Family businesses are unique because there’s so much more at stake. Family dynamics can be, to paraphrase the opening lines of the Tale of Two Cities, “It was the best of times. It was the worst of times.”
As business advisors, On-Purpose Partners is there to honor the family and the business. Our independence and forthrightness is essential to chart a workable, rewarding, and profitable path so everyone profits. In addition to the challenges of running any business the family element brings an added dimension and risk for dysfunction.
Family combinations come in many forms and sizes. We’ve worked with husbands and wives, siblings, parent and children, in-laws and out-laws, and more! Family sensitivities must be merged with business sensibilities to produce profits and peace. Sometimes the path to that outcome is paved with painful and difficult decisions. A third party can mediate and mitigate the maze of emotions and monetary attachments.
Improvements in the business planning and model can turn around the business and take the pressure off the family. Sometimes improvements in the family can free the business to advance unencumbered with the family dysfunction. Most often it takes both!
- A father–son team were “co-leading” a large construction company. The father wanted the son to take over, but the father’s financial statements were the basis for the bonding capacity so he was entwined. Their management styles were different and the employees were confused. Over a period of months that included coaching, strategic facilitation, and many realities checks, a succession plan and path was developed, communicated, and executed upon. The business tripled in revenues within 2 years.
- A husband and wife team own a successful landscaping and snow removal business. Their exit strategy was for their son who worked in the business to become the eventual owner. It was assumed to be this way. The dutiful son, however, was ill-equipped and, frankly, not all that interested in following in his parents’ footsteps. By dealing with reality now, other plans and options were explored well before the parents’ retirement. By weeding out the assumptions and facing the facts, business growth resumed and the son was free to find his true future with his parents’ blessing.
- A strong-willed elderly father with three “indentured” sons working in his business was facing forced retirement due to medical challenges. The three sons each had a role to play but dad was the glue who compelled them to work together. The oldest brother felt entitled to be the president. The middle son was the more capable to run it. And the youngest son wanted out. All, however, expected some form of stock ownership in the family business. Family, fortunes, and futures were all on the line. A third party was necessary to strategically sort it out and work with financial and legal counselors to create a winning strategy for all.
- Both parents died unexpectedly within 9 months of one another leaving a $270 million business to four children in their 20s. Two worked in the business. Two worked outside the business. None were qualified or experienced to run the business. Outside legal counsel stepped in to act as the president. Revenues dropped to $70 million and were falling fast. A strategic plan, a marketing plan, and employee and sales force training plan were devised in months in order to avert further revenue decline and turn around the business.
- An extraordinarily talented CEO of a $75 million company and his wife owned 80% of the stock. She worked in the business overseeing the administrative and support staff. Breast cancer in her late 40s, however, was a too soon wake up call that an old age retirement for both might not happen. All options were on the table and explored. After careful planning, patience was the plan. Give the wife time to heal and him time to plan his exit. Respecting his management team, a plan was devised to develop a next generation of leadership and transfer stock on an earned out bonus basis at a favorable share price.
- Three sons in their 40s grew up working in a woodworking business their parents started in the 1950s. Mom and dad had died years before we met the sons. Wanting to retain key employees, an ESOP was set up with employees holding 30% of the company stock. That minority interest, however, while respectful of the sons, was none too pleased with the financial performance under their leadership. For 10 years the company sales were flat at $17 million and profits were barely above breakeven. A strategic session, executive coaching, marketing and sales plans plus some TOP Performer employee training contributed to a dramatic profit increase to $20 million within a year. Within two years revenues grew to $24 million and profits continued their growth.
The On-Purpose approach and perspective is uniquely qualified for family businesses because of the high value and emphasis placed on the integration of people and profits, period.
Also see Business Succession Planning