All right, well, well
Unknown Speaker 39:57
done, Chris. So enjoy your time. topping up your tan and I'll see you sometime soon. And I look forward to the next episode of wealth builders quest and until then my friend See ya.
Unknown Speaker 40:12
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access. That's wealth builders.co.uk slash membershipUnknown Speaker 0:01
The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.
Christian Rodwell 0:19
Welcome to Episode 86 of wealth talk. My name is Christian Rodwell, the membership director for wealth builders. And I'm joined today by our founder, Mr. Kevin Whalen. Hi, Kevin. Hello, Chris.
Unknown Speaker 0:29
Good to be with you. Again, an interesting topic today.
Christian Rodwell 0:32
Yes, focusing on business pillar this week, and in particular families in business. And we know Kevin bobbsey, from our members that one of the main reasons for people wanting to build wealth is to build and leave a legacy for their family. So it's no surprise really that many businesses are with the involvement of the family. But that can be good sometimes. And also, it can have its downsides, which is what we're going to be focusing on today.
Unknown Speaker 0:59
Yeah, being in business with family is very popular, isn't it? I mean, the vast majority of SMEs, you know, evolve some form of familial connection. And it's easy to see why, you know, the husband or wife decides to set up the company, they want to get it started. So they rope in family members to do certain things. And then, you know, they often will continue in other family members join in because, as opposed to, they can easily do something when they're kids, and then they get involved in doing it as adults. But as we know, you know, they often say blood Blood is thicker than water, don't they? But part of the challenge with that is there's often no documentation at all. So you know, it's almost happens by accident, not by design. And as a result, it can be very difficult. If either values change, relationships change. You know, kids want to go off in different directions, or even want to build another business or a separate business, your attentions can can get involved. And I think that's what our guest today specializes in being more of a consultant to help businesses not just to defuse issues, but really to help them plan with great skill, not dissimilar, Chris, to the idea that we espouse in wealth program, which is the family wealth business. So creating an idea that you're creating wealth for the whole family, as opposed to it being a business in itself. So very similar things,
Christian Rodwell 2:36
I think. Absolutely. So our guest today is Russ Haworth and Ross has been working in family business area for 15 years now he really has a passion and holds the advanced certificate in family business advising. So certainly a man we've experienced and and has encountered all kinds of different scenarios. And of course, there's many issues when it comes to family businesses about you know how that would be passed on and best ways of discussing with the young generation, whether I guess they wish to continue with the business or whether you know, it perhaps leads to a sale. So many, many different areas that will be discussed today. Hmm.
Unknown Speaker 3:15
It's interesting to me, because that made me smile. And I thought, wow, there's a there's a proper qualification for this, you know, is almost like, a no, you and me like a good movie, Chris. So you know, when you think about family business, you think of movies like The Godfather? And, you know, they had a consigliere, you know, somebody who was a trusted guide. And I think that's kind of what Russ tends to do, isn't it sort of act as a guide, sort of between the family members, because he's not embroiled in the relationship, or even just involved in the relationship if there's no tension, but tension so often do happen. And I think he says, In the podcast, Chris, that often the starting point is there is tension. And that's why the family are asking for help.
Christian Rodwell 4:02
Okay, talking about relationships. We've had a wonderful review this week come in from Paul on trustpilot. So if I read this out, and Paul says, he's been a client of wealth builders since 2017, and he's enjoyed the great benefit of knowledge and education that he's been able to access during this time, not only from Kevin and the rest of the wealth builder team, but also from the fabulous content within the weekly podcast that he looks forward to each week. And he continues to say that my SAS pension is fully deployed and diversified. And in great health. I've actually just come off the phone with Kevin, who cared enough to contact me personally, to discuss a query that I posted on a group chat just last evening. Now that is what I call great service. Thank you, Kevin and the team, keep up the excellent work.
Unknown Speaker 4:50
Very nice, very nice, Paul and a very nice guy too. So thank you so much to Paul for being so generous and sharing. And you know, it's interesting That, when you focus on the relationships with people not focus on the transaction, you tend to get this sort of comment down you because this wasn't born out of a need to make money on something, he posted something which I thought there was possibly an alarm bell that I wanted to raise to keep him safe, gave him the benefit of my knowledge on that subject. And I'm pleased to say he acted on that council that constantly arion me came through, and he decided not to pursue that action, which I think would put them in harm's way. So that's just as important, you know, not to do things as opposed to getting advice on what to do. So anyway, thank you, Paul. I appreciate it.
