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Should I Encourage My Children To Join The Family Business?

September 26, 2016 No Comments
Photo courtesy of: Henry Martin Cartoons, © Punch Limited
Photo courtesy of: Henry Martin Cartoons, © Punch Limited

 

This is a question that I am often asked by just about every family business owner(s) facing this decision.  It is often hard to come up with a direct answer for so many reasons.

My first response is usually the question, “What does your son/daughter want to do?”
This generally begins a discussion that results in a long list of questions that first must be addressed.

While it sounds like a bit of an annoying process, the resulting questions are truly the beginning to finding out the true answers to the initial question.

As parents, the thought of a child joining the family business brings so many varying feelings.  These feelings range from sheer excitement & retirement planning, to fear of conflict, to the shift in the family dynamic that inevitably happens, to procrastination on dealing with the issue.

This is a huge decision for most family business owners. There are concerns of things not working out and the resulting damage to the family. (refer back to my article entitled, “What Does Mom Have To Say” for further insight on that front).  Never forget about Mom in this process!

What Should the Family Business Owners (Mom and Dad, Siblings, Partners) Do Now?

Let me answer that question!

Engage in an outside expert to help facilitate a conversation.  I focus on asking the right questions, having the proper respectful discussions in a safe environment, and really digging deep to explore all of the segments of a successful entry into the business for your children.  All done with a vast knowledge of family business dynamics.

As you read this you may still be looking for the answer to the real question posed in the heading.  At the risk of sounding coy, there is not “one” answer other than let’s work together to explore and figure it out. Family Harmony may depend on it!

Please feel free to share this article with anyone pondering these questions. I am always happy to offer a COMPLIMENTARY one hour meeting.  In this hour, we may even answer a few of these tough questions.  Call me and let’s chat 🙂

Fair is Not Always Equal and Equal is Not Always Fair

August 10, 2016 No Comments

equal kids

 

Many of you have heard me make this statement.

Fair is not always equal and equal is not always fair! 

What does it really mean in the world of Family Business?

Why does it apply and how do we as parents accept this to be true?

As parents we always work hard to maintain equality with our kids.  We make sure they have the same opportunities as they grow up.  They get “equal” presents for their birthdays and holidays and we try and spend equal time with each of them for their various activities.

When our kids finish high school, we want them to have the same post secondary opportunities, making sure that whichever direction they choose, they do it for themselves first (and us second).  We follow their growth in their studies and help them through their difficulties, whether they be academic or often social.

They graduate! We celebrate! They either want to work in the family business or use it as a default destination.  One may thrive at the business and one may just “punch a clock”.  We don’t love them any less that’s for sure. Do we pay them at the same rate? What about performance bonuses?

Now this is not an article entirely on parenting.  As they progress in their career in the family business, your accountant, lawyer, financial advisors, or even close friends; suggest you do some deeper estate planning.  This involves the future ownership of the business.  Most parents want to see their children be treated equally as shareholders and “partners” in this business.  This is where the hard questions begin!

Does the child who constantly outperforms your expectations and their contributions deserve to be treated equally to the “clock puncher”?

My answer is very clear…it depends!

Some families face decisions like these when properly guided through a succession process.  In my role, the underperformer is encouraged to take advantage of a clean slate to try and “start over” and prove themselves. Through some difficult discussions, we work to understand the different level of commitments that each child may have to the business.

We work to flush out ALL of the issues that brought us to this point.  Sometimes we bring the “clock puncher” to the table with a new vigor for success.  Often we do not. Sometimes we find out their true passion lies outside the business and as parents, we want to support our kids to follow their dreams.

Maybe it is fair that the children be equal shareholders but at very different pay structures that reflect their performance.  Maybe parents need to focus on the legacy of the business and have the child with the real passion be a future majority shareholder with the others in a minority position.  Sometimes those shares are placed in a trust and sometimes the decision is to keep things equal.

This article is not designed to give you the answers.  It is designed to make youquestion what the ideal outcome for your family, for your business and your harmony.

Please share this article with those in your circles, amongst your clients, and anyone who you think may be feeling this dilemma.  It is time to have that conversation!

Family Businesses that can make some tough decisions and take action are often those whose success we read about and work to emulate!

Can We Love Our Children TOO Much?

June 28, 2016 No Comments

tight_hug

As a parent the immediate answer is NO WAY! You can never love your kids too much no matter what their age and stage in life is.  But there is a line in which our parental love for our kids creates a false sense of entitlement which will not serve them well in life.

