We are often asked to resolve succession issues within multi generational family business. In many ways issues that exist with family businesses can also appear within long established professional firms.
There are often many complicated interrelated issues that causes problems at this critical time in the long-term success of the business or partnership.
We have found over the years that these issues can be summarized under one of four areas.
In this the second of the series we will briefly look at how history can impact on Family Business Succession.
The story behind how a business starts is often fascinating. There are many reasons, from no one would employ the founder, to the founder having a clear shining vision of the future (perhaps with even starting a business dynasty).
- Interestingly, like all things in life, it is how we look back on the history, that our experience is really important. Indeed, in our role as advisors we are often chided that as the owners have forty years experience what can we add? However, is that forty years experience or is it the first five years that just gets photocopied every year?
- Either the past is polished or tarnished based on the experiences over the important initial growth stages. The real skill, surely, is to learn from our mistakes and to pass on that understanding. Not for the next generation to have to make the same mistakes. ‘They are not ready to take on running the business yet they still need to ripen!’
- Often we try to protect our children from the mistakes of the past in the mistaken view that is their role in the business. Family and business boundaries become blurred (separate article on Boundaries to follow). Actually by not recognising the maturity within the next generation we are stifling their development. When considering these issues timing is so important, a topic that is also the subject of a separate article.
- Sometimes when there is a breakdown in family relations the positions become so entrenched that there is no going back. Particularly with sibling rivalry and between more extended members of the family, cousins etc. This needs to be resolved as its commercial impact on the business and family is potentially huge. (See ‘The Pink Elephant’). Sometimes the basis of the breakdown is a misunderstanding that has just been allowed to fester.
When we view family history we have to be aware of the paradigm (internal filter) we see the past through. Our perception of reality is seen through our own internal filter. Often two people looking at the same actions and behaviours will come to two totally different versions of reality. It’s difficult to communicate clearly if we are seeing them differently. There needs to be a consensus by all involved that the past will be consigned to the past, take the understanding and allow the business to move on to a bright and better future.
Once again we come back to that ‘Pink Elephant in the Room’. The individual members of the family may need an external advisor to be able to change the filter.
To read the next article in this series click here.