Christian Rodwell 5:46
Okay, so let's head on now. And listen to our conversation with Russ Haworth. Russ, welcome to our talk.
Unknown Speaker 5:54
Thanks for having me, Chris. How are you?
Christian Rodwell 5:56
I'm very good. Thank you. I'm really looking forward to today. Ross, it's a different topic that whilst we talk about this, at the beginning of our program, the seven steps to wealth, we talked about creating your family wealth business. Now, we're not talking about setting up a company or anything. But of course, in real life, this is the reality. Of course, many people either purposely set up business with their family or accidentally kind of find themselves in that situation. So looking forward to finding out about the complexities around this. And of course, you're an expert in your field, Russell, so why don't give us a little bit of background as to how you got going with all of this.
Unknown Speaker 6:32
Yeah, so I am a family business advisor. But I haven't always been a family business advisor, although I have always given advice to family businesses. So my background is I started in financial planning and wealth management, and did that for about 15 years, and found myself working predominantly with family owned businesses, because they make up nearly 90% of the UK SME market. And so just by default in the market, I was operating and I tended to work more with family and business, not what I found was there was an awful lot of work that can be done in helping business owners and family business owners become financially independent. But alongside that there is a need for them to also become emotionally independent of that business as well in order to allow things like succession planning to happen, where you're passing either leadership, ownership or management on to the next generation. And so I decided to write a book which has never been published. But it focused on the elements of succession planning that are often ignored, which has so many emotional elements, a sense of purpose, loss of identity, that kind of thing. And that opened up my eyes to a world of family business consulting. So I put myself through what's known as the advanced certificate and advising family businesses, which is a certification based in the States. And since then, so the last four or five years or so I've been giving, consultancy, advice to family owned businesses, as well. And come April this year decided that that would be my full time role. So gave up the financial planning side, and now focus entirely on working with families in business, and effectively helping them navigate the complexity that comes from being in business with your family, which, as you say, sometimes happens accidentally.
Christian Rodwell 8:27
Yeah, I guess, you know, many businesses are set up out of identifying a problem, right, that exists out there. So do you find that people come to Ross because they've got a problem, or they coming because they're understanding that, you know, they're going, they're entering into a long term relationship here in business, as well, as you know, in family, and they know that from the beginning, it's important to lay everything out so that in the worst case scenario, you know, they're not going to hit real issues later on.
Unknown Speaker 8:59
it more often than not, it's the first version they come in, because they've had a pain point. And they don't really know where to turn or where to look. And if you consider that you, you have a tax advisor to help you with tax stuff, you have a legal advisor or solicitors to help you with legal stuff, and you have financial advisors to help you financial stuff. There's not many of us that are out there to help advise on the family dynamics. And there's often the family dynamics that has a bigger impact on the other stuff than anything else. Because most of the other stuff is based in logic. So, certain share structure or certain legal arrangement will be based in logic. Whereas what we're talking about with family dynamics is based in emotion. And when those two collide, it can create challenges and tensions within the family business. And my role is to go in and facilitate those conversations that are perhaps too difficult to have on their own because all of that emotions involved so normally, it's a point where They have realized that there's this tension but don't really know who else to turn to. That being said, I am seeing more now that people are being aware of the challenges that can come from being in business with your family. And being more proactive around finding solutions for that. And something I think we'll get onto in in a bit is the role of governance in that, and families are starting to see actually, it doesn't mean we don't like each other or don't trust each other, if we put things in place that deal with the bad side of stuff, doesn't mean it's gonna happen. It's like having a will, just because you've got a will doesn't mean you're then gonna die. So it's the same sort of stuff, putting this governance stuff in places to help you performance and enhance your performance as a family, rather than create permission for things to go wrong.
