Ten ideas to successfully prepare for a changing of the guard.
- Regularly express your appreciation to Father and Mother for the opportunity they created for you. Your expressed thanks are essential for a successful family business relationship. Parents in their sixties and seventies seek validation for their business accomplishments. When appreciation is not expressed, parents often feel that the children are ungrateful.
- Nurture a reciprocal commitment to each other's success. This is important between parent and child as well with siblings. Without this expressed, demonstrated mutuality, enormous tension can arise. With this commitment the family works as a team in their business.
- Establish agreed-upon ground rules for how you will become part of the business. Use business sources and your parent's experience to establish how you will enter, train, be accountable, develop leadership, use mentoring, be compensated and work with siblings, generations and non-family managers. Pre-defined ground rules help prevent arguments and can save enormous amounts of time. The younger generation should take initiative to work with their parents and see that these rules are defined.
- Formalize all agreements to prevent further misunderstandings. Hearing this, many family members will say, "We don't need to do that because we all love and trust each other." That's exactly why you need to do it. Love and trust is no guard against misunderstanding. I have found that the family-owned business that formalizes their ground rules, creates shareholder agreements and develops family participation plans tends to be more successful with less hurt feelings.
- Define and adopt a Common Family Vision. This is a written understanding created out of the family's values on what you, your siblings, parents and all family members want to see perpetuated in the company and that unites your family. It envisions what you are and aspire to as a family.
- As part of your family vision, strive for good communication and ways to manage differences. In any family, differences are normal, but many business families shy from discussing them because they fear it will create family disunity. I often hear clients say "We don't want to upset our family relationship. We don't want to ruin family celebrations, holidays, or events." Unfortunately, the reverse comes true: not talking about issues produces the family disunity you are trying to avoid. Regularly discuss and manage differences before they grow into problems.
- Be willing to lead in organizing family meetings. Family-owned business meetings can be: 1) shareholder meetings where only shareholders attend; 2) employee meetings where only company-employed family members attend; and 3) family meetings where the entire family is invited to attend. Use this third place to work out the overlap between family and business and how it is managed (see diagram below).
- Actively help to formalize plans necessary for success. While the senior generation is responsible for many of these plans, the younger generation helps by being actively involved. There are many different plans to formulate. First, develop a strategic business plan that draws out what is often only in the entrepreneur's head. Get those insights on paper. Second, when the time is right, have the family develop an ownership and estate plan and a management and leadership plan. Third, create a plan for how to be a family beyond the business. In my experience, business and financial differences will erode family relationships unless the family knows how to come together to preserve those relationships.
- Build the emotional equity of your family as vigorously as you build the business equity. You read stories about couples who divorce yet keep their business relationships or siblings who squabble over business issues that ruin their family ties. To build emotional equity, celebrate and maintain family celebrations and traditions. These precious moments and events are the glue that holds a people together as a family and not just as a business.
- Have fun with each other out of the office. Enjoy work and play. Meet for lunch or breakfast a few times each month. Share dinner occasionally. I have clients where the father and sons and a father and daughter get away at least once a year to golf, ski, or go to the theater. Time spent together enjoying each other away from the business builds emotional equity.
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