Being a new leader in transition

The first responsibility of a leader is to define reality. The last is to say thank you. In between, the leader is a servant. —Max DePree

Being a new leader, the child of a family business owner who decides to come into the business, must make show their mark early on. They can handle the family business, they are able to take the reigns and show their mark. But how can they do that?

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3 tips for Succession and Transition planning for family businesses

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“Failure to plan, is planning to fail” (Not sure who exactly said this, google search reveals Alan Lakein may have said it first).

Transitioning in family businesses and succession planning are a difficult and tricky business. According to Forbes, a third of businesses make it to the second generation, and an even smaller portion make it to the fourth generation. 60% of business owners are over age 55, and 1/3rd are over age 65. And it makes sense, business owners are focused on their goals and building up their company, that they don’t think about who will take over. What steps can family business owners take to transition successfully?

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Starting a family business

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“Amateurs sit and wait for inspiration, the rest of us just get up and go to work.”

Stephen King, On Writing: A Memoir of the Craft

Some founders don’t think of starting a family business right from the start. They’re business people who have dreams and ideas, and when successful have an established business that needs a successor, just like any other business. So what are some tips to get started?

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Retirement Planning

You’ve worked hard, maybe 40 years without a break, you’ve seen your business grow, have enjoyed the fruits of the labor, but now the landscape is changing. New online services are replacing those you offered. Products from abroad that are sold cheaper and with higher quality are replacing those you sell to your customers. How do you cope?

To have a business and get older is one of the hardest occurrences that happens to people. It is unfortunate to grow old without a succession plan, and have financial problems at the same time. Especially with all the cuts to Social Security Benefits, and closure of SS offices that leaves many over 65 who are not internet savvy clueless on how to access their service.

How can business owners transitioning their business protect themselves against financial losses especially at older age?

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Succession planning

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“The only rock I know that stays steady, the only institution I know that works, is the family.” —Lee Iacocca

Well, some might agree with Lee, but certainly for families that go through lots of difficulties, they don’t “work” in the same way.

Recently someone asked on LinkedIn:

What’s the real price for for the family business without a succession plan? For the family relationships – for the continued success of the business?

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Motivating children of family business owners

Motivation is key

Starting a small business is daunting in itself, so is starting out on your own, or even running a business in general. When children of family business owners want to get involved in business, it’s a great way to challenge them and excite them, much easier than when they don’t want to get involved (a topic we will cover in weeks to come). So how can you motivate them when they are already motivated?

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10 key family business issues

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Every family has issues, the ones who resolve them succeed the test of time: This brief glimpse into the life of Forrest Mars (inventor of M&M) and his disagreement with this father (Frank C Mars, the founder).

“Born in 1904, [Forrest Mars] inherited the privately held company from his father, Frank, who developed the Milky Way candy bar in the 1920’s and quickly had a hit on his hands. Forrest Mars, however, is credited with suggesting some ingredients for the candy. The two ended up squabbling, and Forrest Mars went to England, where he marketed the Milky Way with some variations in the formula. During World War II, he returned to the United States and introduced a candy-coated chocolate that he named M & M’s, based on a popular European product.”–Link from Hays, Constance (1999, July 3). Forrest Mars, 95, Creator of the M&M and a Candy Empire. Retrieved from http://www.nytimes.com/1999/07/03/business/forrest-mars-95-creator-of-the-m-m-and-a-candy-empire.html

What is the take away from the Mars family?

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Juggling Business, family, and health

“Imagine life as a game in which you are juggling some five balls in the air. You name them – work, family, health, friends and spirit … and you’re keeping all of these in the air. You will soon understand that work is a rubber ball. If you drop it, it will bounce back. But the other four balls – family, health, friends and spirit – are made of glass. If you drop one of these they will be irrevocably scuffed, marked, nicked, damaged or even shattered. They will never be the same. You must understand that and strive for balance in your life.” —Brian Dyson (former CEO Coca Cola)

I am always interested in how businesses start. How do entrepreneurs persevere while having families to provide for. It’s especially interesting to read about single moms juggling responsibility with starting a business (which requires as much attention as children can demand). Like this article in huffington post: there’s lack of sleep, 1000 % attention, and costly, among some of the examples they provide. And somehow women like Mary Kay Ash is a favorite story, she launched Mary Kay Cosmetics in her 40’s and has seen its growing success to this day.

And many times, the balance seems to work out. I remember growing up, my mom had 3 kids, my dad traveling as a consultant for IBM, and my mom was starting her own business. It was definitely not easy, but it’s a process that is a right of passage for any business owner, learning the balance between family and business. I remember when I was 10 years old, I would answer the phone at my moms office, it was a really simple job, but it was a fun one.

Family can be as much a painful part of owning a business as it can be a supportive role. Obviously, I opt for the supportive role. But what can you do when it’s the opposite? When the family is not supportive?  (hypothetical question) It’s lonely, and it takes time to learn how to find the balance.

 

Finding and Keeping Talent

One of the many challenges in owning and operating a family business is keeping the talent. How does one find and retain top talent? According to several articles and especially this one from CNN good talent relies on 60-70% on the job experience, 20% education, and 10% mentoring and coaching. The article cites companies like Unilever and Proctor and Gamble that really turn out impressive leaders by any field’s standards. And they’re able to do so by incorporating training, mentoring, coaching, and job experience that brings out their strengths.

An important lesson for family business is to bring on talent from the outside and not be afraid to have them be successors and work with them as though they were “part of the family.” That means including them on important decisions, taking them out to dinner, getting to know their families and involving them. In this way, they are engaged and close. Granted, this would not be for every employee, but it would be for the ones that show promise as leaders in the organization.