Today was one of those fabulous sunny warm unusual English summer days. And working from my home studio reminds me more than ever how fortunate I am to have this life working with a passion at something I believe in. I feel I can make a real contribution to the family business sector and what could be better than seeing and working with two of my daughters every day. That’s what we call the ‘family factor’ and I can look back and join the dots that say this was meant to be.
Another wonderful thing was I had a coffee with an amazing, brilliant, successful businessman who ran his own premium winery as a family business. We got talking. This is a person who has a life running many businesses around the globe; uber successful but no stranger to failure either. In my book a serial entrepreneur and maverick. An awesome and somewhat intimidating character. But I just had to be myself. What the hell.
We got talking about family business, the challenges, issues, ups, downs, risks, failure, success et al. We then debated the subject of succession. With my knowledge and experience of knowing and working with family businesses of all sizes across all sectors, I’ve come across so many differing views on the whole topic of succession. This particular gentleman having bought and sold many family firms was wholeheartedly against succession to the next generation as a concept. The adage of ‘shirt sleeves to shirt sleeves’ rang true. And in fact, he said himself that he would ensure all his kids had a house and car as a gift from his own success, but that was it! All of his children had to make their own way in the world, just as he did. No handouts, no extra perks. If they want to come into the family business they have to work their way up just like everyone else. And in fact, this is written into their family constitution.
He has seen enough toxic bad blood, bad decision making and wrong turns, so much so he bought one such family business for £1. Reading this you may find his approach hardcore. But it does beg the question ‘is succession to the next generation always the right course of action?’ How many times have I had the conversation around merit versus entitlement? And I have to conclude there is no place for ‘entitlement’ as a business strategy. I believe it will always end in tears.
When I work with family businesses on exit strategies one of my questions to the next generation is ‘would you be prepared to buy shares in the business’? The answer is always a big giveaway and I have to be prepared to say it like it is.
Research tells us that there are 4 reasons why anyone would want to join the family business:
- You have a passion for the business (since I was a youngster I always knew I wanted to join the firm)
- Our family name is above the door (the feeling of guilt would haunt me forever if I didn’t sign up)
- Our family wealth would be at risk (it has always provided a good income for the whole family in the past)
- I can’t get a job anywhere else
Once we can understand the thought process of the next generation and where they are in their attitude to joining the family firm we can then work with this.
My conversation over coffee was indeed hardcore, but it was also refreshing to hear something different. Succession isn’t an option of seeing the world through his lens. How many of us dream that our kids will one day join us, take over and flourish as stewards for generations to come. How proud would we be?
The reality is that in this day and age we have to explore all options. This is healthy and wise. Playing ‘what if’ with each exit scenario will inform the goal and outcome. The world is so different to what it was 5, 10, 20 years ago. Our children’s aspirations are not ours, nor ours, theirs.
Luckily for me, this is what I do; in the hope that I can bring consensus and harmony to the family and protect it in light of the business. My mantra remains ‘you can always get another business, but you can’t get another family’.
Specialist advisor to family-owned businesses