, , , ,

Do Family Businesses Really Fail by the 3rd Generation?

Taking a Fresh Look at an Old Saying

This week we’re dealing with a subject that gets talked about a LOT by many of the people who work with family businesses, and that’s the adage that family businesses often fail, usually by their third generation.

Personally, I’ve always avoided this topic, because whenever I speak to anyone from an enterprising family, they never ask about these “statistics” and even when they do hear them they usually believe that their family will prove to be the exception.

But I guess it’s probably high time that I at least address this question, so that we can unpack it a bit and see what can be learned.

I’ll Tell You What You Can Do with Your “Shirtsleeves”

Everyone who works in the field of family business and family wealth is familiar with the old proverb “Shirtsleeves to shirtsleeves in three generations”.

And we’ve all heard that there are similar versions in every language and culture around the globe.

And, I’m pretty sure most of us are sick of hearing about it.

Of course, that hasn’t stopped many of the people who advise such families from trotting out that stuff at every opportunity, because, well, it works!

But what I mean when I say “it works” has much more to do with the fact that it works for solution providers, for whom this point of view helps them to sell their “solutions”.

A “solution” is easier to sell when you can point to a clear “problem”.

We’re Looking at the Wrong Question

The image I chose to accompany this blog comes from an ice storm that hit my region almost 25 years ago, in January 1998. (Image has since been removed! Ooops)

The tower that collapsed was one of dozens that could not stand the weight of the ice that had accumulated on the electric wires they carried.

The business my Dad had founded and for which I worked happened to have manufactured thousands of towers like these over the three decades we operated.

After that storm, people who knew we had been in that business would ask my Dad, “How come those towers collapsed?”.

His reply was always this: “You’re asking the wrong question; you should be asking ‘how did so many of the towers stay up’”.

Accentuate the Positive

I hope that my analogy is obvious enough, but just in case, allow me to share my point more explicitly.

While the ice storm that damaged so many of those towers was a “once in a century” type of occurrence, the challenges of keeping a family business (or any business for that matter) going for decades are a constant uphill battle.

In fact, I’d venture to say that family companies actually fare better than non-family businesses in general.

Do I have any stats or studies to back that up? Well, no, I don’t. 

But the “studies” that were done decades ago on FamBiz were not exactly done with the most scientific rigour either. 

That hasn’t stopped those who benefit from them from trotting them out at every occasion, however.

The Wealth 3.0 Version

I’ve felt this way since I entered this field a decade ago, and thankfully now some higher profile colleagues are leading the way to change the narrative around this subject.

I first heard the term “Wealth 3.0” at the RendezVous of the Purposeful Planning Institute (PPI) in 2019, from Dr. Jim Grubman in his closing keynote.

Since then, Grubman has continued to share his thinking via the Ultra High Net Worth Institute. See Wealth 3.0 and the Ten Domains of Family Wealth for much more background.

The crux of that viewpoint lies in the fact that creating structural “solutions” for the business is wrongheaded, whereas focusing on the human capital of the family is what we should be supporting families with.

More recent research has shown that concentrating on the family, rather than any enterprise they happen to create, makes more sense.

Because so many of the experts have traditionally been hired by the companies, though, it’s not surprising that the focus has been misplaced.

The more recent emphasis on the family is welcome and overdue, but not yet firmly implanted in the field of professionals who serve them.

Progress, Not Perfection

Progress continues to be made, however, and we need to be satisfied with making that continue, rather than lamenting that we are not yet at the “perfect” state of the industry.

See “From Multidisciplinary Field to Interdisciplinary Ecosystem” from a few weeks ago for more on this.

We need to continue to make this progress, one advisor and one family at a time.

/by
, , ,

Sustaining Family Ownership Through Generations

The Essential Element Required

It can sometimes be difficult to explain the work I do to those who don’t happen to belong to a family that runs a business or owns assets together.

There are at least three interdependent sub-systems at work, between the family, the enterprise (businesses/wealth/assets), and the ownership group.

Just about every enterprise is in constant contact with outside experts for a variety of services from the outset.

But the family and the ownership typically take on more of a “behind-the-scenes” role and get much less attention.

