Opinions expressed by Entrepreneur contributors are their own.
Practice makes perfect. Or, when it comes to family, as perfect as things get.
Of course, there’s no perfect family. Nor is there a perfect business.
There’s only practice — practice and growth.
When my father, Christopher Snider, and I purchased Exit Planning Institute in 2012, we set up the purchase so that I owned 49% of the company, and he owned 51%. It was important to both of us that we were as equal as possible while still having a majority owner.
We didn’t want to view each other as anything other than equals. I wasn’t inheriting anything. Rather, we were purchasing a business we intended to grow together. This is different from most family-owned businesses where Junior usually takes over as the 2nd generation owner. In our family-owned business, I’m more like Generation 1.5. Of course, I had things to learn from my father (and still do). However, our intentional setup required me to learn and lead as an active participant.
Unfortunately, we’ve seen it go the other way in family-owned businesses — it’s the nature of our business as exit planning advisors to privately-owned companies. The far too common scenario is this: It’s time for Junior to graduate to the chief executive role from whatever he was doing in the company beforehand. He knows the product but doesn’t know how to run a business. The transition is rocky, making for a rocky relationship with Senior, who just dipped into retirement.
And what follows is almost always like this:
- Junior is upset that he wasn’t prepared properly to run the business.
- Senior is upset that he’s still coming into the office rather than taking that European river cruise he’s planned for.
- Valued employees start heading for the exits because the business feels unstable.
While our family setup is different, it could go sideways in so many ways. That’s why we practice being a good team together. And that practice doesn’t always make perfect, but it does create harmony. Here are three things you can do in your family-owned business to do the same.
Related: Family is Like a Built-In Drama — 3 Tips for Making Family Business Transitions Harmonious
1. Define your roles
The first thing we did was define our roles within the business. I like culture, so I work closely with our leadership team to ensure a robust culture that filters down to all team members. I also have a vision for how to market our business and grow our reach.
My dad is the numbers guy. He likes data and financials, so he takes a valuable strategic planning role and makes recommendations about our business operations.
Defining roles allows each family member to leverage strengths while helping the next-generation owner develop the skills they’ll need when the current owner exits.
Related: Do You Own or Manage Your Business With Family Members? Here Are 3 Essential Tips to Create Value Together.
2. Set framework and boundaries
We don’t interact much daily, but that doesn’t mean we never talk. Quite the opposite, in fact. We’re invested in each other’s success, and we visit our transition plan often.
The first step in setting our framework and boundaries was an intentional conversation that persists to this day. Too often, the older generation assumes that’s what the younger generation wants — and that they have the education and training they need to take over. Yet only 20 percent of businesses survive into the second generation, and 12% survive into the third generation without an outside sale. It takes a great deal of forethought to ensure an intergenerational transfer is successful.
After that intentional conversation, you need to keep having them. We have monthly partner meetings that follow a set agenda. Afterward, we take my mother out to dinner, where no business is discussed. We follow that rule during social visits and holidays, too. Beyond that, we try to do things together. We compartmentalize our business partnership from our family relationship.
We also acknowledge out loud that we have differing visions for our business. The first owner of our business, before we purchased, focused on promoting what we call the Three Legs of the Stool—personal, financial, and business planning for an exit.
For my father, his stamp was the Value Acceleration Methodology. My stamp: growing the Certified Exit Planning Advisor (CEPA) designation to the third largest designation after CFP and CPA, as well as promoting the Value Acceleration concepts to create a better life as well as a better business. None of this is a surprise to my father — we had intentional discussions.
3. Assess, assess, assess
Every December, we use the Family Business Blueprint from Every Family’s Business by Thomas William Deans. It’s a set of 12 yes-or-no questions that assesses our alignment. The result is a discussion that wouldn’t be possible without a communication framework.
With assessment comes feedback and planning. Because we had a good relationship outside of business, we view feedback as a way to show each other that we love each other so much that we accept we’re trying to improve each other.
Related: How to Sustain a Family Business Across Generations
Love doesn’t have to be tough
Let’s face it: you have more at stake when mixing family and business. And, as we enter the greatest transfer of wealth and business our country has ever seen — an estimated $14 trillion changing hands — it’s important to talk intentionally and honestly about your family business.
But sometimes, when family — and love — are involved, we find it difficult to have direct conversations that might make one another uncomfortable. For the older generation, keep in mind that maintenance isn’t an option for the new generation. If a business isn’t evolving, it’s dying. The younger generation must put their stamp on the business—and be honest about whether or not you want to take over, how prepared you are and what you need to be ready.
The conversations might be difficult at first. But that’s why we practice.
