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First, define your ‘family-owned business’

The most frequent issue family business consultants get called to facilitate is succession.

It is the most common request and, by far, the most complex and difficult to fulfill. By definition, family businesses are a collection of family members working together and they are generational. One would assume that when a family business is started, the clear objective is to build a successful business and pass it to the next generation – a simple goal.

Edward P. Monte

At this year’s Parker Center for Family Business Summer Dinner, we will explore why this simple goal is anything but simple. Given COVID-19, the “dinner” will be a virtual presentation on June 25.

Over 30 years working with family businesses, I have learned a very basis, obvious rule – do not rush to fix anything before understanding the real problem at hand. For a family business struggling with success-ion, please assess whether the family business in front of you is, in fact, a family business.

This is the hidden secret and myth in our field. Are you in a family business or do you just work in your parents’ company? Are you in a family business or do you just let your kids work in your business? There are millions of well-run, individually owned businesses masquerading as family businesses. Often, it’s because they existed, and the kids needed a job and were hired. There was no intent, or emotional buy-in, to be a family business. Certainly, no plan or preparation for a successful succession was in the offering.

Parents assume it is their business under their control while the children assume it will be their business and they have a birthright to participate and lead.

The cause of such a dilemma is most often the love of one’s children and wanting them to have a safe place to land. For the lower generation, the parents’ business can look like a safe haven when you haven’t decided who you are or what you want to become. For the parents, another cause is the lack of personal insight into one’s ability to share ownership (emotional or literal), vision, power, control and identity with another.

This is where gender comes into focus for the upper generation, raised in the late 1930s to the mid ’60s. Women were taught to nurture and share, and men were taught to produce and win. Female-run family businesses have much more successful transitions from one generation to another.

Succession, an opportunity for the next generation, can be a visceral experience of being erased.

Who doesn’t like the idea of a loving family working together for a common goal? However, what it requires is the emotional maturity and health of all involved. A family business uniquely demands self-awareness. It demands business acumen and, honestly, much more importantly, it demands you can create and maintain healthy family relationships.

So, what to do? If your family business is in personal chaos, stop for a moment and make certain you want it to be a family business. There is no sin in keeping it solely yours or selling it and making it possible for everyone to go off and pursue what excites them.

Follow the basic tenets for a solid relationship and family – empathy, reciprocity, transparency, belief in benign intent of those around you. And, for goodness’ sake, learn to share without losing yourself.

Edward P. Monte, Ph.D. is the founding principal of Family Solutions Group – a family business – family office consulting firm recently relocated from Philadelphia to Santa Fe. He recently, with other Parker Center Board Directors, taught at the Anderson School of Management. The executive’s desk is a guest column providing advice or information about resources available to the business community in New Mexico. The Journal is a sponsor of the Summer Dinner event, as is Thompson Land & Cattle.

the executive’s desk

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