Personal wealth and family business success are inextricably linked for many New Zealanders. New research by PwC shows many family companies are making use of smart tools and cloud accounting – utilising software on remote servers – to give their businesses a boost.
PwC’s 2016 Family Business Survey showed 41 per cent of family businesses in New Zealand use cloud-based accounting technology, and a further 17 per cent are planning to implement it in the coming 12 months.
That’s a remarkable uptake for what is a relatively new technology, and way above the global norm. By comparison, both mobile phones and even the internet took significantly longer to reach the mainstream. It seems that when personal wealth and professional success share the same path, Kiwi family businesses are trying to make it as smooth and free of roadblocks as possible.
The PwC survey also showed that all shareholders are members of the family in 79 per cent of family companies, compared to the global average of 66 per cent.
Help from above
The popularity of cloud technology makes sense: it gives users a level of functionality, flexibility and resources previously only available to those able to spend a lot of money on infrastructure.
For a monthly subscription fee, family businesses can use tools such as Xero, MYOB, Debtor Daddy, Hedgebook, Shoeboxed, Spotlight Reporting and many others, for both their business and personal money management.
The cloud environment has developed, too. Today, these tools not only offer a general accounting service, but there are a range of plugins and additional apps designed for specific users, industries, portfolios and problems.
Fortunately, Kiwi businesses are on board with getting the most of this user-centric functionality. The 2016 Family Business Survey discovered that while 42 per cent of family companies use one or two apps, there is also a large uptake at the other end of the scale, with 23 per cent using five or more.
All this is just one reason why PwC created Next, a purpose-built cloud platform that brings together multiple cloud accounting tools and other integrated cloud applications on one site. It gives companies of any shape and size, including New Zealand’s foundational family-business sector, the accounting resources of a big corporation. If you can bring together all the data being collected over multiple tools, plug-ins and apps and control it in one place, you can get a lot more mileage out of the cloud.
On cloud nine
So what’s the consensus? The 2016 Family Business Survey also polled business owners to see how they’re finding cloud accounting – and whether it’s actually helping them.
According to New Zealand’s family businesses, the top-three advantages were:
1. Access to real-time information
A data-driven world requires fast action. If you’re even a day behind, you may miss a very real opportunity.
That’s why when asked about the benefits of using the cloud for family business, the top-equal response was improved access to real-time information.
One of the strengths that we consistently see in family businesses is their ability to move quickly, with many saying they’re able to make faster decisions than their counterparts in non-family businesses. In 2014, 70 per cent of businesses surveyed strongly agreed that their decision-making was much faster than other businesses, a figure that increased in 2016 to 82 per cent.
The cloud is making this even easier, whether the decision is around a personal investment or a business challenge.
2. Anywhere, anytime access
The other most-quoted benefit of working in the cloud was accessing information from software and tools from virtually anywhere in the world.
If you’re a business owner with a three-hour layover in a foreign airport, for example, you can log on and keep track of your company on a tablet or even your smartphone.
3. Greater collaboration
Another often-quoted advantage – and one that’s only growing in maturity– is that “advisers and stakeholders are all working from same information”.
Business advisers can be much more proactive when they have a client’s information in front of them. You don’t see an orchestra play a single note without knowing the score, and now other people working with a family company don’t have
to rely on data being physically passed on before they can get to work.
New Zealand wouldn’t be what it is today without family businesses. Tomorrow wouldn’t look as bright either.
However, the nature of their position makes personal wealth management a little more risky for the owners of family businesses. As major shareholders, and likely investors, their financial success balances on professional achievements.
Thankfully, it’s arguably never been a better time to gain greater control of both, thanks to the incredible cloud resources we have on hand today.
First published 29 May, 2017
By Scott McLiver
The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.