The family circle happens to be where I do most of my work, and I’ve been developing a bigger appreciation for its overlap with the ownership group lately.

Focusing on “family ownership” and how important it is for the future of the enterprise is the focus of this week’s post.

For those in the know, you won’t be surprised that we’ll be talking about the essential role of a family champion.

Their Nebulous and Misunderstood Role

I first wrote about the concept of family champions back in 2019, in The Unsung Role of Family Champions.

Recently, I had the wonderful occasion of spending a day with a number of people who play such a role in their families, even if they weren’t all sure that they “qualified” for such status.

I led the opening discussion, where I shared the origin of the term and just how essential having at least one such family member has been for all of the families featured in Dennis Jaffe’s study of 100 family enterprises that had endured for at least 100 years. 

See Jaffe’s book Borrowed from Our Grandchildren

But just because Jaffe and Joshua Nacht, one of his researchers, came up with the term, that doesn’t mean it’s well understood, even by those who play this role in their enterprising family.

Will Every Family Eventually Reach Its Limit?

While certain family members often play a starring role as the CEO and perhaps others are some kind of rainmaker, the family champion is typically much more low-key, and out of the limelight.

Few families are able to maintain family ownership over generations, often because they lack someone motivated and interested in doing the work of keeping the family focused and organized ahead of important transitions.

Eventually the family often grows bigger than the enterprises that are meant to support the people, and choices need to be made.

While these choices occur infrequently, the idea of discussing whether or not continued ownership by the whole family still makes sense is usually a scary notion that is not easily put on the table.

But when it is raised, you can bet that the family champion played an important role in setting the stage for it.

Forever Asking the Key Question

A family that owns an enterprise together will likely assume that it can and will and should remain that way, and for a certain period of time, which may be measured in decades and even generations, it’s often true.

At some point, though, most families need to ask themselves if that is still going to be the case after the next generational transition.

Hopefully, once they get to the point where hard choices need to be made, they’ll be able to figure out how to make the necessary changes in a way that leaves the family intact.

The result could be to prune the family tree or maybe sell the enterprise and have a liquidity event. See Pruning the FamBiz Ownership Tree and Huge Liquidity Events – Great News, Right?

For someone like me, who considers himself a family specialist, my thoughts are always “family first”, and many families I know also adopt this attitude. 

There are exceptions, those who put the success of their business first, which sometimes has me shaking my head. I typically do not work with such families.

Who Is Looking Out for the Family?

So much focus is put on the business that the family owns, so it’s not that surprising that the family and the ownership areas sometimes get lost in the shuffle.

The business stuff happens at a much faster pace (see Varying Time Factors in Each of the Three Circles) and those who work in that area are put on the spot on a daily basis.

Meanwhile, though, there needs to be someone who is thinking about and talking about the family’s role in all of this, and who makes sure that the family and its ownership of the enterprise also get the attention they deserve.

/by
, , , ,

Make Sure Happiness Is a By-Product, Not the Goal

Some Useful Parenting Advice 

Every so often, I’m lucky enough to hear a great pearl of wisdom and manage to jot it down, and it turns into a perfect title for a blog post.

This one came from a presentation I attended at the recent FFI conference in Boston.

Many of the blogs I write are of course based upon the wisdom of others, and I think I do a pretty good job of sharing the credit when it’s due, at least when it makes sense for me to do so.

Let’s jump into the details so that we can then unpack this subject a bit more, as it relates to family wealth and its eventual transition.

Emerging Adults Don’t Always Launch as Desired

The presentation in question was a breakout session entitled “Emerging Adults: Moving forth the family firm”. 

It included three presenters who shared ideas and strategies around helping families get positive results for their family businesses by ensuring that their rising generation members were well prepared for what is expected of them.

One of the presenters, Diana Clark of the O’Connor Professional Group, provided my money quote, towards the end of the discussion.

As someone who has worked in the field of addictions for decades, she had a warning for all parents.

“Don’t make having “happy” kids your main goal; make sure it’s a by-product”, she said.  “Otherwise”, she continued, “they’ll end up coming to see me.”

What’s Wrong with Being Happy?

To be clear, she was not saying that having happy children was not something to strive for.

