You’ve heard this story. Mom and Dad start a business. After a lot of years of hard work, the business grows to be a successful endeavor. Mom and Dad love their four children and give each of them equal shares in the company.
But two of them don’t work in the business. Of the two who work in the business, one clearly has her arms around the business and is responsible for driving its growth. Her brother “runs” marketing but spends most of his time on the golf course. Mom and Dad spend most of their time traveling.
The business, however, is at a critical juncture. It needs a real VP of Marketing to grow and can’t afford the strong dividends it has been paying the children. The daughter charged with growing the business is frustrated and ready to quit. Mom and Dad just want to keep the peace. What’s the answer?
This scenario and the many other similar struggles are common when it comes to navigating multiple generations in the business. There are no one size fits all answers. But one thing is sure: Avoiding the problem will only lead to failure. Here are a few suggestions:
- Hire a Family Legacy Consultant— In many cases, if there are strong relationships then a family legacy consultant is a great place to start. A third-party consultant can facilitate conversations among the family and get to the truth of where the family wants to go and help bring about change to accomplish those goals.
- Hire a Family Counselor— If there is underlying conflict in the relationships, then it might be wise to hire a counselor with experience in family business conflict. Before a plan can be developed, it is often best to address the source of deep-seated conflict.
- Appoint an Independent Board— An independent board with authority over the future of the business can help make some of the hard decisions related to the future of the company. They key is whether Mom and Dad are willing to give up some of that authority.
- Appoint an Advisory Board— If Mom and Dad are not willing to appoint the Independent Board with authority, they can appoint an advisory board to give guidance on the future of the company, compensation, distributions and personnel. The advisory board can be made up of a family legacy consultant, attorney, accountant etc. and present the findings to the family.
The essence of each of these recommendations is provide buffer to Mom and Dad so they don’t make emotional decisions but fact-based decisions for the good of the company and ultimately the good of the family.
While the conversations may feel uncomfortable at first, the desire and commitment to see your family to thrive long term must take precedence. The heart of these discussions are more than just about the business; you are modeling faithfulness and other key values to instill. The conversations and their lessons last long term for your children, and that is of utmost importance beyond how they are involved in the business.