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Tom Laming

Tom is a Client Director with NZAB and has a significant, market leading experience in working with banks across NZ
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Trust: The Fertiliser for Outstanding Business Succession

Jul 16, 2021 7:47:21 AM / by Tom Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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Every few months another ‘most trusted” survey hits the media headlines, providing a bit of fodder for office and talkback conversations.

Most trusted brand, most trusted New Zealand celebrities (past winners including such luminaries as Suzanne Paul and Richie McCaw!), and most trusted professions (politicians not typically well represented!).

In a world of fake news, consumerism, brands and ideologies built around personalities, genuine trust is as valuable as ever.

Last week Andrew wrote a great article on succession, focusing on inter-generational businesses that have the quality, diversity and profitability to appeal to family and support positive succession outcomes. Without these dynamics, successful succession outcomes are hard to come by.

This week I would like to focus on a few other elements that will support succession, with a central focus around trust.

 

I read an article recently that described the three core elements of Trust.

The article was focused on what breeds trust in organisations, but the principles can be applied to any situation where trust is critical to a positive outcome or experience. The elements were:

  1. A mindset built around genuine benevolence – that is, that you feel that the party you are dealing with has your best interests at heart. That doesn’t mean a fair and balanced commercial outcome can’t be achieved or is given away, but it means that you have confidence that the other party is genuinely interested in your success, your satisfaction or in meeting your key needs. And critically, that they will do it on a sustained basis, not just a one-off transaction.

  2. Competence – this is pretty simple. At the core of any relationship that has a high degree of trust is the confidence that the other party is competent – that they can do the job, provide the service, run your organisation, provide great advice – with an appropriate level of skill or execution.

  3. The ability and willingness to resolve disputes – any relationship will have times where tension is high, or parties aren’t seeing eye to eye. A relationship that is built on trust will have the ability to navigate these times and find a solution and outcome that allows all parties to move on with the relationship intact (and possibly strengthened).

So how does trust relate to positive succession outcomes

(and running a successful business)?

When you think about it, trust is at the core of succession in so many ways. To achieve a positive succession outcome, you need to trust:

  • Each other – the base of everything else that goes into a succession process. Do you have trust in each other? Do you have confidence that those involved have your best interests at heart? Are you able to be open and honest with each other, knowing that sharing openly won’t be used against you? Do you exhibit trust when setting up the ongoing structure of the business? And have you earned trust?

  • In advisors – invariably, a well-managed succession process will involve a group of advisors. In some cases, these advisors will have an execution role – legal framework, ownership structure, funding solutions etc. In other cases, an advisor will play a key leadership role in facilitating the succession process and being a part of the ongoing execution. Whatever the role they play, having the ability to trust your advisory team – the faith that they are working for you, that they are competent to do the job you are asking – is critical. Trust is also at the core of holding all these parties to account for their own performance and execution.

  • To put the right people in the right roles – as Andrew pointed out in his article, a great business is key to succession. And a great business has the right people on the bus and puts the right people in the right roles. Whether that be operationally, or at advisory or governance level, being prepared to make the hard calls on key people and trust in their abilities is key.

  • To be held genuinely accountable – again, another fundamental value of a great business. Having built a clear strategy, having plotted a deliberate pathway, having developed excellent systems for monitoring performance – are you prepared to be held accountable to all these elements?

  • To let others, have control or influence in your business – this can be one of the hardest things to achieve. Having built a business over decades, being in control of most aspects operationally and making all the decisions, are you prepared to let others in? What do you need in place to be able to trust that the people coming in to run the business, drive decision making or provide governance or strategic support are trustworthy? Or what is it about yourself that you need to get comfortable with, to allow yourself to trust these people?

  • The process – there are rarely quick and easy solutions to succession. These are processes that take time and energy and patience and leadership. And at times you will be frustrated, or feel things aren’t moving quickly enough or in the right direction. But if you have laid out a clear process, with clearly defined roles and responsibilities, at times you will need to just sit back and trust the process.