She was, however, providing a warning that I think all parents should heed, i.e. Don’t make their happiness the primary focus.

The familiar refrain we’ve all heard (and likely even said), “I just want my children to be happy”, can lead to many undesirable consequences.

I touched on part of this way back in 2015, in the post “Over-Parenting: Worse than Neglect?”

What I had labelled “over-parenting” back then included some examples of not allowing children to struggle for themselves, which has as its root a desire to keep them “happy”.

What I think Clark was getting at is that making your children’s happiness the main focus is actually kind of a cop out.

From Dependent to Independent

When you reflect on the roles that parents are expected to play, I’m not even sure if happiness is supposed to be near the top of the list.

To me it is much more of a recent phenomenon, a far cry from the “children should be seen and not heard” that was popular not too many decades ago.

I’ve been a parent for over twenty years now, and it is definitely a work-in-progress. 

Also, times have continued to evolve, and it’s often difficult to swim against the current when you live in a society of instant gratification.

I’ve always felt that one of the primary parental responsibilities is to make sure that our offspring progress from a state of dependence upon their parents to a state of independence from them.

What a child needs a parent to do for them at the age of 5 is different from what they need at 10, and at 15, and at 20 and 25.

From Independent to Interdependent

When dealing with the families I work with professionally, those who’ve built up a significant asset base, that they hope to transition to the next generation of their family, making sure their offspring are independent is only the beginning.

I urge these families to work towards a state of interdependence, because that’s what is necessary to increase the likelihood of success.

I believe that Clark would agree that trying to make sure that those who succeed us become independent, and capable of functioning as adults in every way, is way more important than making sure that they’re happy all the time.

In fact, when parents succeed at this, their children will more likely be happy, as a by-product, as she suggested.

A Tale as Old as Time

This can get quite complex, and the struggle to get it right is a story that’s been around forever.

Getting parenting right is tricky, especially when you can do everything for your kids. It’s hard to say “No”.

But having them never require addiction treatment is probably something we can all agree is a good thing. 

Best of luck (that helps too!)

/by
, , , ,

From Multidisciplinary Field to Interdisciplinary Ecosystem

The Continuing Evolution of Our Professional Space

There’s nothing like a conference with peers, who come at our work with enterprising families from a variety of different professions, to stimulate reflection about the journey we’re all on.

When that conference (FFI Boston ’22) is the first big get-together in 3 years, it’s even more impactful.

And, when that conference has as its theme the future, it makes members of that community even more reflective and inspired.

Please join me as I continue to process all of what I took in, along with all the debriefing I’ve done with colleagues since then.

See Now What? After the Great Meeting

From Multi-Disciplinary to Interdisciplinary

Let’s begin with the insightful framing of an FFI Award that was shared by this year’s recipient. Jack Wofford received the annual FFI Interdisciplinary Award for 2022 at the FFI Fellows breakfast on Friday morning.

Wofford is an attorney who has a long history of acting as a mediator in all sorts of multi-party disputes, including many involving enterprising families.

During his acceptance speech, he made a point of stating that the name of the award is “interdisciplinary” which he contrasted with another, oft-used similar expression, “multi-disciplinary”.

Hmmm, I thought to myself, I’d never thought about this distinction before.

A Multi-Disciplinary Field, Requiring Interdisciplinary Effort

There is no denying that the people who serve family firms come from a multitude of different disciplines, this has been known and acknowledged for decades.

What is more recent is the understanding that in order to do this work well, and not just in our original silos, requires some effort to be able to work with people from disciplines different from one’s own.

Many professionals do not even really recognize this, and even among those who acknowledge it, my guess is that there are only a small minority who really do a good job of learning how to do it well.

Perhaps that’s one of the reasons that it merits its own award.

From Field to Ecosystem

The title of this post hit on two parts of the evolution of the professional space in which I and many readers endeavour, the part about the disciplines, as well as the issue of how we label the area in which we all work.

Let’s switch gears and take on the second question.

The A-Ha Moment for this came during an off-site dinner that I attended with what we called “Team Canada”, which was a wonderful opportunity for many of us Canucks to spend some time getting to know one another a bit better.