Christian Rodwell 10:52
Okay, so before we dive into some of those areas, then Ross, just so our listeners understand, you know, what the issues are, if they don't address these, I mean, you've been in this business for 15 years now. So
Unknown Speaker 11:05
that the primary or the biggest example, I guess, is succession planning. Now, when you talk to a lawyer about succession planning, they're talking about when you die and pass on and what happens to your estate, succession planning within a family businesses, what is happening to that business, whilst you're still alive, hopefully, because you don't necessarily want it to be left until you die, because then it's out of your control. It's left to whatever's happened in your world, when you're not there to kind of enjoy the fruits of your labor so much. But But in terms of succession planning, for example, a prime example is saying, Let's lump everything in together when we talk about succession. So are you taking on the ownership of that business? Are you taking on a management role in that business? Or are you taking on a leadership role in that business as part of your succession plan, and very often, they're all lumped in together. And that can be really complicated to deal with. Because ownership means something different to management. And there's a really handy model, which is difficult to articulate on our on a podcast, if you imagine a Venn diagram with three circles. So the first two circles are present within any owner manage business. And you've got an ownership system, which is where you're making decisions as a business owner. And then you've got a management or business system where you're making decisions as an manager or director within that business. And sometimes they overlap and create conflict, because what's right for the management side of it might not be right for the ownership side of it. So that that creates some complexity that needs to be managed. If you overlay that with a third circle, which is family circle, and not the box of biscuits, you get out of Christmas, but a family system that sits over the top of those two circles, you've gone from a model with three sections and a degree of complexity to a model with seven sections and a far higher degree of complexity. So you might have non family si family members who don't own or work in the business, who are able to influence that business. So spouses, for example, of people who own and run family businesses can influence those businesses and having a set of rules that governs that family system that says this is why we own the business, this is what it is intended to do. Here's who can own shares, here's a route to management, you know, you have to go through a particular Management Development path to get to that level within the business. That's what we refer to as governance in the in the family business consulting world, having those in place helps to smooth out the potential for tension within that family business. Because otherwise, a lot of it is based on assumption. A lot of it is based on the informality that exists around families when they're managing wealth or a business. And so having it written down kind of takes the personal side out of it a little bit, because you're not pointing fingers at each other saying, Well, I think this should happen. I think that should happen. You're having a discussion and creating it one instruments called a family charter, which documents everything that the family stands for, what their values are, what the vision of the business is, who can own it, all that kind of stuff is included in a family charter. So having the things in place again, doesn't mean that you know, someone's going to come in and stop people doing what they want to do. It just formalizes and enhances what's going on within that business.
Christian Rodwell 14:34
Yeah, so I like the sound of that. So it may well be people listening right now, Russ, who, you know, may just be husband and wife in business, you know, that that kind of situation and everything's taking along perfectly well, so far, you know, what would be just the minimum steps you would say to someone like that right now, just to make sure that they've got a document and that, you know, some kind of agreement what would be those first steps.
Unknown Speaker 15:01
So typically, with a husband and wife team, what would generally happen is you'd have a 5050 split on those shares, because that makes sense from a tax perspective, because you can split dividend and income from that business. But what's important to have is a shareholders agreement. So their shareholders agreement formalizes how people can get rid of shares, for example, and puts a formal legal structure around the ownership, what happens to those shares on death, what happens to those shares on divorce, things like that, because otherwise, again, it's that lack of formality that often exists at the early stages of a business, because let's face it, you've got far more important things to be dealing with, than creating formal legal structures that deal with when things go wrong. You've got a business to build, you know, you're doing it out of a passion, you're doing this out of something that's driving both of you been having those discussions around a shareholders agreement, which be with your lawyer, to formalize that structure means that you're then protecting yourselves against future disputes. A prime example of that is, again, it's very stereotypical, and it sounds very sexist, but it is very common is a husband will start a business, and the wife will be a 50%, shareholder. And then if later on 510 years down the line, there's a divorce, those shares should be split 5050. Now that can have very damaging effects on the business itself, because the the business assets might need to be sold in order to pay out those shares. You've got to create that kind of thing. And it can be really troublesome. So it's, it's having those conversations at the beginning to say this is what if we hope nothing bad happens, but if it does, let's have an insurance policy against it. And let's have have something formal in writing that outlines how it's all dealt with the benefit of doing that whilst things aren't going wrong, if rather than looking at it from the point of view of Oh, he or she doesn't trust me, which is why we're having this conversation. Look at it from the point of view, as we trust each other implicitly. That's why we're having this conversation. We're having this conversation because we really trust each other. And we know that we're going to enter into these agreements in good faith. And therefore it helps to make that a smoother process as well. But I in those early stages, I would get those formalities done. What one other thing on that side of it is, I would also suggest that you create clear boundaries between your business and your relationship. Because it can be again, really easy if you're in business, with your spouse, for everything to just be taken up by the business. And that's, you know, that can be damaging over the long term to relationships and people's perspectives. If you're just talking about business 24 seven, then you're you're forgetting all the other important stuff.
