Keeping it in the family

By developing plans to deal with estates, succession, business and decision-making, CA firms can provide value-added services to family-business clients

One of the ways in which our profession is changing is seen in the growth of competition around core services. It is virtually impossible to say we do a better financial statement or a better tax return than any other competent chartered accountant, and so we look for ways in which we can add value to the services and products we offer our clients.

In our firm, we examined our client base and discovered the common thread linking our clients is family business. Virtually every Canadian-controlled private corporation for whom we work is owned and run by one or more families. Therefore, we decided our products should focus on helping family businesses be successful, as opposed to ensuring the compliance work is done.

Family businesses are constantly dealing with certain unclear issues that revolve around family, ownership and management, and a single issue can have an impact on all these areas. For the business to be successful, it needs a structure for identifying where the issues fit, then addressing them. The issues are illustrated above.

Working with the client, our firm now develops plans to address each area. In the ownership area, we do a lot of work with clients in creating estate plans. Over time, we have helped to install estate freezes, insured buyouts, family trusts and other tactics. While we have done a good job of reporting each transaction, we do not have a separate document that can be used as reference material, bringing all the legal, tax, accounting and finance issues together in one spot.

Consequently, we are establishing an estate plan. Labelled "estate plan," it has an index and summaries for the various sections. It also includes the original documents. This is a powerful communication tool that brings together the tactics that have been installed, shows clients the work done and, more important, is a reference material that answers their questions about their ownership plan.

In the management area, we have initiated the development of business plans with clients. At first, we found there was great resistance; the client really wanted a forecast and nothing more. Therefore, we developed a business plan that documents the direction of the firm, the marketing targets and the roles played by people within the organization. By presenting these within the context of a marketing, capital and operations plan, we have a product that carries high added value. Although the business plan takes time to develop, its success is apparent when the management group begins to refer routinely to it. The business plan is also a place to file all of the compliance work we do. If it provides linkages to the day-today operations, it becomes a communication tool and a tool to address conflict.

The business plan also becomes the route to a succession plan. While estate planning deals with shares, taxes and financial matters, succession planning is about people. The business plan defines the current roles of people within the organization, and out of this it is possible to develop a succession plan that shows what will happen in the event of a disaster. This forms the basis for developing an experience plan for family members - the areas in which they should have experience in order to strengthen the long-term direction of the organization.

The final plan we put together with our clients is a decision-making plan. This plan usually evolves out of an information process and culminates in an agreement on how decisions will be made. While all our clients have a decisionmaking process embedded in their shareholders' agreement, they do not have an agreed process for making decisions on a daily or regular basis.

As with most CA firms, family businesses are a key part of our practice. We found that by helping clients move the issues into the area to which they relate - family, ownership or management there has been better communication and less conflict. By documenting what the client has in place in these areas, we have improved communication and helped identify the value we have brought to the table.

As CAs, we have a choice between delivering our compliance products or delivering a process that includes our products. We have chosen to deliver a process because that not only helps to differentiate us, it builds on the relationship with clients, improves their communications, gives a family a chance to be a family business for a longer period of time and truly does make a difference with the client. We are helping our clients to be more successful by focusing on process, rather than on products.

[Author Affiliation]

Grant C. Robinson, FCA, is a partner with Robinson eS Company in Guelph, Ontario, and Technical Editor for Business Adviser for CAmagazine.