I came across a great line and I cannot remember who said it but I love it!  It is as follows:

“A parent’s job is to raise responsible adults who can have high self-esteem and can function independently in their world with our unconditional acceptance”.

Sometimes loving our kids too much challenges the very nature of the above quote.  It is not our intention to derail their growth and independence, but it is sometimes a by-product of our best intentions.

The result of “loving our kids and giving them too much” creates a sense of entitlement that can be tough to reverse but not impossible.  We have to teach or sometimes
‘re-teach‘ some of the values that come with work ethic, wealth understanding, and the power of both.

As most of you know, I work with family businesses in their succession planning and this involves mentoring the next generation to become great leaders.  Part of this role I play involves understanding in depth, how the business generates wealth, and the responsibilities that fall on next generation leaders.

There is going to be a huge wealth transfer over the next 10 years (estimated at $750 Billion!) and this overwhelmingly large transfer will create massive issues for those who are ill prepared to accept the responsibility that comes with it.  That means there is still a bit of time to educate our children on how to be great stewards of this money and these assets.

Talk to your kids! Hire a professional, like me, to help them understand what lays ahead and how amazing communication skills needs to be a part of these future plans.

If you have struggled with this part of your parenting, you are NOT ALONE.  It is never too late to begin improving your communication! It is never too late to deal with ANDprevent current and future conflict.

There is no “dollar value” of an estate that is too small to make sure the next generation and those subsequent, to understand their wealth, what responsibility comes with it and how to best manage it while maintaining family harmony.

Call me now for a no obligation chat about how to create your own incredibly, successful next generation leaders.

It is never too late to make your family and family business the BEST it can be.

 

Clarity and Communication!

 
Please feel free to forward this article to a family you feel may benefit from this conversation! I am always looking to meet all kinds of family businesses, small or large, young or old.

Is the Cottage Always the Peaceful Place for the Family?

May 19, 2016 No Comments

cottage

The idea of a family cottage where everyone can hang out together and share the cottage time with their families is always a great plan.  Too often, disputes arise when families try and “relax” together. Does this sound familiar?

There are more legacy type of issues with the cottage than with any other asset in the family.  Everyone has such fond memories, great times together that make for multi-generational stories. All the memories are usually good ones when Mom and Dad are around to be the “Mediator” and the “Banker”. What happens when they are not around anymore?

In guiding family business owners with their succession journey one of my first intake questions is, “Do you have a family cottage?”  If the answer is YES, then we need to have a chat and explore what things will look like when you are no longer able to be the CEO of the cottage.

I usually hear, “Oh the kids will work it out”.  Having had to mediate on these issues, I have developed a new philosophy regarding the family cottage:

Sell it before you pass away, or deem it to be SOLD in your will, or have it placed in a Family Trust with the funding mechanism to sustain it for a very long time. 

People ask me why I am so harsh regarding the cottage.  Here is why:

  • The value of the property is probably so high based on recent trends, that it represents a large proportion of an estate.  What was bought for $100,000 30 years ago could now be worth well over $1,000,000 today?  It is too valuable to take a “wait and see” approach.
  • The conflict around who pays for what in a cottage, that is now shared by siblings and their families?  A new roof? a new boat? boat repairs? dock installation? gas in the boat?What is a capital expense versus a consumable and why does this matter?
  • Who sets the schedule for use in our limited season?
  • All family members often do NOT use the cottage to the same extent. It is fair to say some may like it more than others.

These questions are endless but in most cases will lead to a dispute amongst family members. It can be avoided! If keeping the cottage in the family is the only option, then you have to be proactive.

How Do We Avoid These Challenges?

One of the best options is to have a family retreat that is facilitated by a third party (hey, I do that!) and openly deal with all of the issues that will arise in shared ownership.

Flush out the potential conflicts early and find the solutions to the issues before they become issues!

By bringing the family members together with spouses and hopefully Mom and Dad, we can be collaborative, proactive and prepare for a successful season on sharing the cottage and all that it entails.

If dealing with the cottage as part of an estate issue (upon death), those siblings who do not use the cottage and have no desire to participate in ownership, can be bought out of their share at market value taking you one step closer to family harmony.

Cottage season is upon us.  I wish you a great season of making memories and being safe.  Be proactive and talk about the cottage and its future while things are going well.

If you have any questions as to how to get started in having these conversations, please reach out to me as you know I would be more than happy to help!

