Tuesday, December 1, 2020

We All Love Each Other


Rarely do we find an enterprising family that openly denies loving each other. As their logic goes, ‘we all love each other, therefore we don’t really need to worry about putting things in writing’.


Many family businesses that succeed from generation to generation have one thing in common. They have the difficult discussions to put governance and transition plans in place, while they all still love each other. 


The most appropriate governance structures for a family business must be tailored to the particular organization, the industry, and the family. There are several structures, however, that are strong foundational structures in almost any organization:


Family Vision and Philosophy – Countless entrepreneurs and first generation

family business owners built strong businesses on a core set of clear but often

unspoken values. An invaluable starting place for many organizations and

families is to take the time to write down the values, vision, and philosophy

of the family and the organization. People change. Businesses change. Families change. Guiding values should not.


Buy/Sell Agreement – Drafting a clear buy/sell agreement (or related type of

agreement) that lays out how the business will transfer among family

members and among generations is vital as families grow and new generations

come into the business.


Succession Plan – Developing a strong bench of candidates for future leadership

is important for any organization’s continued success. It’s an important step

for leaders, but it’s also important for rising generations to know that an

investment is being made in them and opportunity is being given for them to

earn more responsibility in the business.


Whether your business is in the first generation or the fifth, it is not too late. Some

organizations create a formal family charter in working through these issues. Some

families start by scratching out their ideas on the back of a napkin. Whatever the format, these basic structures can help set up your family business to thrive for generations to come. Governance agreements require hard work. Where will you start?



“There is no better time than when relationships are

strong and positive to develop an agreement that

protects all in the family against unforeseen changes

down the road.” – Unknown


Tuesday, November 10, 2020

Think Like An Owner


Family businesses have many competitive advantages: strength of relationships, cultural fit of family members, shared values, long term commitment, patient capital, shared vision, flexibility in hard times. In some family businesses, however, these advantages can unintentionally foster an environment in which the rising generation becomes overly focused internally.  


Internal issues do matter.  Operational excellence, for example, is important.  Its part of what built the business to begin with, and the rising generation needs to master it.  However, the rising generation also needs to learn how to recognize and lead through the greater range of issues.  This means keeping a focus on the internal issues like operations as well as, for example, seeking new innovations to pivot to meet changing demands in the marketplace.  In short, this requires thinking like an owner.


Learning to think like an owner takes time.  It doesn’t happen all at once.  Nurturing the rising generation to think like an owner means helping them think through the questions that keep owners up at night.


- How and where should we be investing our resources; human capital, financial capital, and intellectual capital?


- What systems, processes, or procedures will be put in place to maintain the long-term success of the business and the family?


- What communications guidelines will be agreed to by all family members?


- How will the family’s values, mission, and culture be applied to continue to build the enterprise?


- What risks are reasonable? What is too much risk?


- What is not adding value that needs to stop?


- What is the best governance structure for the rising genteration?


- How will the next generation navigate the ownership responsibilities?


After building the business, transitioning the family business is the next most significant work.  Empowering the rising generation to think like owners is part of preparing your family and your business for continued success.  



Friday, October 9, 2020

Make "Success" The Outcome Of The Succession Plan


You’ve worked hard to create a strong, sustainable business.  You’ve been successful in building a profitable business.  But, beyond building a successful company, you want to build a legacy for your family.  Perhaps that means preparing for the next generation to take over the company.  Perhaps that means liquidating the company and using the wealth for other family legacy purposes.  Or, perhaps you have other goals in mind.  Whatever the case, it takes careful planning to make it happen.


Avoidance, or doing nothing, can seem like the easiest option, but is only going to make things more difficult in the future (and probably frustrate the rising generation in the process).  Preparing for any change in season takes planning, preparing for succession is no different. Planning that requires an understanding of where we are now; where we are going; and how will we get there.


Journeys that are critical to the ultimate success of individuals, the family, and the organization require commitment. The commitment is best when considered in the frame of a holistic approach. This means results are best achieved with more than just a single event or item. The preference to work over time to develop the capability of the family to manage their own governance and decision making contributes to fully functioning at the crossroads of the Determined Strategy and Emerging Issues.


To make “success” the outcome of succession, it’s not too late to get started.  Doing nothing is not really an option.

  1. As a family, commit to building the family legacy and the business legacy.
  2. Commit to having the difficult conversations. A professional family business advisor will be invaluable to help your family through these discussions.
  3. Draft a written plan, along with a timeline, for the transitions to the rising generation.
  4. Prepare development plans for the rising generation that provide opportunities to learn about the values and vision of the family and that provide opportunities to learn about the rights and responsibilities of being an owner of the business.