  • To let go! – possibly the last and the hardest step. Trusting your process, the people around you, the plan and the structure and being able to step back and let go.

We work with many businesses at various stages of the succession process.

Trust doesn’t get built overnight. It’s built on great communication, on openness, on transparency, on a willingness to let go and on the confidence that there is a level of competence from all involved that inspires trust.

 

When there is trust – and where succession is done well, what does that look like? And what has led to that point?

When I draw on personal experience, the businesses I see doing this well exhibit the following characteristics

  • Starting early – and the earlier the better

  • Communication – an environment where open and honest communication is encouraged, and where people feel like they can articulate their needs and be heard and understood

  • Transparency – being open and transparent about what the business is, how it is performing, what its strategy is, what are its strengths and weaknesses. Being honest about what the exiting generation wants and needs. And having an environment where the next generation feels the same.

  • Clear expectations – what do you want personally, and what do you expect of others?

  • Leadership – who is going to drive this process. Who has the competence and mindset to see a truly great process from beginning to end?

  • Independence – getting the right people around the business, people who genuinely want to see a great outcome and will go on the journey with you. Too often we see a “succession plan” – a document that lays out some needs and a structure, but no pathway to a successful endpoint. Great independent support will be there right through with you, playing a key role in successful execution.

  • And of course, a great business – one that everyone wants to be a part of.

And the last element that often gets missed is to have some fun!

Being able to build and transition an inter-generational business is something to be immensely proud of. Yes, there will be bumps along the way, but you are achieving something that few businesses have the opportunity to do. That should be a satisfying and fun process, something to cherish and appreciate.

 

No successful and sustainable relationship exists without trust.

And successful and sustainable relationships are at the heart of succession and running strong businesses. At NZAB, trust is our highest priority. We exist to see our clients succeed, and every month we are measured on that. We employ the best in the market, with years of knowledge and experience and the know how to help you navigate the challenges of succession, the challenges of building a business that people want to be a part of.

 

So, trust the process!

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Where's the Balance?

Apr 13, 2021 11:26:32 AM / by Tom Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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I grew up as a child of the 80’s.
I had a horrendous bowl cut, idolised Richard Hadlee, thought Bruce Springsteen was the epitome of cool…..and had no desire at all to follow Dad into farming.
 
Things were tough – for most farming businesses life was about survival – just getting through a season and a year and hoping that fortunes would turn. And slowly they did.

The 90’s bought a period of relative stability and as the decade went on farmers saw opportunities to intensify, utilise abundant water resource, change land use and embark on a period of unprecedented wealth creation.

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Green Shoots in Agri Banking Appetite Can Bring Big Savings.

Mar 5, 2021 1:40:24 PM / by Tom Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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The Power of Neutral Thinking - Critical When You Set Your Business Strategy

Feb 9, 2021 12:11:11 PM / by Tom Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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We know negative thinking isn't great, but 100% positive thinking doesn't always work either.   Welcome to neutral thinking.

I’m an avid podcast listener.

Early morning runs and a fair amount of time in the car provides plenty of downtime to be entertained, educated or just zoned out!

One theme I have found really interesting in a few different forums recently has been around the power of “neutral” thinking.

It’s not hard to find literature and information on the power of positive thinking.

Books like "The Secret" espouse the value of positivity, visualising an outcome and then having it almost magically turn to reality.

By contrast, we all probably appreciate the dangers of negative thinking.

One study I read suggested that a negative thought is 70 times more powerful than a positive one!

Neutral thinking by contrast is far more constructive.

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“ESG” – a growing opportunity to protect and improve your bank margin

Jan 19, 2021 12:51:48 PM / by Tom Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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My daughter turns six later in the month, so to celebrate we had a big gathering of friends and family over the weekend. Thankfully no injuries on the bouncy castle (this time!).

