In part two of this conversation with Laurie Foster, you’ll get a deeper dive into what Laurie’s experience working with families in business is like and hear about some common insights Laurie has gained as well as what families in business can do to be prepared for their future.
BCR: Have you had experiences in the past that have helped you consult families more successfully?
Foster: There is no cookie-cutter approach to helping family businesses in transition. There are however tools, approaches, and frameworks that we use to engage in the issues and to develop successful solutions. Developing a framework and using tools that work is helpful. What people want to know is that they’re not the worst family in the world and that other families are going through similar situations and that there is an end to the tunnel.
I often share stories of other families and how they have navigated their journey to succession. I also have them talk to a past client who can assure them that others have gone through difficult transitions and that they’ve come out to the other end relatively unscathed. All that being said, all family situations have their unique challenges. The path is often difficult, but our experience is that perseverance and commitment to the process works.
BCR: What do you see are typical problems that families face?
Foster: A typical challenge is that the kids think they are more competent and the parents are reluctant to let go. The next generation often comes into the business with great confidence, they want to affect change that seems obvious to them and they are often impatient with the older generation reluctant to accept their ideas. The older generation is comfortable with the way they have conducted business over decades and change is difficult.
Especially when they have often not had experience with the next generation in the business and confidence needs to be built. To address this, we encourage the next generation to start with smaller projects and to build success and confidence over time.
BCR: What is the hardest thing about working with families in business?
Foster: Dealing with all of the family dynamics is without question the biggest challenge. Understanding all of the family and non-family personalities and trying to get people to adapt and modify behavior as opposed to take a more confrontational approach is key.
It is also difficult to get people to actually sit together and talk honestly and openly. Forcing the discussion can be uncomfortable but can also be extremely beneficial to resolve difficult issues. We know we don’t have all of the answers to this but we do have a process and can facilitate these discussions and let the process work. It really does take time and you can’t erase the history of the people or the business.
BCR: How can families be better prepared for the future of their business?
Foster: Establishing a Family Council or Family Board is a great way to engage family members in the business. These entities often meet periodically to discuss business and family initiatives and issues. Starting early and getting the kids engaged about what the business is, the opportunities it represents, and their responsibilities as an owner, active manager, or employee in the future is beneficial.
This helps them understand at an early age that the family business is a responsibility of theirs that they have to prepare for, whether they actually work in the family business or they will become an owner of the family business. Family members should also work in another business before going directly into the family business to bring outside views and practices to the family business.
BCR: What outcomes are you looking for at the end of a consulting engagement?
Foster: A successful transition is the goal. Those involved have transitioned to another role and/or life pattern that they are comfortable with and the business has successfully transitioned leadership and often ownership. When all parties know where their next path is and aren’t fighting the process anymore, we know we’ve succeeded.
The most important success is that the family relationships are not only intact but strong. The end game may not be perfect for all due to family circumstances, but the solution evolves over time. When the family can look back from the other side and recognize how difficult it was but how grateful they are to have a strong family, that is success.
BCR: What advice do you have for those thinking about going into business with their family or those already in business with their family?
Foster: People often focus on the difficulties of a family business, but there are so many positives to a family business. Trust is the biggest. Families tend to trust each other more than anyone and you can’t buy that. You have something no one else has as a family and can take that advantage and capitalize on family-based trust.
If folks are going to get into a family business, it’s important to separate family and business. Little things like calling your parents by their first name to separates the business and family. Trying not to take business decisions personally is often necessary. If you combine family and business, it often goes awry. One can either jeopardize the business or worse yet jeopardize the family relationship. We often ask family members to explicitly define the relationship between the family and the business. Most often they choose (and we encourage) the following: Family comes first but not to the detriment of the business. That one statement guides business and family decisions.
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