The Family Business Collision Course - Wendy Dickinson

Wendy Dickinson, Catalytic Conversation$

IBGR.Network - PROFIT Radio. Everything a business owner needs to start, grow or exit a business. GROW WITH US.

Introduction:
Family business is complicated because people are complicated and families are complicated, AND business is complicated.  Yet, a significant portion of the world’s economy relies on family businesses.

Family business is like any other in the sense that the business can be a viable asset, or a job for family members.  It takes attention and intention to form a viable asset that can exist beyond the current generation to become a legacy for future generations.

In this segment, let’s focus on the potential pitfalls and possible options for building legacy, not conflict, in an asset.

SHOW OBJECTIVES: THE WHY

1. Define the ultimate destination for the business. Legacy? Sale?
2. Connect the company vision and values to strategy.
3. Reverse engineer the elements of success for the company in the future.
4. Identify the skills needed to take the business to that place of success.
5. Build a strong, independent board of directors to set your family up to create a legacy of success.

KEY ISSUES: Problems You May Encounter:
There are several issues that many family business owners face.  There is value in naming each of the challenges, as well as in recognizing the spectrum of options that exist to navigate each.

1. Fair & justifiable compensation and benefits.  There are so many stories of a family member who is a poor example or delivers a lower standard of work and it negatively impacts the morale of the business.
2. Each generation of the family impacts the culture of the business - for good or for ill.
3. It can be hard to separate the business from the family’s personal interactions.
4. Generations differ and there can be conflict in management style, communication, as well as values.  
5. Most companies do not have a succession plan.  And, of those that do, most have not communicated that plan to the family.
6. Entitlement on the part of the next generations, as well as on the part of those in power currently.
7. Sibling rivalry can have a huge impact on the family and the business.  It can fester.
8. Employing spouses takes finesse.  Employment of spouses can seriously impact the family’s business and it’s up to you, the leader, to determine whether that impact will be positive or negative.

What You Need To Know - THE WHAT:

1. Take the time to acknowledge and share each person’s CORE Identity: beliefs, patterns of behavior, allegiances, values, and emotionally meaningful experiences.
2. Create a succession plan.
3. Prioritize a business continuity plan.
4. Create a BCP for 3 most likely scenarios (death, illness, climate event).
5. Identify the causes for sibling rivalry.  This type of competition interferes with operating as a team for the company’s success.
6. May need to dig into relationships between parents and children.
7. Create provisions for employing spouses.

What You Need To Do - THE HOW:

1. Prepare the next generations to work well together.
2. Educate the next generation for their future responsibilities.
3. Prioritize business continuity over personal power.
4. Adhere to the corporate governance structure and the clearly written (& communicated) succession plan.
5. Devise a solid business plan that everyone in the family can agree on.
6. On the topic of employing spouses: develop guidelines, employment & compensation policies, written codes of conduct, disciplinary and dispute resolution process.

​Resources:

1. “Developing The Next Generation of Leaders in your Family Business”, by Claudio Fernández-Aráoz, January 31,2020, HBR.  https://hbr.org/2020/01/developing-the-next-generation-of-leaders-in-your-family-business
2. Work The Bugs Out: Practices To Work In, & On, Your Business, by Wendy Dickinson, Publish: TBD.  Excerpt: Free Downloadable PDFs to work through.
3. 2019 US Family Business Survey, PWC, January 2019.
4. 5 Challenges for Family-Owned Businesses, by Barbara Weltman, April, 2018, sba.gov.
5. Family Business Challenges: The 3 Issues Families Can’t Ignore, by Francois Botha, March 31, 2020, forbes.com 

You can connect with Wendy Dickinson on FB, LinkedIn, and Instagram.

E3.03.4NA