Naturally the conversation turned to the recent election, but also the potential impact on farming from the National Environmental Standards released earlier in the year, especially given the election result and a continued swing to the Left.

I won’t begin to go into the detail of the standards, nor the potential options to manage and mitigate the potential impacts (nor our respective political views!).

What I would like to do is talk more broadly about what we at NZAB are seeing as the key themes in this space, and the potential impact on farming businesses and their ability to access capital going forward.

 

What is ESG? (Environmental, Social, Governance)

You will have no doubt seen or heard this acronym in the last while. Environmental, Social and Corporate Governance refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. For investors, bankers, regulators and governors of businesses across all sectors, it is an increasingly important aspect in how they assess the future performance of companies (return and risk).

We’re seeing the impact of this already in loan pricing

In September 2019, Synlait Milk accessed a $50m loan from ANZ Bank that has its pricing linked to the ESG policies and performance of the company. This is a clear demonstration of how Bank’s are looking to incentivise good performance in this space, on the basis that it knows that key risks are being managed, but also that the business may reap economic benefits.

Similarly, the Auckland City Council has gone to the market recently, raising $500m via the issue of a “Green Bond” – essentially accessing funding on a long-term basis that is allocated to council projects with an environmental or sustainability focus.

The world is awash with so called “green money”. This pool of relatively cheap and long-term funding looks set to continue to grow.

Consumers are already valuing products that have great ESG fundamentals

You don’t have to go too far in the media at the moment to find examples of companies looking to leverage what they are doing environmentally to help appeal to consumers.

Recent examples include Fonterra’s Carbon Zero Milk; Anchor with plant based milk bottles; Southern Pastures purchasing Lewis Road Creamery outright as it looks to leverage its 10 Star Values Program; Bostock Chicken and its Bio-degradable Meat Packaging - the examples are endless and show the value consumers are starting to place on good practice in this space.

These are positive innovations and reflect a focus from NZ producers on meeting consumer needs, whilst hopefully driving higher returns within the farm gate. We are well placed as a sector to take advantage of these changes in consumer preference, the rewards represent the carrot rather than the stick.

So what about ESG in the Banking Sector?

As illustrated via the Synlait example, Bank’s are starting to put a much greater focus on both their clients, and their own, environmental and social policies.

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Don't let others set your strategy - Get excited about it and own it!

Aug 14, 2020 4:52:19 PM / by Tom Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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Tom Laming, Client  Director, NZAB

If you are anything like most businesses – farming or otherwise – you will be hearing the word “strategy” a lot at the moment. Your Bank is probably looking for one, you might need one for your fertiliser company or to meet regulatory requirements, or you might just be wrestling with how to develop a strategy for your own family and business.

Whatever the circumstances, you may well be asking “where do I start?” What exactly is a strategy, what is the process to develop one and what should it look like once I’m done? And most importantly, why will a strategy benefit my business? Why should I get excited about the process?

 

From the biggest corporate on down, businesses through the generations have attempted to develop strategies that clearly capture the needs and aspirations of all key stakeholders – from the biggest shareholder to the family who own and operate the business.

 

Some become clearly defined. I have recently finished a book by Bob Iger, the current CEO of Disney. For context, Disney had revenue of nearly USD70 billion in 2019! His strategy for the business however was simple and was captured in only three key focuses – to increase the amount of branded content the company created, embrace and advance technology, and be a truly global player. Under his leadership Disney has doubled it’s revenue, and cemented a dominant position in the media landscape.

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The World has Changed So Your Business Needs to As Well

Jul 13, 2020 4:42:47 PM / by Tom Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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“Change is the law of life. And those who look only to the past or present are certain to miss the future.”

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The Game Might Have Changed but the Opportunities for Growth Haven’t

Jun 23, 2020 9:24:18 AM / by Tom Laming posted in Debt, Action, Planning, Budget, Banking, Strategy

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Even in this ever evolving environment, there is still great opportunity to achieve growth in your agricultural businesses. You just need the right game plan.

 

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