Without naming names, I was seated next to a friend and colleague who I happen to know was born about two and a half decades after I was.  Across from him was a woman I know, who I also understood to be much younger than my late-50’s.

As it turns out, they had already compared notes and were born in the same year.  I was suddenly quite jealous, but maybe not for the simple reasons you might guess.

Entering and Ecosystem, Not Just a Field

I had my calling to do this work relatively late, and so I’ve been trying to make up for lost time for a decade now.

I’m jealous of these two professionals not just because they are so much younger, but also because they both seem to have found work that really suits them and that they enjoy.

And, the field has continued to evolve, to the point where it is now so much more than a plain old field, it has become an ecosystem in its own right.

The opportunities for those entering this space are so much better defined and available now than they were even a decade ago.

The Family Enterprise Parallel Version

I always like to draw some sort of parallel to the situations involving business families in these posts, so let’s do that before we run out of room.

Any FamBiz going from the founder’s generation (G1) to the next, offers some complexity and opportunity, and things to work on.

But when you see a family where there are active members in G3, G4, and G5 (and so on) that’s when things really get interesting.

Just as the young professionals I spoke about have plenty of opportunities, I’m also jealous of the rising generation members of such families, because they have a much broader path of opportunities ahead of them too.

/by
, , ,

Philanthropy as a Doorway to Family Governance

Finding a Reason for Organized Family Discussions

Every week here I tackle a subject relating to families who either work together or own assets together. 

The main thrust typically involves the challenges these families face in organizing themselves in ways that increase the likelihood that they’ll be able to keep a great thing going right through the next generational transition of the family.

That often means I talk about the importance of having regular family meetings and beginning to institute some forms of family governance, which is often a tough swallow for some families.

For certain families, there’s kind of a nice “back door” to this that presents itself, and that’s family philanthropy.

A Subject That’s Long Overdue Here

I’m almost embarrassed that I’ve written so little about philanthropic activities in this space, because family enterprises are often quite generous, especially in their local communities.

When I got into this field, the ideas I had around philanthropy were quite simplistic, eg. Companies makes money, so they give some of it back, that seems logical.

It was only later, when I noted that some families had found it necessary to organize their activities on a more formal basis to actually implement everything required to properly execute their giving, that I realized the wonderful side effect this can have.

The Family Governance Angle

Regular readers recognize that we are now venturing into familiar territory, i.e. family governance.

I typically lament the fact that most families seem almost allergic to the idea of implementing any form of governance, and I fully understand their reluctance.

In my first book, SHIFT your Family Business, there’s even a chapter called “Governance, Ugh!”

So one day it finally clicked, philanthropy offers some families a wonderful onramp to this world, because family giving, done right, actually necessitates many of the steps required for other types of family enterprise governance.

Philanthropy Experts Abound

The professional circles in which I travel and connect also contain philanthropy experts on a regular basis, and it is amazing how much we have in common.

On the podcast that I often host for Family Enterprise Canada, Let’s Talk Family Enterprise, I once did an episode with a colleague, Dr. Sharilyn Hale, called How Philanthropy Can Support Both Family Governance and Legacy.

Yet it still never clicked that I needed to share this idea with my blog readers. Like I said, this is long overdue.

In the organisations I belong to, including the Family Firm Institute (FFI) and the Purposeful Planning Institute (PPI), I regularly interact with professionals who work with families to support their philanthropic activities.

I guess I’m starting to realize how much we have in common.

When There’s No Operating Business (Anymore?)

One way this situation suddenly appears is right after a liquidity event, when the family realizes that now that they no longer own and operate a business together, many things are different. 

See Huge Liquidity Events – Great News, Right?

Yes, they now have much more liquid wealth to handle and organize, but they’ve lost that common asset that they used to rally around and identify with, likely much more than they ever realized at the time.

How do you get a family excited about rallying around a pile of money?

Well, one answer, one that seems to be gaining in popularity, is very much centered around philanthropy.

It takes work and intention to do this well, especially if the family leaders have realized that doing this in a way that will last beyond their own lifetime, they will need to do this as a family, and not just by one or two people.

Building a Strong Foundation

Whether the specific vehicle(s) the family chooses to use include a family foundation or not, it will be important for every family to build a strong (figurative) foundation upon which they want to structure the family’s giving.

