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Practice makes perfect. Or, when it comes to family, as perfect as possible.
Of course, there is no perfect family. There is no perfect business either.
There is only practice – practice and development.
When my father, Christopher Snider, and I purchased Exit Planning Institute in 2012, we arranged the purchase so that I owned 49% of the company and he owned 51%. It was necessary to each of us that we were as equal as possible and at the same time had a majority owner.
We didn’t want to see each other as anything apart from equals. I didn’t inherit anything. Rather, we were buying a company that we intended to develop together. This is different from most family businesses where Junior normally takes over as #2II generation owner. In our family business, I’m more like generation 1.5. Of course, I could have learned something from my father (and still do). However, our intended configuration required me to learn and lead as an lively participant.
Unfortunately, we have seen this occur the other way around in family businesses – that is the nature of our business as exit planning advisors for private firms. The all-too-common scenario is this: it is time for Junior to move into the CEO role after what he was doing at the company. He knows the product but doesn’t know how to run the business. The transition is difficult, which leads to a difficult relationship with the Senior who has just retired.
And what follows almost at all times looks like this:
- Junior is upset that he was not properly prepared to run the company.
- The senior is upset that he continues to come to the office as an alternative of going on his scheduled cruise around Europe.
- Valuable employees are starting to head for the exit because the company seems unstable.
Although our family setup is different, it may well go improper in many ways. That’s why we practice being a good team together. And this practice does not at all times make perfect, but it creates harmony. Here are three things you may do in your family business to achieve the same.
1. Define your roles
The first thing we did was define our roles in the company. I like culture, which is why I work closely with our leadership team to ensure a strong culture that features all team members. I also have a vision to promote our company and expand its reach.
My dad is a numbers guy. He enjoys data and finance and plays a priceless role in strategic planning and making recommendations regarding our business operations.
Defining roles allows each family member to play to their strengths while helping the next generation owner develop the skills they’ll need after the current owner leaves.
2. Establish frameworks and boundaries
We don’t contact each other fairly often on a day by day basis, but that does not imply we never talk. Quite the opposite. We are invested in each other’s success and review our transition plan ceaselessly.
The first step in establishing our framework and boundaries was an intentional conversation that continues to at the present time. Too often, the older generation assumes that this is what the younger generation wants and that they have the education and training needed to take over. However, only 20 percent of companies survive to the second generation and 12 percent to the third generation without outside sales. Lots of forethought is needed for an intergenerational transfer to achieve success.
After this purposeful conversation, you wish to proceed it. Every month we organize partner meetings with a set agenda. Then we take Mom out for dinner, where we do not discuss anything. We also follow this principle during social visits and holidays. Besides, we try to do all the things together. We separate our business partnerships from our family relationships.
We also admit loudly that we have different visions of our business. The first owner of our company, before we made the purchase, focused on promoting what we call the three legs of the stool – personal, financial and business exit planning.
For my father, his signature was the Value Acceleration Methodology. My badge: expanding the Certified Exit Planning Advisor (CEPA) designation to the third highest designation after CFP and CPA, and promoting the concept of Value Acceleration to create higher lives and higher businesses. None of this comes as a surprise to my father – we have had deliberate discussions.
3. Rate, rate, rate
Every 12 months in December we use the Family Business Plan A matter for every family by Thomas William Deans. This is a set of 12 yes or no questions that assess our fit. The result is a discussion that might not be possible without a communication framework.
Assessment involves feedback and planning. Because we had a good relationship outside of business, we see feedback as a way to show each other that we love each other so much that we accept that we are trying to make each other higher.
Love doesn’t have to be difficult
Let’s face it: when you mix family and business, you have a lot more to lose. And as we embark on the largest transfer of wealth and business our country has ever seen – an estimated $14 trillion changing hands – it is necessary to talk consciously and truthfully about your family business.
Sometimes, nonetheless, when family – and love – are involved, we discover it difficult to have direct conversations that may make us feel uncomfortable. For the older generation, keep in mind that conservation is not an option for the latest generation. If a company doesn’t grow, it dies. The younger generation needs to make their mark on the business and be honest about whether you would like to take over the company, how prepared you are, and what you wish to be ready.
Conversations might be difficult at first. But that is why we practice.