Recently I was contacted by three cousins. They were successful being in business together, said they got along really well and wanted to know if I could help them. You might be thinking, “With what? This sounds great – an enterprising family with no major family conflict.”
The cousins wanted to avoid the pitfalls that tore their fathers (two brothers) apart. The fathers’ business was ruined and they barely speak to each other now. Fortunately, the cousins managed to stay close and start their own business in the same industry as their fathers’. Also positive is the fact that they were sophisticated enough to plan ahead and think through the interplay of family and enterprise before major issues arose. They were not sure what the pitfalls might be and wanted to develop a process for open discussion and planning for the various (and normal) conflicts that inevitably arise when the intensity of business is combined with the intensity of family relationships.
While forward-looking calls like these are more common than they were years ago, the reality is that the majority of calls I get are from families and their trusted advisors after things have been simmering for quite some time and often are at a rapid boil. The importance and value of being proactive can’t be overstated. While I can be quite helpful to families in business even after conflicts are in full force, it is clear to me how much more time, energy and money is needed to address these issues later rather than sooner. This is true for many reasons, not least of which is that by the time emotions are running high and communications are blocked, it is markedly more difficult to start untangling the problems and move forward.
While conflicts are to be expected in family enterprise, they can best be handled by starting the important and necessary discussions early and having them often.
In other words, strike while the iron is cold!
What is the lesson?
Enterprising Families: If you are early in the life-cycle of your business and starting to think about involving family members (or are already working together) consider implementing family-specific governance structures (e.g. family councils or family meetings) or have an assessment by an experienced family business consultant. Even if you go no further than the assessment, you will have some valuable direction, a good baseline, and food for thought.
Advisors to Enterprising Families: Technical expertise, good financing, strong marketing, and all the other hallmarks of a thriving business just aren’t enough to insure success over time. Williams and Preisser, in their excellent book on family enterprise, Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values, detail their research on 3,250 enterprising families. They find 70% of generational transitions fail even while 97% of technical professionals are performing well. Their research demonstrated that 85% of the failures were due to lack of communication, trust and preparing the next generation. Helping your family clients to begin thinking about and addressing issues at the intersection of family and enterprise is one of the best ways you can add value and help your clients achieve their true potential.