So, You’re in the Family Business…?by Paul  Karofsky

Ben (father): You kids are going to analyze the future to death. I say, “You see an opportunity, you go for it.” I don’t have to check with a hundred other people.

Fred (son): But, Dad, it’s more complex today. We’ve got to look at the numbers, study the market, consider the consequences.

Sandy (daughter): We’ve got to think about our key people. How do they feel? We need them to “buy in” in order for any change to work out properly.

Ben: My gut feel is what started this company and built it to where it is. I’ve always had a good sense about the future, even without an MBA. I just know what’s best.

Ben thinks silently, “These kids are unbelievable. Sometimes I think they don’t even want to grow the business. They’re afraid to take chances. You’ve got to take risks if you’re going to succeed. They’re going to bury themselves in numbers and never make the tough decisions. I’m afraid to think what this place would be like without me.”

Fred reflects, “We can’t just ’shoot from the hip’ anymore. I understand that’s how dad used to do it and it worked for him, but the world of business is more complicated now. We’ve got to look at cash flow projections, incremental contributions, investment alternatives, the current state of the market, and the future of this industry. We’ve got too much at stake to just roll the dice like Dad would. Since he has achieved his financial independence, why does he want such risk? I’m not going to be a workaholic like my father. It will take too great a toll on my family.”

And Sandy considers, “Dad has had some brilliant ideas and has built a terrific business. But the future challenge belongs to us. Once upon a time, he could be the Lone Ranger. Today we need a posse. Ben’s and my style is one of consensus. My human resource training convinces me that if our key people are part of the planning process, the implementation will go a lot smoother. We don’t have all the answers and can’t be expected to. We also need to get the objective opinions of outside experts who have no vested interest in what we’re considering. I also want to be a mother to my kids. If we take on this kind of growth, it might demand more time than I’m ready to put into the business. Fred and I both have pretty comfortable life styles as is. Maybe Dad’s ideas for more growth are more than we need or want.”

What’s going on…

Dad, Fred and Sandy have differing views around risk taking, style of life and how decisions are made. Dad has been a creative and risk taking entrepreneur. Because his children are reluctant to support his instincts, Ben thinks they are not willing to take risks and grow the business. Their approach is more conservative and analytical and requires the input of others. Since Dad has secured his financial position, money is not his lure. It is more the “thrill of the deal,” the “action” that motivates him. His gut feel has dictated much of his success. When he was building a business from the ground up, that was a style that worked for him. But there is more at risk today and Fred and Sandy have achieved their levels of comfort. They are more focused on stewardship than entrepreneurship and their dad’s way may not necessarily be appropriate for them at this time.

Fred’s business school training has provided him with a systematic approach to decision making. Sandy’s human resource background has convinced her that the involvement of key people is critical. Both have some concerns about “quality of life issues.” They remember how little time their dad had for them when they were young. They want to add time for their families into the equation, and may well not wish to opt for a significant growth strategy if the tradeoff negatively impacts their home lives.

What to do…

Ben, Fred and Sandy are good candidates for a family business meeting to reflect on some longer term personal goals to be followed up with strategic planning for the business. Their agenda for this family business meeting might consist of:

An individual and shared discussion of long-term goals and desires for the principals and their families. What kinds of lives do they wish to be living 5, 10, 15 years from now? How much of their lives do they wish the business to represent?

Family members should discuss their financial goals and whether they wish to build wealth or preserve wealth.

Family members should talk about their tolerances for risk, while acknowledging their responsibility to the needs of the business in order to determine how future business opportunities can accommodate the needs of all.

A process needs to be established for decision making around key issues. For these questions, who are the decision makers? Does anyone have the power of veto?

Discussions about personal needs and desires of family members can be an effective precursor to strategic planning. Traditional lingo says that the family must serve the business in order for the business to serve the family. But without an understanding of the individual needs of family members working in the business, it’s awfully hard to consider effective strategies that are best for the family and the business as well.

Paul Karofsky was president of his family’s third generation business.  He completed graduate studies at Harvard University doing research in family communication styles.  Paul is Executive Director Emeritus of Northeastern University’s Center for Family Business and facilitates its Leadership Development Forum.  He is the Founder and CEO of Transition Consulting Group, Ltd and is a frequent speaker and resource to educational institutions worldwide.  Paul consults to family enterprises and can be reached at [email protected] or 561-626-1110.

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