Confused, a FamilyBusiness Turns to a Coach, The New York Times articulates how 2 sisters in business turned to a coach to work through family issues that threatened the long term sustainability of their business AND their relationship with on another.
Only a very few advisors and coaches are equipped to help family businesses. Most advisors tend to be attorneys or accountants - most families feel comfortable confiding with these professionals since they know the most deep, dark secrets of the family.
This kind of advice tends to be transactional, meaning it centers around legal or accounting tactics, as opposed to a more holistic effort address the root causes of the surface issues.
Every semester I start each of my family business classes reviewing 3 fundamentals of Family Business Management.
Are we a business family or a family business?
A family business is the tangible part, the container that generates current cash flow, a place for family members to be employed, the symbol of the family that is represented to the community. Like everything, there is a beginning, middle and end. At some point a family business does not address the family needs and would be best to be sold with the proceeds going back to generate more wealth in other vehicles for the family.
A business family is a family that likes to work together and has the unique "right balance" human capital and economic capital. They have the strategic and tactical ingredients to make many types of business successful, thereby creating a steady growth in wealth for the family for generations to come.
Why does this family have this business and why does this business have this family?
This is not a trick question and it is very difficult to answer since it requires family discussion and brutal honesty. A business requires requisite business knowledge and social management skills. Does the family in the aggregate have most of them under one roof? If not, is the f`mily "smart" enough to recognize this and seek the necessary management talent where they lack this talent?
Why does the family have this business clarifies the reasons for the family to invest their time and money. Is it a place that simply generates a steady stream of cash? Is it a place that provides a safe landing strip of employment for family members that might have a difficult time matching their lifestyle needs to what they would be compensated in the real world? There is no right or wrong answer.. Just the honest answer.
What is the ring model of Business, Family and Ownership?
Family business consists of overlapping dynamics of family, business and ownership and ALL qualified family advisors know what this is. It is the early stage blueprint where one starts to address everything that is happening in each family, business and ownership sector and most importantly, all of the stakeholders within and outside of the family business. Most business have stakeholders primarily as equity holders or employees and management. Family businesses have stakeholders that are neither owners or work in the business… essentially other family members that are children, spouses, cousins, etc. They have a strong influence in what happens in the business and this is where most supposed family advisors go wrong in that they do not understand what is called stakeholder analysis.
So if you are a family business and are seeking a coach or advisor, pose the above questions and see if they can answer each similarly to how I have. If they can, then they understand how to help family businesses… otherwise move on.
All the best!
Dom Celentano
Tips on Running a Family Business