That important work includes defining the family’s values, which needs to be done pretty early on. Likewise, co-creating a vision and mission can also be important pillars that can help strengthen a coherent effort that all family members can get behind, and possibly also be involved in executing.

This will involve figuring out how they are going to communicate and make decisions together, as well as solve problems as they arise.

And as regular readers will recognize, I just laid out the key elements of family governance, right there in that last sentence.

Indeed, philanthropy offers many benefits for the family, not just for society!

/by
, , ,

Now What? After the Great Meeting

Following Up After the Big Meeting is the Key

“Now what”, or “what’s next”, are so important to making the progress we want to make, in so many areas of our lives.

And, it’s good to remind ourselves that even though we need to take time to recover from a big event to rest and reflect, we cannot take too much time “off” and very much need to get back into the rhythm of what was so great about a meeting.

Okay, so let me step back here and share what I’m getting at, because I uncharacteristically jumped right to my point without much context there.

I’ve just returned from another wonderful conference and I’m still coming down from the high of spending time with so many wonderful people, and as I planned to share the experience here, I realized that there are parallels here to the kind of work that I do with families.

Setting the Date for the Next Meeting

Whenever anyone asks for tips on holding a great family meeting, I’ve been known to say that the most important thing you need to do is make sure that you set the date for the next meeting, so that everyone can put it on their calendar and make sure they’ll be there.

I drove back from the annual FFI Conference in Boston yesterday, and so I just followed my own advice and added next year’s event to my calendar for October 25-28, 2023 in New York City.

I also made a note on my calendar for Monday morning, when I get back to my desk, to make sure I look through my notes and the event brochure and be sure not to let any follow-ups fall through the cracks.

I already went through the attendees list and made sure to hit up all the new folks I spoke with over the past few days with LinkedIn connection requests.

My notes will surely reveal some blog ideas and at least one follow up for a podcast guest request, if not more.

Connecting Like-Minded Colleagues

During the three days of the conference I was on the lookout for other fellow Canadians, so that I could add a Canadian flag sticker to their name badge.

I can’t believe that the 25 stickers I brought weren’t sufficient and I ran out. I must remember to bring more next time, and I should probably make sure I order extras, because they were quite popular.

Besides trying to herd all my fellow great-white-north friends, I was also on the lookout for any French-speaking attendees.

FFI has had a Spanish language study group for a decade now, and some fellow Quebecers want to launch something similar in French, so I spent some time trying to connect colleagues for that too.

More Jolly Good Fellows

Every year at the FFI conference they announce another group of members who have achieved “FFI Fellow” status, and this year I was very honoured to be part of this group.

I’m still a tiny bit disappointed that they haven’t adopted the tradition of singing “For he’s the jolly good fellow” during the ceremony, but I’ll get over it.

It is indeed gratifying to be part of the growing group of leaders in the field of family enterprise, all of whom make an effort to share so generously with colleagues so that we can all serve our family clients even better.

Back to the Family Meetings….

I just spent a few paragraphs writing a lot about “who”, and when you think about family meetings, the “who” part is also huge, because spending family time together is obviously a huge part of what you are trying to do.

Sharing common experiences is key to the family bonding and understanding, which is all part of making sure that your communications are working.

There’s also the “what” part you need to consider, and the content and planning are not something you want to skimp on or leave to the last minute.

Just like this conference I was at, many people spent a lot of time creating the conditions for success, and your family meetings deserve as much as well.

Make sure your agenda includes learning and fun, as well as some break time for people to just “be” together.

You want them to leave satisfied and looking forward to the next one.

/by
, , ,

The Iterative Cycles of Family Wealth Continuity Planning

It’s All Interconnected and It Never Really Ends

Every week in this space I tackle an issue related to the challenges families face when trying to ensure that the wealth or business they own will be successfully transitioned to the following generations of their family.

I’ve been doing this for a decade, and have yet to exhaust the topics on which I enjoy sharing my thoughts.

Sometimes the subjects are narrow, as they’ve been recently (see Should I Join My Family Business and Getting your MBA to Lead your Family Business: 5 Things to Consider), and other times, like this week, they’re reallllllllllly broad.

