Why the Route to Finding a Family Business Advisor is Confusing
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 on 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 fundamentals of Family Business Management.
Here are the essentials real family business advisers work on with family businesses.
- Are we a business family or a family business?
- Why does this family have this business and why does this business have this family?
- What is the ring model of Business, Family and Ownership?
- Predictable Transitions
- Emotional Resistance
- Working on your Independent Credibility and Marketability
- Credibility
- Marketability
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 family "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.
Predictable Transitions
Every family business has a similar time line with transitions that WILL occur. They are predictable and therefore can be part of the "family business plan" early on in order for all stakeholders to see and have the ability to discuss with founders and all that are part of the family, wither working family or those that have some interest in the family business.
Emotional Resistance
Emotional Resistance
Stemming from the above, there are emotional components to Transitions and many of those transitions are difficult to deal with from a personal/family perspective. The most obvious is dealing with family business transition issues related to the death of a family business member.
We all can look back and see that some of the conflicts we have experienced could have been eliminated or dealt with in a better way if we first recognized Predictable Transitions and Emotional Resistance. Starting to recognize Predictable Transitions requires being proactive early on and dealing with the large unknown of "I don't know what I don't know"... much harder to execute but never the less critical to the successful growth and transition of a family business.
Working on your Independent Credibility and Marketability
"Start planning now for your professional life at a company where the boss doesn’t share your last name" by working on your Independent Credibility and Marketability. For the Successor Generation, the issues of Credibility and Marketability come into play when the “safety” of the Family Business no longer exists. The vast majority of family members in a business never develop independent credibility and marketability and are ill prepared for this once a sale is completed.
Credibility
Too many members of family businesses have the air of Entitlement and do not understand nor develop Credibility. Dr. Gregg McCann, Founder of the Stetson University Family Business Center succinctly defines Credibility as “..having self-confidence and having those we associate legitimately validate that feeling.” There is an internal and external aspect… both of which you need to develop! Entitlement, on the other hand means getting something without deserving it.
The reality for those family members in a family business is they are employed due to Nepotism. Now there is nothing wrong with Nepotism. It is wonderful to be able to have your family work together; done properly it greatly strengthens the family bonds. I “got my job” in my family business because of Mom and Dad having me work in the business starting as a teenager, obtaining broad experience in Operations, Sales, Marketing, Finance, etc. Those in corporate rarely get this experiential opportunity and are unfortunately relegated to narrow “silos” of the business.
The problem with Nepotism is that one lacks the external credentials that validate ones capabilities in business. The outside world incorrectly connects Nepotism to Entitlement to lack of Competence. This means as a family business member, one has to work hard at establishing Credibility within your organization (Internal) as well as to the overall business community (External).
Why is Credibility ignored? In a family business there rarely is any pressure to establish credibility. Family is about Emotion, Security, Fun and an Inward Focus. Business is about Task Orientation, Productivity and is Externally Focused. The “insular” nature of family and family business can lead one to believe that credibility is not necessary to develop. Do you really need to formally develop your credibility with your family? Even if you know more than key non family personnel, how will the outside world validate that unless you make an effort to develop credibility beyond the safety net of the family business? I did not realize this. Even though my experience was broad and new more than my colleagues, I did not take the steps that were necessary to reinforce this with the external business community.
Marketability
Marketability is inextricably tied to developing Credibility. Again Gregg McCann succinctly defines Marketability as “…having the skills, credentials and experience needed to succeed in a career you want to pursue”. How many of you in family businesses interviewed for your job and created a resume? Maybe none? Families have unconditional support for each other as well as a high degree of trust. When I entered the family business as a teenager, I lacked the skills, credentials and experience that would be required should I have taken a different road to a business career. However parents, in general, believe in their children and the family business is a safe place to develop skills, credentials and experience, to make mistakes, and iteratively develop as a professional. I made many mistakes but was allowed a safe environment to grow, learn and flourish.
No longer in a family business, my Marketability is partly based on the Family Business experience, one reason being the business is a well known brand and to a degree I have some established, immediate credibility with new clients. However while I was with the family business, I was recognized as the “bosses son” first and then as Executive VP or whatever title I had at the time. Today my Marketability is External, such as a consultant to Family Businesses, Business Strategy Developer, Adjunct Professor, etc. Successes in Consulting or Teaching are unrelated to family and are easily verifiable and credible.
So What Do You Do?
You work on Credibility and Marketability simultaneously; they are linked and therefore one supports the other. If you are a founder set on selling the business, it is incumbent upon you to understand the impact on the Successor Generation. Examples:
We all can look back and see that some of the conflicts we have experienced could have been eliminated or dealt with in a better way if we first recognized Predictable Transitions and Emotional Resistance. Starting to recognize Predictable Transitions requires being proactive early on and dealing with the large unknown of "I don't know what I don't know"... much harder to execute but never the less critical to the successful growth and transition of a family business.
Working on your Independent Credibility and Marketability
"Start planning now for your professional life at a company where the boss doesn’t share your last name" by working on your Independent Credibility and Marketability. For the Successor Generation, the issues of Credibility and Marketability come into play when the “safety” of the Family Business no longer exists. The vast majority of family members in a business never develop independent credibility and marketability and are ill prepared for this once a sale is completed.
