This is one of those subjects that gets people nodding their heads up and down, because of course it makes sense to align the family’s values with its business, but HOW do you do that?

If you haven’t already done the work of figuring out what your family values are, then that is the obvious place to begin.  The good news is that it doesn’t take that long to do the exercise.

The bad news?  Well, to do it properly, it really helps to bring in someone from outside who knows how to do it.  If not, you will just end up with a bunch of meaningliess values that really don’t have much meaning.

https://stevelegler.com/2016/02/14/brainstorming-your-family-legacy/

There are lots of Mom & Pop family businesses that never grow beyond that stage, and that’s fine.  For those that do grow to be more substantial, there are a couple of key things that they usually needed to get right.

Treating the business as a business, and not like an extension of the family is the first thing.

One of the best ways to do that is to bring people into the business who are NOT part of the family.

And please don’t just bring in underlings who will all report to family members.  You want to benefit from their skills, objectivity and experience.

Want to be more professional? Simple, bring in professionals.

When a family sells off an important stake in an operating business, resulting in a major liquidity event, lots of things will change.  It is always better to begin discussing those changes with the people whose lives will change before it actually takes place.

Most people do not deal with change very well, especially when it involves surprises, and when it hits them “where they live”, as in their job and their livelihood.

We use the term liquidity “event” because the new pile of cash usually arrives in one fell swoop, but it is better to think and act as if you are dealing with a liquiduty process.

https://stevelegler.com/2017/03/04/liquidity-events-fambiz-pros-cons/#.WMljzRQ44QI

https://stevelegler.com/2017/03/11/liquidity-events-fambiz-pros-cons-part-2/#.WMlj7BQ44QI 

It is often very tempting to treat all one’s children equally, because we want to be fair and not single any one of them our for special treatment.  In most families that isn’t too difficult.

In a family with a business or lots of wealth, it gets trickier, and doing everything equally often creates more problems than it solves, and I consider it “taking the easy way out”.

You need to be able to deal openly in an adult-to-adult way with all the people you care about enough to leave them your assets.  You can expect child C to be thrilled getting 1/3 of the business they have been running while siblings A and B also each get 1/3 of the voting shares along with passive roles.

Equitable is much more important that equal.  There are an infinite number of possible solutions, but you need to have the courage to ask your heirs what makes sense to them.

Allow me to use the barbershop analogy here.  If you ask a barber of you need a haircut, they will usually say “yes”.  But you know that you don’t need a haircut every week.

Every once in a while, even if Mom helps with a trim once in a while, it makes sense to go outside and get some professional help.  So let’s talk about “when”.

When you are facing situations that require questions that are hard to ask and discussions that you are worried might not go well, that is usually a good sign.  When you are finally ready to discuss really important long-term questions but can’t get started alone, an outsider is likely the way to overcome this difficulty.

Please be careful and consider someone who concentrates on the family aspects; you surely already deal with lots of people from the outside who help with business questions. The family deserves at least as much.

Read our blog on: “The Value of a Trusted Family Business Advisor”

The relationship between two or more siblings will usually last almost a lifetime, and a couple of decades longer than parent-child relationships.  These can go well, or they can go poorly.

In a family business situation, the key is knowing whether or not the siblings can and will get along.  The problem is that the answer sometimes changes along the way, usually around the time that the parents are no longer in the picture.

Clear roles and responsibilities for everyone can help a lot, as well as clear dispute resolution mechanisms.  If there is a clear and accepted governance system in place, siblings jointly running a family business can be a beautiful thing to behold.

If the questions about who gets to decide, how they will communicate, and how they are going to solve problems together never get worked out, well, look out.

https://stevelegler.com/2014/04/06/oh-brother-siblings-in-the-family-business/#.WMlucRQ44QI

https://stevelegler.com/2015/11/22/getting-brothers-on-the-same-page/#.WMlulBQ44QI