I’m not sure how to narrow my thoughts down into one post, but I’ll give it a shot.

Complex Subjects, with Lots of Moving Parts

Wealth transitions affect people from different generations of every family, and often deal with ownership and control going from a small group of people to a larger one.

Each person brings their own desires, needs, and expectations, making this work fraught with potential conflicting views and ideas.

There’s no “one-size-fits-all” method, although many professional experts in a particular subset of the field may try to make you believe otherwise. 

I’ve recently been involved in a few different discussions and activities that made me realize how much of this work defies a linear approach, and is in fact very iterative and cyclical.

Few circumstances in this world lend themselves to a simple “do A, then B, then C, then D, and you’re done”.

Instead, when you get to C, you may realize that some elements of A need to be revisited, and the work done in B may now be irrelevant.

And This Is All a Good Thing

Lest readers begin to think that I believe that this is bad, well, NO, it actually has to be this way, assuming of course, that you want it to work.

Indeed, oftentimes experts have “shoved” their A-B-C-D process onto an unsuspecting family, which makes everyone happy and relieved in the short term, only to see most of it unravel once the family needs to actually live with the result.

With complex issues that involve so many parties, it is not realistic to think that a couple of people will be able to come up with the ideal plan for all right off the bat.

And even if you could, all those affected by it would not feel any ownership in it because they were not involved (or even heard) during its creation.

Planning and Governance Must Evolve Over Time

Whether we’re talking about structural elements of planning for which you involve experts in law, trusts, and taxes, or the family dynamics aspects that lead to what I call family governance, the same holds true.

You need to start by trying to figure out what you want, then you need to have discussions about it with those who will be affected by it, then you need to speak with experts and get their input.

Then you go around again, taking what you learned from the experts and sharing it with those who will be affected by the decisions.

After getting their input, you can go back to the experts again with plan 1.1 or 2.0, and get advice again.

And then repeat.

Even when you have something that works and that all agree on, that will only serve for a certain time (although it could be for years) until circumstances have changed and a new, refreshed, and better suite plan will be needed.

Regular Dialogue Where These Subjects Are Safe

Back in 2020, in How to ACE your FamBiz Succession Planning, we looked at how Alignment, Clarity, and Engagement are important elements to keep in mind.

I could have added that making sure your family has a regular forum where dialogue around these subjects is allowed, expected, and safe, is also a key success factor.

We’re talking about important subjects that deeply affect the lives of every family member, so if you’re trying to do the best job you can for all of those people, you need to have them involved, and do it in a positive and intentional manner.

Did Anyone Say This Was Supposed to Be Easy?

I know that the desire for an end point or “destination” is very strong, and nobody can “argue with” that.

But, assuming that you really want to prepare everyone and everything as best you can, then you really need to think about all of this as being more of a journey instead.

Try to enjoy this journey, even though it will not always be easy.

/by
, , ,

Where’s the Puck: Family Wealth Hockey Analogies

A New Season Is Upon Us, So…

As another season of Canada’s favourite sport begins, it feels like a good time to share some analogies from the world of hockey, that happen to fit nicely with some of my views on the subject of family wealth, and how best to prepare to transition it to future generations.

As a lifelong Montrealer, who was spoiled to be alive for 10 Stanley Cup wins by our beloved Canadiens before I finished High School, hockey holds a special place in my life, and my heart.

Although “Les Glorieux” are approaching three decades of drought, hope springs eternal, although probably not for another couple of seasons, as a roster rebuild is now on.

Our new coach recently said something during a press conference which got me thinking about some hockey analogies to write about here.

Offence Versus Defence

There’s a very simple one we can kick around a bit, about the importance of both offence and defence for a winning team.

If you have lots of scorers and lousy goaltending, you can try to win every game 8-7, but that’s not sustainable.

If you have the best goalie but can’t score, you need to try for a 0-0 tie and hope for the best in overtime.

My wealth analogy includes the risks involved in trying to make lots of money (score goals) versus making sure you don’t lose too much money (defence and goaltending).

Most families that achieve lots of wealth did so by playing exceptional offence for some time, and then need to focus on defence, since that game is played over decades and generations, not three 20-minute periods.

