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Practice makes perfect. Or, when it comes to family, as perfect as things get.
Of course, there is no perfect family. Nor is there a perfect business.
There is only practice – practice and growth.
When my father, Christopher Snider, and I bought Exit Planning Institute in 2012, we structured the purchase so that I owned 49% of the company and he owned 51%. It was important to both of us to be as equal as possible while still having a majority owner.
We didn't want to see each other as anything but equals. I didn't inherit anything. On the contrary, we were buying a business we intended to grow up together. This is different from most family owned businesses where Junior usually takes over as the 2ndn.d generation owner. In our family business, I'm more like Generation 1.5. Of course, I had things to learn from my father (and still do). However, our intentional organization required me to learn and lead as an active participant.
Unfortunately, we've seen it go the other way family businesses — is the nature of our business as exit planning advisors to private companies. The all-too-common scenario is this: It's time for Junior to graduate to the role of CEO from whatever he was doing in the company before. He knows the product, but he doesn't know how to run a business. The transition is difficult, creating a difficult relationship with Senior, who recently retired.
And what follows is almost always like this:
- Junior is upset that he wasn't properly prepared to run the business.
- Senior is upset that he is still coming to the office instead of taking that European river cruise he has planned.
- Valued employees start heading for the exits because the business feels unsustainable.
While our family structure is different, it can go sideways in many ways. This is why we practice being a good team together. And this practice is not always perfect, but it creates harmony. Here are three things you can do in your family business to do the same.
Related: Family is like an integrated drama – 3 tips to make family business transitions smooth
1. Define your roles
The first thing we did was define our roles within the business. I love culture, so I work closely with our leadership team to ensure a strong culture that filters down to all team members. I also have a vision of how to market our business and increase our reach.
My dad is a numbers guy. He loves data and finance, so he takes on a valuable strategic planning role and makes recommendations for our business operations.
Defining roles allows each family member to play to their strengths while helping the next generation owner develop the skills they will need when the current owner leaves.
2. Set the frame and borders
We don't interact much every day, but that doesn't mean we never talk. Quite the opposite, in fact. We are invested in each other's success and revisit our transition plan frequently.
The first step in setting up our framework and borders was an intentional conversation that continues to this day. Too often, the older generation assumes that this is what the younger generation wants – and that they have the education and training to take over. However, only 20 percent of businesses survive into the second generation and 12% survive into the third generation without an outside sale. It takes a lot of forethought to ensure that an intergenerational transfer is successful.
After that intentional conversation, you should continue to have them. We have monthly partner meetings that follow a specific agenda. Then we take my mother out to dinner, where no business is discussed. We follow this rule even during social visits and holidays. Beyond that, we try to do things together. We separate our business partnership from our family relationship.
We also admit out loud that we have different visions for our business. The first owner of our business, before we bought, 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 into the third largest designation after CFP and CPA, and promoting 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 deliberate discussions.
3. Rate, rate, rate
Every December, we use the Family Business Plan from Every family's business by Thomas William Deans. It's a set of 12 yes-or-no questions that assess our reach. The result is a discussion that would not be possible without a communication framework.
It comes with appreciation feedback and planning. Because we had a good relationship outside of business, we look at feedback as a way to show each other that we love each other so much that we admit we are trying to make each other better.
Related: How to maintain a family business through the generations
Love doesn't have to be harsh
Let's face it: you have more at stake when you mix family and business. And as we enter into the largest transfer of wealth and business our country has ever seen—some $14 trillion changing hands—it's important to speak purposefully and honestly about your family business.
But sometimes, when family — and love — is involved, we have a hard time having the direct conversations that can make each other uncomfortable. For the older generation, keep in mind that maintenance is not an option for the new generation. If a business is not evolving, it is dying. The younger generation needs to put their stamp on the business – and be honest about whether or not you want to take it on, how prepared you are and what you need to be ready for.
Conversations can be difficult at first. But that's why we practice.