Honestly discussing the critical issues facing families and family businesses in transition helps foster the objectivity and focus needed for long-term success.  Successfully navigating the transition of leadership can often be the key piece in solidifying the opportunity to create a multi-generational family business legacy. 


Nurturing and developing the rising generation can be a very rewarding journey.  Moreover, it supports and builds the family legacy.  However, it takes time, intentional commitment, and effort to work together.


Tuesday, September 22, 2020

The Stress of COVID and Politics

Everywhere you look, you’re likely to see people facing an unprecedented amount of stress. Mental health experts know stress during times like this can impact people in many different ways and may be exhibited by:

  • Fear and worry about ones’ own health and the health of your loved ones, the financial situation or job, or loss of support services relied on.
  • Changes in sleep or eating patterns.
  • Difficulty sleeping or concentrating.
  • Worsening of chronic health problems.
  • Worsening of mental health conditions.
  • Increased use of tobacco, and/or alcohol and other substances.

Everyone reacts differently to stressful situations. How you respond to stress during these unprecedented times can depend on your background, social support from family or friends, your financial situation, your health and emotional background, the community you live in, and many other factors. 

As a leader in the family business, how do you help your family and employees navigate the current situations?

Part of the answer needs to lie within each individual. Each individual needs to have a level of self-awareness so as not to react inappropriately. Respond, don’t react. As Families in Business it is important to help all family members and employees to understand themselves. They, after all, represent the family and the business. Inappropriate reactions are not healthy.

Another part of the answer lies within the structure of the organization. Are the processes, procedures, workflow, reporting dynamics, or structures creating a toxic environment or contributing to the stress levels? 

Leadership needs to look in the mirror and honestly explore their contribution to the crisis.

-       How much added stress are we creating in our family, or in our business, or for our employees?

-       How are we helping our family and team members gain higher levels of self-awareness? 

-       What are we doing to provide proper and acceptable ways of dealing with stress?

Grit and resilience are critical to personal care. Taking care of your family and employees can be a stress reliever, but it should be balanced with care for yourself. 

Leading a successful family business through unprecedented times requires a clear understanding of positive family relationships and a clear understanding of business relationships (known as employees, management, vendors, and customers). 



Tuesday, September 15, 2020

Plans Are Critical For Smooth Successions

Good succession planning is a process. The importance of leadership for succession is required! If a key leadership role in your business was unexpectedly vacated by death, disability, or disqualification, who is ready to step up? Understanding the value of succession planning requires everyone to be more engaged.


A reluctance to plan is understandable. Reasons families do nothing run the gamut: the senior generation fears letting go; the business is going well and it is too much fun to let go; the business is struggling and the senior generation feels like they have to get it back on track; the senior generation’s belief that the rising generation is not ready or not interested; the senior generation’s indecision in choosing the next leader; the family wants to avoid difficult or awkward conversations; psychological and emotional connections to an identity connected to leading the family business.


Business families succeed when they are able to discuss the difficult issues, plan for the future, and work together as a cohesive unit in a unified structure. When the ownership is beyond the founder/entrepreneur and consists of a sibling group or a cousin consortium, there is even greater opportunity for misaligned expectations, misunderstanding, and conflict. The dialogue required for this planning is not always comfortable or easy. The discussions need to address, among other things, business goals, business management, ownership, and shareholder expectations. 


For a smooth succession planning process:

Cast the vision: The vision is the shared image of the family’s definition of success and what the family wants the business to be.  The vision provides a future orientation It points the direction for where you are going.


Identify the Talent Pool: Examine the current talent pool of individuals in the family and the business to understand potential options for future leadership.  


Plan for the ‘what ifs’: This means consider what scenarios may occur and how the family and the business will respond.


Communicate Communicate Communicate: For succession plans to be smooth and effective, it must be made known to those it impacts. These discussions may be difficult, however in the absence of communication individuals will create their own narrative.


Formalize the Plan: Draft a written plan, along with a timeline, for the transitions to the rising generation. Review the existing Shareholder Agreements, Buy-Sell Agreement, compensation arrangements, Key-Man Life Insurance policies, as well as additional legal documents.


A defined transition plan should be flexible enough to deal with both current issues and future issues, and yet detailed enough to provide meaningful guidance for both generations. 