The asset allocation angle version might be the saying, “nobody ever got rich investing in bonds, but lots of people stay rich that way”.

Wayne Gretzky’s Famous Quote

We should also look at the most famous quote from one of the greatest players to ever lace up a pair of skates, Wayne Gretzky:

     “Skate to where the puck is going, not where it has been.”

Indeed, we need to always be looking forward, not backwards, as we think about the wealth the family now owns, and how we plan to transition that wealth into the future.

The thing about intergenerational wealth, though, is that it is INTER generational.

That implies that the people in the current leading generation, who likely control that wealth, won’t be around forever, and so it behooves those folks to look to where not only the puck is going to be, but where the other players on the team will be.

The Guys Without the Puck

The Canadiens had their worst season in decades last year, and fired their coach midstream. Then, they turned heads by hiring someone who’d only ever coached his teenaged kids’ teams.

The team showed new life as he brought a fresh philosophy to the group, and he was then signed to a new long-term contract.

As the team prepared for the new season, during one of his many press conferences, he noted:

 

                         “I don’t coach the guy with the puck.

                          I coach the four guys without the puck. 

                           The guy with the puck is the present. 

                           The other four guys are the future.”

– Martin St. Louis

They Are All On the Team NOW

The team has lots of young players, who are playing alongside more experienced pros, but they’re all on the team now, sharing the ice together.

Yes, there’s a farm team too, preparing some future players who aren’t yet ready, but the “four guys without the puck” are all being coached to play well together now.

Too many families spend too much time concentrating on the guy with the puck, hoping he’ll continue to maintain his scoring prowess forever.

It’s a Team Sport

Working to transition your family’s wealth from one generation to the next is the ultimate team sport.

Coaching the ones who don’t yet have the puck is key, as is having the one with the puck understand that winning the game will involve passing the puck to others.

Learning to play well together is also a big part of success too.

Often the wealth creator had early success in an individual sport more like golf or tennis, where success as a “solo artist” is the major success factor.

Once you bring the family in, get inspired by team examples instead.

/by
, , ,

Getting your MBA to Lead your FamBiz? 5 Things to Consider

A Road Well Travelled.

The idea of going to do your MBA in order to then come back and work in (and possibly lead) your family business has been around for a long time.

It has been repeated often with varying degrees of success over the past few decades, in many places, and probably in every industry, somewhere on the planet.

It can be the perfect next step to give an aspiring leader the extra tools, confidence, and respect from fellow employees that they’ll need to take that next step in moving up the ranks and eventually taking over.

And sometimes, well, not so much.

This week I want to look at 5 things that you should consider before taking that leap.

 

Learning and Growth, or Just the Letters, Please

Whenever anyone is making a big decision, like going back to school for an advanced degree in anything, I always encourage them to think the decision through, and especially make sure that they’re doing it for the right reason.

If all you really want are the letters “MBA” after your name, that probably won’t be enough to sustain you on your journey.

If, however, you are looking to learn and grow as a person and as a leader, then your chances of success, during your studies and long after, will rise markedly.

But please be honest with yourself during this reflection.

 

Is This the Missing Link?

Even if you do realize that you need some more learning and growth in order to increase your chances of success, is the MBA route truly what’s missing for you to advance to where you want to get?

In many cases the answer is still YES, but there are lots of other educational opportunities that may be more suitable to you, depending on what strengths and education you already have, what industry you are in, and what type of role you hope to grow into.

 

What Role Likely Awaits You?

And that brings us to the role you are looking to occupy. 

Since we are looking very long term here, you need to think about not only the next role you hope to grow into, but also any subsequent ones.

You may see roles that interest you now, and it may seem clear that they seem tailor-made for you (and you may be right).

But please, before making a big decision like going back to school, make sure that you have a number of discussions with other family members who are above you in the business hierarchy before you make any commitments.

 

Podunk State Vs. Harvard/Stanford/Wharton

Assuming you’ve thought through it all, discussed it with all important stakeholders, and are ready to take the leap. You need to figure out where to set your sights.

There’s a huge variability in the quality of the programs out there, their cost, their ease of qualifying, and time commitment and distance.