Credibility
Too many members of family businesses have the air of Entitlement and do not understand nor develop Credibility. Dr. Gregg McCann, Founder of the Stetson University Family Business Center succinctly defines Credibility as “..having self-confidence and having those we associate legitimately validate that feeling.” There is an internal and external aspect… both of which you need to develop! Entitlement, on the other hand means getting something without deserving it.
The reality for those family members in a family business is they are employed due to Nepotism. Now there is nothing wrong with Nepotism. It is wonderful to be able to have your family work together; done properly it greatly strengthens the family bonds. I “got my job” in my family business because of Mom and Dad having me work in the business starting as a teenager, obtaining broad experience in Operations, Sales, Marketing, Finance, etc. Those in corporate rarely get this experiential opportunity and are unfortunately relegated to narrow “silos” of the business.
The problem with Nepotism is that one lacks the external credentials that validate ones capabilities in business. The outside world incorrectly connects Nepotism to Entitlement to lack of Competence. This means as a family business member, one has to work hard at establishing Credibility within your organization (Internal) as well as to the overall business community (External).
Why is Credibility ignored? In a family business there rarely is any pressure to establish credibility. Family is about Emotion, Security, Fun and an Inward Focus. Business is about Task Orientation, Productivity and is Externally Focused. The “insular” nature of family and family business can lead one to believe that credibility is not necessary to develop. Do you really need to formally develop your credibility with your family? Even if you know more than key non family personnel, how will the outside world validate that unless you make an effort to develop credibility beyond the safety net of the family business? I did not realize this. Even though my experience was broad and new more than my colleagues, I did not take the steps that were necessary to reinforce this with the external business community.
Marketability
Marketability is inextricably tied to developing Credibility. Again Gregg McCann succinctly defines Marketability as “…having the skills, credentials and experience needed to succeed in a career you want to pursue”. How many of you in family businesses interviewed for your job and created a resume? Maybe none? Families have unconditional support for each other as well as a high degree of trust. When I entered the family business as a teenager, I lacked the skills, credentials and experience that would be required should I have taken a different road to a business career. However parents, in general, believe in their children and the family business is a safe place to develop skills, credentials and experience, to make mistakes, and iteratively develop as a professional. I made many mistakes but was allowed a safe environment to grow, learn and flourish.
No longer in a family business, my Marketability is partly based on the Family Business experience, one reason being the business is a well known brand and to a degree I have some established, immediate credibility with new clients. However while I was with the family business, I was recognized as the “bosses son” first and then as Executive VP or whatever title I had at the time. Today my Marketability is External, such as a consultant to Family Businesses, Business Strategy Developer, Adjunct Professor, etc. Successes in Consulting or Teaching are unrelated to family and are easily verifiable and credible.
So What Do You Do?
You work on Credibility and Marketability simultaneously; they are linked and therefore one supports the other. If you are a founder set on selling the business, it is incumbent upon you to understand the impact on the Successor Generation. Examples:
Work in the family business has been a goal since early childhood and they are ensconced in values related to a Family Business.
- They have prepared themselves academically and psychologically for the opportunity to work in the business.
- When the business is sold, their dreams and hard work disappear. Their needs should be a key consideration prior to the sale. AND don’t assume that because they are younger they are flexible and have many opportunities. Emphatically this is wrong!
- They will take years to recover and are shocked to the core and lack of recognition here can dissipate the family.
Work with a Family Business professional (not just your accounts and attorneys) to develop a plan to provide counseling on career opportunities outside the business as well as transitioning from a Family must plan transition from a industrial/service family to a Financial Family. Also insure that you monitor the successor generation for post sales trauma.
The Family’s must survive the sale and recognize that it’s most important assets, its human assets, are intact.
Tips for the Family Business Successor
If you are a Successor to the business take steps now to establish External Credibility and Marketability.
The Family’s must survive the sale and recognize that it’s most important assets, its human assets, are intact.
Tips for the Family Business Successor
If you are a Successor to the business take steps now to establish External Credibility and Marketability.
- Create and maintain a resume and biography. This may sound simple… it is, but you want to have a portfolio of your accomplishments. If your business has a web site, inure that the site has a section outlining family history and a place for key member’s resumes and bios. The bio is critical when dealing with Public Relations opportunities.
- Get involved with industry organizations. Creating a high level of visibility in external organizations in your industry allows you to establish credibility beyond the four walls of your business. Speak at trade shows, participate in advisory boards, show case your business as a leader in the field.
- Get involved in your community. Run for office; sit on your Planning Board or Board of Adjustment. Participate on the Board of Education. Anything community oriented establishes credibility outside of your family business. If forces you to learn new things, deal with people in different ways, increases your visibility and so on. It establishes Marketability in so far as a non family entity has entrusted responsibility and accountability to you.
- Get an MBA. In today’s business world, an undergraduate degree is not enough. An MBA adds a high level of credibility and enhances your marketability to the external world. The MBA also adds to your Intellectual Capital which inures great benefits to your Family Business. If you choose an Executive MBA, all the better since you also network with Peers and gain knowledge and insight from people outside of the Family Circle.
All the best!
Dom Celentano
Tips on Running a Small Business