Effective succession planning is a process that can make or break the future of an organization. Even with the best transition plan in place, however, the plan must be executed. Contact an advisor to help guide the process. Both generations need to execute the plan with a focus on the present and striving toward a vision of the future



Wednesday, August 19, 2020

Leadership Integrity for the Family Business

Integrity in leadership is frequently referenced but often undefined. It is often used to represent general platitudes such as consistency of words and actions, overall moral or ethical behavior, and consistency in adversity. At its core, though, leadership integrity in a family business involves the leader’s identity grounded in a commitment to a specific set of values. A value is a principle, standard, or quality considered intrinsically worthwhile or desirable. Values are a source of strength because they give business families the power to act. Values are deep and emotional, difficult to change, and often unconscious, and integrity is a personal commitment to living out those values.


Sometimes people think of values as a list of things they should or should not do.  To the contrary, values should be energizing, motivating, and inspiring. When people care passionately about something—in other words, value it—they can spur themselves to great achievements.

Integrity requires humble introspection, not self-righteous declaration. Being a leader of integrity does not mean perfection. Part of leading with integrity means the strength of character to learn from mistakes and seek continual self-improvement. Regardless of position or title, every leader and every family member must be responsible for modeling integrity.

How do you know if you are a leader of integrity? What are you doing to lead with integrity and to strengthen the integrity of those around you? 


Tell your own story. Share how your character has developed and strengthened over time. 


Invite feedback. Build a small group of people who know you well, see you clearly, want the best for you, and are willing to be totally honest with you. 


Listen. Learn to listen without filtering what you hear through your pre-existing notions. You will find that everyone around you is continually giving you clues. 


Our actions must mirror our words in every area of our life.



“Good leadership is built on love and truth, for kindness and integrity are what keep leaders in their position of trust.”

            Proverbs 20:28 The Passion Translation


Tuesday, July 28, 2020

It Is Not Always About Best Practices

There is a common phrase; ‘when you have seen one family business, you have seen one family business’. This is an important concept to remember when your family is evaluating ‘best practices’.

Best practices are not all bad, and many individuals are quick to espouse best practices for your family business. A best practice is a method or technique that has been generally accepted as better than alternatives.

These best practices are thought to produce superior results or have simply become an acceptable way of doing things. Some families are looking for pre-made templates to standardize family business processes. Sometimes a best practice is not applicable or is inappropriate for a particular business family’s needs. A key strategic ability required when applying best practice to organizations is the ability to balance the unique familiness, qualities, values, strategies, and goals of a business family that it has in common with other family businesses. 

Determining best practices to address a problem or situation is a commonly used but little understood tool of analysis because the concept is vague. Vagueness stems from the term ‘best’ which is subjective. While some evidence must go into determining a practice the ‘best’, it is more helpful to simply determine if a practice has worked exceptionally well and why. Instead of being the best, it may simply be a smart practice. This approach allows for a mix and match of smart practices. 

The primary mechanism in a good practice is the ability or the means of achieving a goal in an efficient manner. When adopting good practices, it is important to identify the core essence of the practice while allowing flexibility for how it is implemented so it remains sensitive to the needs of the family. Robust good practices are adaptable to various conditions, have many operational features, and can employ similar but diverse ways to achieve their goals.

In addition to the reasons why a smart practice might succeed, advisors and family business leaders should describe potential vulnerabilities that could lead a good practice to fail. Leaders and advisors of the business family must develop safeguards in order to minimize the risk of vulnerabilities. Risks to implementing the selected good practices in the applied context as well as what support structures can be put in place need to be anticipated in order to maximize the likelihood of success. These conditions include increased enthusiasm, advantageous family involvement and economic conditions, and less bureaucratic resistance.

Learn to know the good practices other business families are using and judiciously, with guidance, use what will best fit your family and your family business. It’s not about the best practices for someone else’s business; it’s about developing the best solutions for your business family.


Tuesday, June 30, 2020

Family Business Values Really Do Drive The Family And Business Culture

A “value” is a principle, standard, or quality considered intrinsically worthwhile or desirable. The root of value is valoir, which means “to be of worth.” Values are deep and emotional, difficult to change and often unconscious. Every family has values. They may be spoken or unspoken. Some families live out their values more closely than others, but each family has a set of values. 

Though the world is ever-changing, a family’s core values should be constant.  It is these core values that influence attitudes and drive behavior. It is who you are as a business family. 

As leaders in our families and in our businesses, are we modeling the behaviors that match our values?

            Are we showing and modeling respect?
            Are we showing and modeling honesty?
            Are we showing and modeling credibility?
            Are we showing and modeling commitment?

