Today's environment has created a lot of priority around responding to urgent and important challenges – family and employee health, sourcing supplies and cost cutting, to name a few. The continued uncertainty and external pressure require focus on the sort-term... Which is the right response for immediate survival.
But, if you’re like 80% of agriculture and non-agriculture family business owners who have responded to various surveys, you plan to pass your business to the next generation. And sometimes, as you’re on the hamster-wheel of survival, it’s hard to find time for action that will drive this long-term goal of continuity. That is, a goal of not merely surviving today but creating the conditions within the business and the family that allow your values, your legacy, to last beyond your own lifetime.
Accomplishing the building blocks that support long-term goals might feel like “one more thing” that you just don’t have time for – especially right now. Happily, there’s been some great work done recently that highlights the practices of “100-year family enterprises, ” detailing the actions they took, early in their evolution, to sustain business success and family harmony. Learning what they prioritized can make it much more manageable for you to keep one eye on survival today…and still spare some attention for the high payoff, long-term practices that will support your goal of family business continuity.
The author of Borrowed from Your Grandchildren: The Evolution of 100-Year Family Enterprises, Dennis T. Jaffe, and his team interviewed over 90 family businesses who’ve sustained BOTH a sense of shared family values and identity AND a successful business and financial ventures over three or more generations.
They found a key practice: The survivors here (who have “survived” over 100 years!), invest in a “conscious” family. That is, a “…group of individuals who are personally tied to each other through a legacy and a commitment to becoming stewards for their own and for future generations.”
What a lovely illustration of the long-term goal of continuity! A family that feels connected to each other because of their own legacy and, because of that goodwill and connection, commit, as a group, to being guardians of the legacy (and the assets!) for use for themselves but also for their children and grandchildren.
Gorgeous vision. And, I don’t have a single client who expects this (or has found it) to be easy to achieve. So, how did they get there? Here are three key practices these family businesses embraced, generation after generation.
1. Have a strong sense of mission and values.
A family business usually begins with a first generation who sacrifices, works hard and then has success far beyond expectations. The principles and vision are lived, not stated. The next generation are often expected to continue this success, employing the same principles. But their challenges are different – siblings must learn to manage a much different business, work as a team and then, make the dream their own. No family business survives unless each generation re-forms the mission and values to both honor prior generations AND include their own “signature.”
Come together as a family or owner group and talk about your own principles. What do you stand for? How will you behave towards each other? What will you and won’t you do within your business? Within your family? This may not seem like actual “work,” yet the discussion and eventual alignment around who you are as a family and as a business – and then the continued assessment and refinement of that across years and new family members – is the glue that sustains the legacy and the commitment to stewardship.
2. Share information.
First generation founders don’t usually have to share – they have the ideas, the knowledge and the control. When a family business evolves into a team of siblings or cousins, a much broader group must be knowledgeable enough to make key decisions together – and to do so, they need to understand financials, business plans, estate documents, tax strategy and other technical details. Many times, family needs education about what these mean and what their role is in relation to them. Within the family businesses studied here, “…information about the family enterprise becomes freely available inside the community of the family.”
Senior generation members must communicate more. Probably a lot more. You can share informally – for example, talk (OUT LOUD) about the factors you considered as you made a key decision. Or reflect (again, OUT LOUD) on how a lesson you learned from the prior generation guided your approach. And, you can share more formally. Invite the next gen to meetings with lawyers and tax advisors. Or, invest in some group education – invite your lender or another family business leader to talk to the whole group. Invest in learning and transparency.
3. Build respect for and cooperate with each other.
The book’s author found that, “Siblings learn to fight and argue before they learn to cooperate. Some siblings never learn to cooperate. And, as a family enterprise grows in numbers and adds married-ins, differences in perspective can be more likely than common ground.” Across generations, conflict can certainly result in individuals or branches leaving the family enterprise. For those family enterprises that survived, the family grew their communication skills, engaged in the difficult discussions and invested the time and money necessary to build trust, respect and cooperation.
Often, an unwillingness to have the difficult conversations stems from not having the skills to hold that conversation. Invest in your own conflict management skills. Or, do it as a family! There are lots of ways to do two- to three-hour trainings by video. You can each learn skills and have a team building experience, together.
Survival in the short-term might be where your focus must lie right now. But don’t lose sight of your own, longer-term survival goals. Could yours become a family enterprise that lasts over 100 years? Perhaps! Certainly, executing any one of the actions will take some thought and energy from you as a business owner or manager. And, sometimes the work of execution can be supported by other family members. Is there a next gen who has some interest and energy and could track down the resources you’d need to gather as a family and tackle just one of these three actions?
Find a few hours this summer and lay some of your own foundation for SURVIVAL!
ABOUT THE AUTHOR
Barb Dartt, DVM, MS, is a consultant with the Family Business Consulting Group. She works with families and management teams to help them keep their business healthy and the people happy – and assists with succession and continuity planning. Barb can be reached at 269-382-0539 or email@example.com.
The opinions stated herein are not necessarily those of GreenStone Farm Credit Services.
To view the article in the online 2020 Partners Magazine, click here.