The long-term fate of the family business
I recently read a good article by Jay Goltz, published in The New York Times – Is My Family Business Going to Be an Orphan? The dilemma that the author faces is a common one faced by many family businesses: the author believes it’s never too early to plan for the future and wants to preserve the business for his three sons, all of whom have other plans though.
Succession plans are not one size fits all
The idea of a family business succession plan got Goltz thinking:
“First of all, this is about my situation and my family business. Succession plans are not one size fits all. Entrepreneurship is always about personal freedom and personal choices, and every entrepreneur has a different mix of goals, values, skills and circumstances. The succession plan might in fact be the grand finale of these choices. While I have been fighting the epic battle of trying to balance the needs of the business and the needs of my family for 34 years, this choice will not be part of that battle.
I am going to make sure that my family does not suffer any more consequences from being born (or married) into the chaos of entrepreneurship. At the same time, I am going to do everything possible to preserve the business for the sake of my estate and my employees. What that means, exactly, is that the succession plan is Step 2. Step 1 is for my sons to figure out what they want to do for their livings. While I don’t want them to live in my shadow, I also don’t want them to live in the dark. The business could provide a very good living and satisfaction for the right person. That said, I know the succession needs of a business can cause problems by involving offspring who don’t really want or aren’t really qualified to be there. I am going to work to avoid that on my watch.”
Family means everyone is included
Goltz held a family meeting to discuss the long-term fate of the family business, intending for his daughter-in-law to attend and be part of the discussion, given that she and any future daughters-in-law would be affected. I like his approach here – opening the discussion and including spouses and significant others – family means everyone is included.
I don’t necessarily agree with other aspects of his approach though:
“The second lesson I learned was that I have become accustomed to running meetings in my business where the ground rules are well established and followed: show up on time and come prepared. That means, don’t get up in the middle of the meeting to get coffee in another room. It is a distraction, the whole meeting grinds to a halt and you lose momentum.”
The approach is a little autocratic and not consultative enough – he wants to run a family meeting like a boardroom meeting, which doesn’t work. Family don’t want to feel like employees.
Write down thoughts about the future
Goltz asked all three sons to write down their thoughts about their future, especially with regard to the family business. Here are the synopses of each son’s feedback…
I believe that it is important that we come up with a plan now to ensure that the business carries on under the Goltz name. I love my two brothers very much, but I have seen many family businesses fall apart because of too many cooks in the kitchen. Since I have chosen a different path, I sincerely hope that one of my brothers will choose to be groomed by my father to eventually take over the business. This is very important to me so that my dad’s legacy will be a lasting one. The idea of selling the business makes me sick. My wife and I are currently awaiting the birth of our first child. We hope that the same values I learned growing up around the business will also be instilled in him, and that, if he chooses, there will be a family business for him to be part of.”
While working at my father’s companies is a great opportunity, one that I am fortunate to have, I am not sure it is the best opportunity for me. I am interested in creating something of my own, or being part of a team creating or doing something I’m more interested in. I also might want to get an M.B.A., although I am not totally sure it is the right thing to do. Lastly, I feel like working with my dad puts a strain on my relationship with him and that most conversations are geared toward business. While I am uncertain about my future, I feel like now is the time I should do something on my own.”
At an early age I picked up a video camera and turned a hobby into a career path, as I am about to graduate from film school and seek work in the industry. Although I’m trying to ‘make it,’ it remains to be seen which opportunity will be greater a few years from now: a name in the entertainment industry or the prospect of joy and fulfillment working in a family business. The media offer a thrill with sacrifices attached, whereas a family organisation has a destiny over which I ultimately have more control. One thing I know today is that I will be making a living working for someone else. If the day comes that I join the family business, I will have a unique talent to contribute to a position where I can be valuable.”
Questions for family business owners
There’s a generational change that needs to be explored here. The ‘Y’ and ‘Millennium’ generations don’t want to live in their parents’ shadow. They have a deep-seated need to make it on their own and be entrepreneurial, and I don’t think their parents necessarily understand that.
Goltz’s insight into the future of his business raises a lot of questions for family business owners. I’ll be reading his follow-up articles to see how he resolves the dilemma.
In the meantime, weigh in with your thoughts – how would you manage the transition to the next generation when there is no clear successor?