The family business cocktail: How step-families can work

There's no standard shape for a family, but when kids from previous marriages come together there can be fireworks. The key is keeping roles separate and lines clean.

Fraught issues of inheritance in family businesses are multiplied in blended families with all those ex-wives, ex-husbands, children, half-brothers, half-sisters, stepchildren, parents and step-parents.

But some family businesses manage to do it well. Bendigo furniture manufacturer Jimmy Possum is a shining example of how a blended family can create a successful family business. When Jimmy Possum was set up in 1995, Alan Spalding was producing furniture by himself, with his wife Margot learning to finish the product. The company now employs 130 people, has a turnover of $20 million and has shops in Brisbane, Sydney, Canberra, Bendigo and four in Melbourne.

A lot of its success comes in being a blended family. The Spaldings had three children each from previous relationships. After they married, they had Lucy. Five of their seven children have senior roles in the family business.

Margot admits that keeping it all together can be “tricky” but the key, she says, is that each kid has a role -- Jessica does the art work, Emily is the retail leader, Georgia the creative director, Eliza set up the retail systems and is studying her masters of accounting so that she can run the finances and Todd is in charge of design and development and is a senior leader in manufacturing.

And then there are the in-laws: Georgia’s husband Boris is legal counsel and project manager. She says he has also been anointed to take over as managing director ("so that I can play in our shed and make things"); Dave is married to Eliza is in charge of retail operations, and Olivia, married to their son Sam, runs three stores.

What makes it easier is it’s the kind of business that allows many different roles and she concedes it could have been different in another industry.

“One reason it works is that they all have very different skills and interests and the business is large enough and diverse enough to accommodate those differences. We always encourage those differences,” she says.

Succession planning is critical in any family business, even more so with blended families. She says there was no doubt about selecting Boris, a family outsider, as the next MD. It was a case of looking after the family.

“We don’t have any of the infighting between the kids, we don’t have any favouritism and we are very into fairness. Everyone is well skilled in being fair and I think everybody recognises that each person is doing a job that suits their talents, skills, interests and abilities.

“That makes a difference because when it came down to doing my role, Boris was the obvious choice (even though he’s the last in) because he has obvious skills that others don’t have and he doesn’t have skills that they have.”

Laszlo Konya, a partner at Pointon Partners, says business owners need to identify which children would be capable of having a role in the business and keep that in mind when planning for retirement.

“Not all children would be suited to taking over the business so you would have to compensate them in other ways. They might get more of a cash payout than a role,” Konya says.

A will and a family charter are crucial but these, he says, have to be constantly reviewed.

“Circumstances change and people become sick or relationships end or financial situations change --It’s not something that you can lock into stone.”

Jane Miller, a partner at Adelaide law firm TGB says anyone with a family businesses entering a blended relationship needs to ensure their partner does not have an untidy relationship with their ex. “If you are starting this venture and it’s going well, you don’t want it to be tempting for the ex to come back in and make a claim,” she says.

The will should be redone to balance the needs of the new partner against children from previous relationships. “Most of those considerations come down to estate planning and a succession plan, which is very difficult and most people stick their heads in the sand about it,” she says.

Margo Spalding says none of this is easy but in the end it comes down to how much people from different backgrounds can work together.

“People have to be well-skilled and there’s always a solution. We work it out,” she says.

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