It’s not always easy to merge traditional ways of doing business with new ways of doing business. Harvard Business School may recommend taking on debt, spending, and expanding, but traditional business may say to spend when you have cash, limit debt, and expand slowly. How do you merge the two schools? How do you convince a younger or older generation in a family business towards the road of expansion?
I came across a blog post this morning on Seekingalpha.com, entitled “Why the Smart Money is Beginning to Worry about the Downside” and couldn’t help but click on the link. When I started reading the article by Jesse Felder from the Felder Report, I started to think this is such a common occurrence, that seems to be a 21st century issue, where corporations are taking on more debt than they are able to handle. Regardless of your opinions on if it is the 2007 crash happening all over again, it shows great insight into our culture from the budding college students who take out loans to pay for cars, clothes, and European travel excursions, to the young families buying second or third houses that they hope will provide a return, without looking at the risk involved, to the corporations who take on billions of dollars in debt to expand their business.
But, to my original prompt, how does this impact a family business?
Family businesses can run more conservatively than private or public companies. They may have young leaders who come to a leadership position with expansion models that outrun what a company is capable of, and they may clash with the older leaders who started the company, or helped run it for 30-50 years. The best way forward is to start with a simple conversation and time. Take your time to listen to the young leader, likewise, for a young leader, take time to listen to your predecessor.
It sounds so simple, but the answer is patience and conversation. Give yourselves a month to plan for expansion, to jump into lofty goals is one of the reasons we had a $3.5 trillion debt in 2007, and the reason companies are conservative on expanding too quickly now.