Christian Rodwell 17:51
Yeah. Now, one of the other most wonderful tools in the wealth building toolbox is SAS pensions, which I know you're familiar with, as well, Ross. And of course, you can have, you know, your whole family and as trustees there. And so perhaps, you know, if we could touch on some of the areas, perhaps around governance, around SAS as well, Russ,
Unknown Speaker 18:12
again, is a big sweeping statement. But something like a family charter or family wealth charter is dealing with wealth rather than than a business just kind of outlines. It's not legally binding. So it's not something where you have to have all the legal wording, it can be in the family's own words. And it just outlines why you're doing something. And it sounds very straightforward, but 510 years down the line, it can be really easy to forget why it was that you went into this in the first place, be that assess be that a business be there any form of collective activity with the family. So by having something like a family chart or family wealth chart that outlines why something exists, what happens if, who do we include as family, for example. So our spouses family, our adopted children, family, our stepchildren family? You know, family situations are getting more complicated anyway, because there's an increase in numbers of divorce and remarriage is and blended families and things like that. And rather than allow, you know, chance to happen, where there could be some conflict, laying it all down in a document means that actually you you've dealt with it, and it's a living thing, you refer back to it and go well, actually, our family wealth charter says only family members direct bloodline can be trustees on this or only bloodline, or everyone can benefit from the sort of production of this wealth. And so having those discussions is the important part, not the actual document. It's the discussions it's opening those up and if it's too difficult to have in person, just one on one or the family all together. Having those facilitated makes a big deal. as well, because it removes some of that tension.
Christian Rodwell 20:02
I'm talking about discussions. Ross, I know you have your own podcast, and the family business podcast. So are there any recent discussions that that have stood out for you, and maybe one that you could share for our listeners?
Unknown Speaker 20:15
Yeah. So there's one that I actually recorded last night. So it's not come out yet. But But I'm sort of teasing it. It's a guy who has released the world's top selling family business book. And his argument is, you should never ever gift wealth. And there is a very compelling argument when you listen to what he says is, for example, with a family business, if it's been passed down through generations for no real consideration, it's just the shares are passed on in an efficient way, or they're dealt with in an efficient way via the legal and tax structures. His argument is that you lose the drive and impetus to try and get that business to succeed, which is why family businesses have allegedly very poor succession rates. Now, we ain't got time to get into a debate on the succession survival statistics on family businesses. But the there is the statistic that there's 30% make it from first to second 13, from second to third and 3% from third onwards. Now, you compare that to any other business, and they don't tend to survive more than 100 years anyway. So it's not a direct comparison in there. But in order to help businesses survive, have that conversation around should we sell the business to the next generation at full market rate? or sell it to an external? buyer? That's it. That's his argument. And it's a really interesting conversation that's coming out on the 18th of December. So depending on when this one's released, either keep your eyes open for that one, or go back and check it out. But yes, it's it's a really interesting discussion around gifting wealth
Christian Rodwell 22:05
through that sounds great. And we'll we'll definitely share that one for a Ross. So you talked about selling there. So do you get involved up to the point where there are some businesses that you know, they simply just want to sell? And what's your relationship in that part of the process?
Unknown Speaker 22:21
So so what I do is I work with the family system. So that will be everyone that works, who is a member of the family who works in a business owns a business or can influence that business. So that means if it's owned by same mom and dad, and has been passed down from their parents, and they've got three kids, and they've got spouses, I work with all of those individuals to help improve their relationship with that family business and communications are a key factor there, in that they will invariably not have the right communication forms in place to make sure that there's again, no Chinese whispers or he said, she said stuff going on within the business. But But in terms of the sale, I can then be involved after the sale in helping them decide what to do next. So what what do they want to do as a family? What do they stand for as a family, what impact they want to have with the proceeds from that sale, if they're financially independent, as a result of that sale and want to do something different, that gives them a sense of purpose and a sense of well being, then we discussed that as well. So although there's a business at the center of this, and I'm a family business consultant, I work with the family system to help them understand what it is, it's really important to them in owning either that business as an asset or something else as an asset.