Assuming that you could qualify everywhere and cost is no object, it may well be worth reaching for the top schools for a better quality experience, as well as interacting with a higher level of other students.

That may not be realistic in most cases, so a detailed evaluation of schools and programs is worth the effort, which in this day and age is so much easier than it was decades ago, thanks to the web and Google.

There are even a number of schools that have specific offerings for those coming from family businesses, which didn’t exist when I was beginning this journey in the ‘80’s.

 

Build Your Network Too

I alluded to this above when noting the “higher level of other students” but no matter where you might end up, do not neglect the opportunity to create a network, not just of friends but of future colleagues on whom you can lean when you will need them.

Schools that emphasize family business education may be preferable for just that reason, as you are more likely to meet and get close to others whose career situation will better resemble yours, and with whom continued contact may be mutually beneficial.

 

Aren’t MBA’s “a Dime a Dozen”?

Doing my MBA was a rewarding experience for me, even though we sold our family business soon after my return.

These days, there are many MBA’s out there, and the experience can still offer a lot.

But think it through before committing.

/by
, , ,

Should I Join My Family Business?

A Big Question, Well Worth Considering

Given the number of family businesses out there, you’d think that the question in the title of this post is pretty common.

Unfortunately, it is not asked nearly as often as it should be, at least not out loud.

This is not to point fingers at those who never took the time to properly consider the question, because if I were doing that, the first person I’d need to point at is me!

I write about all sorts of topics relating to family enterprise here, and yet this one, which seems to involve a very important “go / no go” decision, isn’t one I’ve written a lot about.

 

Forced into the Family Business

I did write Forced into the Family Business back in 2018, and if this post interests you, you’ll likely want to read that one as well.

When I re-read it just now, this line jumped out at me:

      “This assumes that both sides are getting what they need out of it.”

That’s worth thinking about in this context, because if it isn’t going to turn into a win-win situation over the short-, medium-, and long-term, then the answer should probably be a firm NO.

You don’t want to end up in a situation where you somehow get stuck in a place that you cannot get out of, and believe me, it happens, probably more often than you realize.

Some people in these positions even have difficulty admitting it to themselves when it occurs.

(If this resonates, check out the book, Trapped in the Family Business, by my friend Michael A. Klein, PsyD).

 

Things to Clarify Before You Enter

Because you don’t want to end up stuck, you need to make sure that you clarify a lot of matters up front, before you commit.

I’m going to assume here that we’re talking about someone who is at least in their mid-20’s and who has already begun their work career with a job elsewhere.

Otherwise, please go and re-read Forced into the Family Business, which clearly lays out my thoughts on going to work in your family business as your first job, right out of school.

None of this is rocket science of course, and if you think about this choice just like you would consider and ask questions about any other job you might want to pursue, with any other company or organization, you’re already off to a good start.

The biggest problems arise when people “leap before they look”.

 

Employees and Ownership

A key consideration that cannot be overlooked is whether the family company has already decided on whether being an owner of the business, now or in the future, is contingent upon working in the business full time. 

Some companies are very firm on this and are well run because of it, and others sometimes end up in a situation where they wish they had imposed this rule. But it certainly isn’t pervasive, and is usually worth considering at some point for many families.

 

Responsibilities and Reporting

Among the key matters to clarify before joining the family business are what you will be responsible for (the “what”) as well as to whom you will be reporting (the “who”).

Make sure you discuss this in advance, and don’t just talk about your first job there, because presumably you will be there for a long time and handling different roles over time is almost surely part of the plan.

It’s also usually better for you to report to someone who is not related to you, inasmuch as that’s possible.

 

Is There Enough Room for Everyone?

Another question to consider is how many other family members are (or will be) also working there.

A situation that can arise is one where there are just too many family members involved and they start stepping on each others’ toes a lot.

Maybe it’s not a good idea to have “everyone” working together, even if you all get along well. Working together may change that, and not in a good way.

 

The Frog in the Boiling Water

Most people have heard the story about the frog who entered the pot when the water was cool and then couldn’t jump out when the water started boiling.

Most such frogs would probably look back and wish they’d asked a few more questions about the water temperature that they could expect going forward.

The time for asking questions and having deep discussions is before agreeing to work in your family business.

/by