As a person that grew up in family business and ran a family business for nearly twenty (20) years I am passionate about helping businesses navigate some of the landmines that exist in family business. This article is the first in a series that I hope can help leaders of family business navigate the Business of Family Business. The content I chose to share is framed from the perspective of talking to my 25 year old self, which is the age I was when I assumed the Presidency of our family business.
In the “Family Business Handbook” published by the Harvard Business Review and written by Josh Baron and Rob Lachenauer, they point out four disruptions that, given enough time, will impact your family business.
1) Death
2) New entrants
3) Inequity
4) Behavioral health
At the risk of stating the obvious, death is inevitable. However, we often underestimate the impact. Quantitatively the need for tax and estate planning should be a given. By partnering with the qualified lawyers and accountants a family can navigate the financial and legal challenges.
We also recognize the need for succession planning. In the podcast “Capital Club”, the host Brian Adams frequently speaks about the importance of killing yourself on paper. This thought experiment is an exercise every family business should undertake.
So yes start by doing estate planning and succession planning, but the work isn’t finished as the non-financial risk factors are more daunting.
The death of a patriarch or matriarch often creates qualitative challenges that are more difficult to foresee. Often, these patriarchs and matriarchs are the glue that holds a family together. The first step is to recognize the deterioration of the family dynamic after a death.
Are holidays a sense of dread?
Is there unspoken tension at funerals, weddings or family reunions?
If these things are happening to your family business take solace you are not alone. Based on my interactions with other family business owners, often the “family” creates more challenges than the “business”.
Perhaps it is time to bring in outside assistance to help unpack “the why” for the brewing tension, create some rules for conflict resolution and create boundaries.
In next week’s installment, I will address the challenges of “new entrants”, such as children and spouses into a family business.
Thanks for reading.