Christian Rodwell 23:47
And Russell, with this being such a personal relationship based business, I'm keen to understand how has this year affected that we've obviously us not being able to get together, you know, in person?
Unknown Speaker 23:59
Yeah, I mean, it's had an impact. I can't deny that. But the beauty of technology as it is, and and the beauty of human endeavor and ingenuity is that we will adapt to most situations pretty quickly and pretty well. So I've moved a lot of my consulting to online using forums like we're using now, which is zoom, or teams or Skype, or whatever the technology is there that can be used to help facilitate those discussions. And whilst it's not as good as being in the same room, looking into each other's eyes, we are still able to see facial expressions and movements and body language to a certain extent. So that helps in in some ways. in other ways, it's actually enhanced what I do because I've now had people get in touch from Australia, from Kenya, from America, who are saying, Well, if we're gonna have to deal with somebody online that expands where we can do our market research anyway. So there's no reason To stop us, if it's in, you know, 500 yards down the road or across the other side of the world, we have to use video communication. So we might as well look beyond our own doorstep. And that's helped in in some ways. But hopefully there's a light at the end of the tunnel. And we'll be back to face to face stuff before we know it. But for the time being, the technology is allowing me to do what I need to do.
Christian Rodwell 25:23
I guess then to summarize, Russell, if there are some top tips to leave listeners on, when it comes to the subject of families in business, what would those key areas be?
Unknown Speaker 25:33
So probably two main key areas, the first one being communicate, make sure you communicate with each other. And if there are taboo subjects, if there are elephants in the room, if there are things that you are concerned about raising, because you don't want to upset or don't think that there's this sort of safe environment to be able to do that, without a causing tension, look to an external facilitator to help come in and host those. So communication is a very, very big tip, make sure that's effective. The second one is to ensure that there are the relevant boundaries between family and business families are a very precious unit, they're a very special thing we don't get, you know, another chance to come back and have a different family. And some people might think that's a good thing or a bad thing. But generally speaking, your family is a very, very precious unit. And letting a business or an element of worth getting in the way of that can be very damaging. And it's often not until it's too late, that people realize that they focused on the wrong thing. So make sure there's relevant boundaries in there. And you have time as a family doing family things, rather than just focusing on the business or the wealth side of things.
Christian Rodwell 26:48
Thank you for being a great guest today, Russ, and if someone wants to check out your podcast, or follow some of your, your writings online, where's the best place for them to go.
Unknown Speaker 26:57
So the podcast is called the family business podcast, it took ages to come up with the title. But if you search on iTunes, or Spotify, it's on there. And that is supported by the Institute for family business. In the UK. I also have a website, which is family business partnership.com. And there's details on there. There's a guide to governance and a guide to consulting on other people download and have a read of. And if you want to get in touch with me LinkedIn or Twitter, I'm more than happy to have conversations there, too. Thanks. Cheers, Chris. Thank you.
Christian Rodwell 27:34
It's very interesting speaking with Ross there. And matching. Kevin, it's, it can be very difficult when you start a business to think about the end, because who knows where that business might be in five years, 10 years, 20 years. And of course, if you're starting a business in your younger years, you may not even have a family yet. And so while starting with the end in mind is always good advice. Kevin, I can see the complexity here with the family businesses.