Owning a Family Business and Sleepless Nights

April 19, 2016 1 Comment

sleeplessness

The family business founders whom I come across frequently ask, “What will make my child the business owner that I am?”  I am usually unsure of where this conversation will go but I always have the same simple answer: “When they lie awake and worry about something business related.”

Many next generation members are initially puzzled about the relationship between my response and business ownership. What does such preoccupation have to do with successfully running a business?  My answer is “EVERYTHING”!!  I do not, nor have I ever met a business owner and founder who can honestly say that they have never lost a minute of sleep worrying about their business.  The sleepless nights can stem from an endless list of causes, including finances (making payroll), customer issues, staffing concerns, exploring potential growth areas, and exciting opportunities in the marketplace.

Like me, these business owners are also Moms and Dads. As parents, we work very hard to protect our children from hardships and unpleasant events throughout their lives. We shelter our children during tough times and celebrate with them in the good times.  It is what good parents try to do.

How does that work in a family business?  Is it prudent to shelter your next generation kids in the business from problems, highly stressful workplace situations, and financial issues? Sheltering your adult children, who you hope will carry on your business legacy, is dangerous.  They will be ill equipped to deal with adversity when called upon and as such, should be exposed to these business issues early and as often as necessary.  As parents, we protect and nurture, but as bosses, we want our team members to be experts at dealing with rough seas.

These issues cause the loss of sleep.  If you are never exposed to them, then you may sleep soundly. But, you will not be properly equipped to take the reins one day.

Mom and Dad, the family business is NOT the place to be overly protective. It is the site of a true education in how to deal with turbulence in the corporate world.
Be transparent, share these issues, ask your children for their opinions, and look at things from all sides (past, present, and future TOGETHER).

Remember: it is okay for your future successors to lose a bit of sleep now and then.  It will strengthen their abilities to be successful and have a more promising future as next generation business owners.

What About Children Who Are Not in the Family Business?

March 16, 2016 No Comments
family, unity

In many families, not all the children make a choice to join the family business. It is important that we understand some of the reasons why they don’t.

There are several which I can quickly list including but not limited to the following:

  • they weren’t encouraged to join,
  • they were not invited in (for many reasons that warrants an article on its own),
  • they don’t like the family business,
  • they may not get along with their siblings and recognize even greater conflict ahead by joining them in the business,
  • they may not have any applicable skill set to bring to the table, and my favorite one
  • they have found their own passion outside of the family business.

I Want To Do My Own Thing

Let’s focus on those that have a chosen profession or career that does not involve the family business. Looking at transition and succession planning from their view is quite different from how Mom and Dad and siblings in the business see things. Their notion could be that they are excluded from the business and its decisions, which may have a direct impact on legacy and wealth preservation. It will make them wonder what else they are excluded from.They may feel like “they are being punished” for choosing a career outside the business. They may also think that their siblings are tied closer to the parents than they are, resulting in an unbalanced relationship, which is usually evident at social gatherings. Are they being punished (financially or otherwise)? That is determined by how you approach succession.

If the succession plans are shrouded in secrecy then they will absolutely feel like outsiders. If the parents goal is to have children outside the business feel excluded and willing choose this method of succession, then they must be prepared for a fractured relationship (at best) with their other children. If family harmony is a desired outcome then the pathway towards succession is quite different.

How Do We Maintain Family Harmony?

The answer is quite simple really. Engage an advisor to help you who wholeheartedly believes in transparency. Whoever this trusted advisor is, should believe in maintaining a solid family unit above any one member’s personal agenda.I can appreciate that this notion may be uncomfortable for many people. I am not necessarily promoted full financial disclosure and such in-depth analysis that everyone feels too vulnerable, but what I am proposing, is that outside children be included in the dialogue with regards to succession planning. They should not show up for a family function and find out that their brother or sister is now vice president and is purchasing the shares from Mom and Dad.

When the decision is made to discuss succession planning (and long-term retirement planning) the most successful families have always included every member of the family
(yes even in-laws in most cases) in the process.

In addition to sharing the plans, outside children can be a valuable asset in the process through their lifelong understanding of their family, their interactions as well as their true intentions. For many, this is a bit scary but with the right guidance parents will provide the entire family with the greatest opportunity to have a successful business transfer and most importantly, a great family unit full of love and support for one another.

Do not go alone in trying to resolve family business conflict, managing your wealth transfer to the next generation, preparing your estate or executing the estate of a loved one. I offer all of the services you need to to maintain family harmony in the family business while preparing for the next generation.

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