To check in on how your business family is doing, here are some discussion questions for your family, perhaps for your next Family Council meeting:

·      What are our family values?
·      How will our family values carry our business through the tough times?
·      How do the stakeholders in our business see our family extend grace, love, and forgiveness to others?
·      How are we ensuring the future generations will commit to our family values?
·      How do we as a family hold each other accountable and responsible to live out our family values?
·      Do we believe difficult decisions can be made expeditiously because our values are clear?
·      Are our values clear so that our priorities are clear?

Sometimes people mistakenly think of values as a list of “shoulds” and “should nots” guiding what they can or cannot do.  To the contrary, values are energizing, motivating, and inspiring. When people care passionately about something—in other words, when they value it—they can spur themselves to great achievements. Values are conscious motivators!

“It’s important that people should know what you stand for. It’s equally important that they know what you won’t stand for.”
                                                Mary H. Waldrip, Author

Contact us to learn how we can assist your family in codifying you values.


Monday, June 15, 2020

What Does It Mean For A Family Business To innovate

In challenging times, it is imperative to the survival of businesses to have ambition, grit, and the internal force of innovation and creativity. All employees, family and non-family, must build on the family’s values, culture, vision, entrepreneurial drive and innovation. Fostering this internal force requires a management and leadership model that empowers all in the business to internalize an “owner’s” mindset.

Being innovative and creative is a conscious choice to challenge the status quo.  Creative people are value investors in the world of ideas.  Value is generated by evaluating a creative idea, calculating the risk-reward, and driving forward.

By defining specific characteristics of innovation as:
     Being an advantage over current use.
     Compatible with the family’s value and beliefs.
     Not overly complex so that it can be implemented.
     Provides an ability to ‘test drive’, yet still revert if it does not prove    
     Visible enough to be seen by others.

How can a family business foster innovation and creativity to keep new ideas flowing?

1.     Set the culture.  Establish a culture that promotes authenticity, commitment to people, commitment to the business, and continuous effort.
2.     Nurture a nudge.  A nudge is an action that attracts people’s attention and urges then to alter their behavior in a positive way, yet it is not done in a heavy-handed way. This nudge may be as simple as urging the sharing of an idea or as complex as developing and implementing a change process.
3.     Teach the family and employees the business.  Focus not only on the technical skills each individual needs to perform, but educate people regarding how the business makes money, how the business attracts and retains clients or customers, and other big-picture issues that impact the business.
4.     Keep the momentum going.  Building the internal force of innovative and creative family leaders and employees, and the culture to keep it going, takes hard work.  To keep the momentum going, ensure that the organization focuses on competitive compensation, keeping morale up, and consistent, effective communication.

By tapping into the internal force of innovative and creative family leaders and employees, a family business can out-think and out-perform the competition, increase profits, and move successfully into the future.


Tuesday, June 9, 2020

Invest In The Next Team

As the economy begins to re-open following the COVID-19 shutdown, many professional sports leagues are still trying to figure out what they will do. During the course of the pandemic, some professional baseball teams decided to stop paying their minor league players. At a fundamental level, decisions like this communicate a withdrawal from investing in the future.

Family owned enterprises cannot afford to stop investing in developing their bench for the next leadership team. Building the bench for a family business, which may include both family and non-family members, brings unique challenges and complexities.  

For a business family that desires to build a legacy and grow profitably well into the future, the following principles will help:

1.  Develop a Family Employment Policy that encourages family members who desire a leadership role to gain work experience outside of the family business and specifically defines the objective criteria necessary for employment and leadership.
2.  Nurture mentoring and coaching between the current CEO and the next generation of leaders. 
3.  Clearly define, in writing, the job description for the leadership team roles.  Identify the expectations and metrics to which each position will be held accountable.  This should also include the knowledge, skills, and abilities expected in each role, as well as a commitment to the family’s values and objectives. Have the senior generation guide the process of selecting their successors before they leave. 
4.  Seek the support of non-biased, third party perspectives in evaluating and selecting the next CEO and leadership team.  This may mean soliciting input from non-family directors, members of the advisory board, or qualified advisors.
5.  Be open to a non-family CEO for a season if a family member is not ready to assume leadership.
6.  Set the leadership team and the next CEO up for success.  Develop a communication structure and a governance system that efficiently and effectively outlines the processes for the family, the ownership, and the business to keep focused on the correct goals and objectives.
7.  Revisit these guidelines annually.

As a family, commit to a process that will build the best bench and develop the most qualified leadership team for the future of your family business.