Unknown Speaker 28:01
You're absolutely right, Chris. And I think probably the point at which it makes sense, to begin to start a chart what what Ross calls the governance, but body really means is a set of rules and principles and documents. I think it's when you create that separate legal entity. You know, because when you most successful family businesses and you know, I'm assuming we can we can just list a few of those, you know, St. Louis was a family business. Marks and Spencers was family business, wasn't it. And you've also got Kellogg's, that's a family business. You know, many family businesses have continued on today. But they not owned and operated by the members of the family, they become very sizeable businesses and those who go on to do that they of course, it was their PLCs they have to have governance because it's required by law. But when you've got successful businesses that are doing well, but they're not going to be publicly quoted, then it's more difficult. But I would say that as soon as you've got the limited company status, you know, you've created the limited company and you've created the separate legal entity, then that's the time to put the shareholder agreements in place. And I like what he said about you know, the difference between you know, the relationships of owners of the business managers of the business and influences of the business not least you know, spouses and, and children as they grow up and so on. So, yeah, I like the sound of almost being kind of flexible, like we are with the family wealth business and create a charter, a story in your own words, you know, without the legal formality. But I think it goes without saying, and we teach us in our foundation when we talk to people on their wealth journey at the beginning, Chris to put their roof in place, you know, their wills, their trust the powers of attorney and sometimes they They look at us oddly and say, Well, why would I do that now, before I'm wealthy, we really got to do it now. So it's watertight. And then you build a stronger roof as you build your wealth. And this is, I think, the same way. So soon as you've got a limited company, take some time to talk to somebody about the creation of a set of rules around shareholders, and owners and influences and you know, how you're going to interact with each other? I think that's very, very wise counsel on behalf of us really,
Christian Rodwell 30:32
yeah, I can definitely see the reflections of what we teach within the wealth program as well, you know, there's rust talking about a business built on the values of you and your family and a deeper sense of purpose. And, of course, we've been trying the values within our document, which is the new declaration of financial independence.
Unknown Speaker 30:51
Exactly right. And the other thing, which you pulled out, Chris, and I think that was smartview, as well, was the concept of the SAS pension, you know, the thing that our members work and learn about so well, that language of the small self administered scheme, which is a family pension, so instead of a traditional pension, a vehicle for one person, you know, a canoe paddling against the tide of the stock market, you've got a multi purpose vehicle, a high powered vehicle, which involves the whole of the family and you know, up to 11, people can be involved in the SAS. So you got a real powerful way to build a multi generational tax free legacy, you know, that's tax free money as well, all protected, ring fenced from the company, separate from the company, but it can support the directors, it can support the owners, and it can support the family, because of the flexibility to lend money back to the company in, in whichever way chooses to use those funds. So it's very powerful things that perhaps some business owners don't know that they can build a whole Trust Fund, a huge Trust Fund, you know, a million pounds, give or take for each person in the family, you know, can be built through the use of the knowledge of SAS. So I hope that's a lesson that he would share more willingly, I guess, and also that our listeners pick up on.
Christian Rodwell 32:19
Now, Russ focuses his time helping others in business. But of course, he's running his own business. And it was interesting there at the end just to hear how he's pivoted this year with the conditions of the pandemic. And because it's such a relationship based business, he normally obviously sits face to face and mediates. But that's all done online now. And actually, he said that that has now helped open up opportunities across the world for him.
Unknown Speaker 32:46
Well, I think it's appropriate isn't it? If you think about families now, they could be family members who are the influences could be in a different country, if you've got a very successful family led business, you could have holiday homes in different places. And you could have family meetings on zoom instead of family meetings together. So I think you know, that's entirely appropriate, I believe you're off to the Canary Islands on you for 10 days to enjoy a pre Christmas warm up. But you'll still be doing, you know, some work on zoom in the normal way. So it's all about one of those freedoms, Chris has no freedom of location, freedom of relationship, all of those good things. So I think using technology to get leverage on that is good once you've got the trust. You know, I don't think there's any problem with that. And just talking about the pandemic, Chris, I think a brief reminder, because we've had some great feedback, haven't we, on the latest output we created called wealth in the second wave, so might be useful. I think, finally, I guess this is the last time to mention it before Christmas, then just let people know that they can download a copy if they haven't already done so. Well, I've just printed
Christian Rodwell 33:54
