Family Business - Functional or Dysfunctional?

Doug Sippel, Leadership Transitions, LLC.
 
Depending on your experience, you may have a very positive or a very negative view of a family business. If you grew up in or around a healthy family business, which provided a great place to work for employees, a good living for the owners, and a source of jobs and support to the community, then you have a very positive view of family business. On the other hand, you may be from an unhealthy or failed family business or a professional who gets called in to try to fix the dysfunction and unhealthy behavior. If so then your perspective may be that family and business should never mix.  
 
The Two-By-Four Enterprises business scenario is a great example of a business at the fork in the road. Down one fork is a strong business with healthy governance structures and great leadership. The other fork leads to family conflict and possibly a failed business. Unfortunately, 70% or more of closely held businesses take the second road. Two-By-Four owner, Bob and his wife Margaret Sprout have a wonderful opportunity. They can engage their children and the other leaders in the business to execute a strategy based on a strong shared vision of success, and core values that drive their behavior and decisions.  
 
Do the children have the willingness to learn how to work together to manage their shared wealth? Will Bob and Margaret be willing and able to balance their own needs with those of the next generation? Will they be able to select a new CEO based on the best person for the job, or will they allow family dysfunction or office politics to guide the decision? Time will tell. If Bob and Margaret spend the time to build a strong foundation based on a sound philosophy and strong guiding principles, they will likely be successful. If they approach this work with a beginner’s mind, willing to listen and learn from wise counsel and trusted advisors, as well as their own best instincts, they will travel the narrow road to success.  
 
As Robert Frost reminds us in his poem "The Road not Taken":

I shall be telling this with a sigh
Somewhere ages and ages hence:  
Two roads diverged in a wood, and I—  
I took the one less traveled by,  
And that has made all the difference.

Traveling down this "less traveled" road with the passion and the commitment of the family and the key employees will be challenging and may require learning to communicate in new ways. Choosing this road is the right choice. And that will make all the difference.
 
Choose wisely Bob and Margaret!

Doug Sippel is founder of Leadership Transitions, LLC. He is a Leadership Coach, Values Consultant, Mediator and Financial Planner. Doug grew up in a multi-generational family business which has prospered through several leadership transitions and maintained strong family unity.

Clarity of Direction and Good Communication

Gary Furr, LLC
Bob Sprout,  founder of Two By Four Enterprises, is not unlike many business owners who started their business when they were young. They never think about the future and the day that they would need to plan for the transition to new ownership, whether the new owners are family members, employees, or a combination of both, or there is an outright sale of the business. These owners work hard for years, go through tough times, and come out on the other side with a very successful business. They made the hard decisions—possibly all the major decisions for the business. Planning for the future wasn’t the first thing on their mind.
 
As they get older, these owners realize that the business has grown up around them and that perhaps they have not adequately planned for the future—theirs and the business. They haven’t given much thought to how they would pass the baton to the next owner. They’ve been too busy being busy to really envision what the future might look like.

Like many others, Bob has not taken the time to clarify what he wants his business to look like in the future. There has been little to no communication to family members, management, and employees as to where the company will be should he decide to retire and step away. With two children already working in the business and many long-term employees wondering what is in store for them, there are a lot of questions up in the air. These questions often create unfounded assumptions that tend to run rampant throughout an organization, fueling speculations that may be far removed from the truth. Who will take the helm and guide the business into the future? This is the question on the forefront of employee’s minds, and there are often conflicting ideas on how to transition into the future. There may even be some animosity toward family members who may or may not be qualified to lead the organization.

The lack of clarity of direction in a closely held business is a major problem as baby boomers age and their businesses mature. Without a clear direction as to where a business is headed, it is difficult, if not impossible, to create a plan of action on how to get there. Taking the time to see the bigger picture and to think long-term are two very important steps for future growth and transition.

Clarity of direction based on common values is the first step toward any successful transition. Although it may seem counter-intuitive, we need to slow down and step back from the business of being busy to see the bigger picture. A current-state analysis is a critical task. Inviting the family, staff, and key employees to gather their thoughts and ideas of what they envision for the future is a good launching pad for discussion. Communication helps prevent chaos and paves the way for a smooth transition, whether it’s in the next month or years down the road.

Gary Furr, LLC specializes in business coaching and consulting helping clients to improve their individual and organizational performance dramatically through one-on-one coaching, group workshops, and training.