‘Family businesses cannot spend all their time in the engine room shovelling coal’

EMCS Tax and Advisory Director Silvan Mifsud recently stressed that family businesses must revolve their decision making around the future, tackling issues at the earliest points possible.

Mr Mifsud provides advisory services to various private businesses, particularly family businesses, focusing on financial analysis, succession planning and business transformation. He has worked at EMCS Tax and Advisory for almost six years, and he is also President of the Family Business Committee within the Malta Chamber of Commerce, Enterprise and Industry.

His comments came as he was attending the Transeo Winter Summit, an event dedicated to focusing on the transfers and acquisitions of SMEs, which was held last week.

Mr Mifsud linked the way family businesses are run to the tragic sinking of the RMS Titanic in 1912, when the passenger liner collided with an iceberg just four days into the ship’s maiden voyage, resulting in the deaths of more than 1,500 people.

“One of the reasons the Titanic sank was not just because it hit an iceberg, but because it did so while going at full speed,” he said.

Instead of spotting the iceberg from afar, most workers on the ship were focused on other matters, and when they noticed the problem, it was already too late.

“I constantly push family businesses to balance operational requirements with strategic requirements, with looking ahead,” Mr Mifsud said.

He added that ultimately, family businesses’ leadership team has to be “more focused on the way ahead”, aiming to tackle issues “when they are small on the horizon”, rather than when they are “icebergs close to them”.

Failing to address such issues from early on will leave family businesses with no choice but to face such problems when they are arguably at their worst, mainly because they didn’t “prevent, prepare, or strategise” for them beforehand.

These are sentiments which were recently highlighted by various business leaders during the Family Business Forum. During the event, family business leaders and different specialists stressed that family businesses must give priority to succession planning, rather than constantly postponing it. They added that such businesses must also focus on corporate governance instead of just focusing on day-to-day operations.

Mr Mifsud was in attendance, and at one point he referred to this Titanic analogy, noting that many family businesses are “busy shovelling coal”, but “hardly none are on the deck seeing where the ship is going”.

“Family businesses cannot spend all their time in the engine room shovelling coal,” he said, saying that they have their trusted employees to do that work. The leadership team must focus on strategic planning and future proofing the family business.