off the 47 pages, so I can read it on the fly, Kevin. So if I hadn't, I haven't taken in the lessons already, I certainly will have by the end of that slide. So yes, we've put together pretty extensive Guide, which covers all seven of the wealth pillars, and plenty more. And you can download a copy of that for free by heading to wealth builders.co.uk forward slash wealth guide, and we've had loads and loads of fantastic feedback. So I'm really pleased to hear that you're enjoying it. And it's seems to be really going down well. Hmm. And
Unknown Speaker 34:27
bombshell though I heard from Mr. Haworth, very interesting. That was a bombshell wasn't it? Never gift, the business. That's gonna stir up a bit of a hornet's nest for you business owners out there with your families. Because often the thought isn't it, that you build up money, you then pass on the money. And then the next generation enjoy the money and say thanks very much in the next generation, spend what's left and after three generations, it's all gone. And there's so much evidence to support that. I've talked about this before. Even different countries have different language for this shirtsleeves to shirtsleeves in three generations clogs to clogs and three generations, it tends to be an established rule, that if you give something that gift will dissipate over time, and will no longer be the family legacy that you'd intended if you were the pioneer and creating it. And I think there's something to be said about not gifting, but transferring wisdom, so that the family can either invest in the business continue the business so that they, they see themselves as a continuation of the value, you know, again, the set of rules and the set of guiding principles. And also to recognize that family members are never going to pay you a premium for the business. So in some cases, it's better to think about selling the business, either because the family members don't want to continue it, or they don't want to buy it, and then you get the premium. And then once you've got a premium, because an acquirer will pay a premium, because they want the value in their existing business, family members will never give you a premium. And then that premium means you've got more money, that you can either help people create a new business for themselves, or you can help create, you know, that new legacy where the substantial sum of money, which is often the biggest check anybody will get will be the sale of a business, particularly if that business is focused on a high level of recurring income, a very strong and identifiable niche, and the ability for the business to work without the family members. So the family members don't need to be working in it. And often, that's what's missing, isn't it there isn't that transfer, have the skills and making the business be able to work without the owners. And as a result, the family members kind of have to step in. And that can be a source of a challenge. So I would encourage family business owners to think about that. And as they're thinking about exiting at some point, you know, what's the best way to do that, and it might not be just to transfer the ownership to the next generation.
Christian Rodwell 37:12
I'm talking about next generation, Kevin, over the coming weeks, we certainly will be reaching out to the younger entrepreneurs out there, and those that are really trying to make a change in that world to bring financial literacy to, you know, teenagers, and we've talked about this on podcasts over recent weeks. And we've had lots and lots of interest. So we'll be inviting various guests over the coming weeks to to explore this further.
Unknown Speaker 37:38
Yes. And I think in our I suppose in our range of connections, now we've seen clients who've been touched by us in some way, Chris, one of our clients has written books for children of five to six years of age, almost financial fairy tales, to bring some lessons others have written materials for the sort of, you know, the, the 11 to 14 year olds and others for the 14 to 16 year olds in the best part of foremost is an extension of the the curriculum, isn't it the PS AG, if I remember the language, and so we're going to be bringing some people on for interview who are very passionate about giving children an alternative route to a career rather than the tried and tested assumption that you work hard in school, you don't cheat by sharing with anybody, you know, you do everything on your own, you then get a good job, or go to uni, get a good job, hopefully. And then you stay in a job, which nobody ever does anymore. And you build your wealth that way, when in fact, there's a whole way to build wealth isn't there entrepreneurially and teach people some of the entrepreneurial skills that they don't get taught in school at all. So we're hoping to be part of that movement. And if you're interested in that, let us know. So if you've got a particular skill or a particular interest, or you know, somebody who's interested in that, nudge them in our direction, tell them about this podcast, or the next ones coming up. And we'll be happy to build that library of good information to give your kids an alternative because not everybody's an academic and not everybody sees themselves in a job. So looking forward to those episodes coming soon.
Christian Rodwell 39:29
Sure. And if you have any questions at all from listening to us today, then send us an email Hello at wealth builders co.uk or join us in our free Facebook community. Just head to Facebook and search for wealth builders. And of course, if you're enjoying the episodes, then perhaps we would love to read out one of your reviews in the coming weeks and it's really easy to leave a review just head to wealth builders.co.uk forward slash reviews. All right, well, well
Unknown Speaker 39:57
done, Chris. So enjoy your time. topping up your tan and I'll see you sometime soon. And I look forward to the next episode of wealth builders quest and until then my friend See ya.
Unknown Speaker 40:12
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access. That's wealth builders.co.uk slash membership