Family Not Just Family Business.

That was one of the points that Drew Mendoza made last week when some of our local family businesses got together Thursday morning to participate in a breakfast forum.  He discussed how important it is to act like a family outside the business.  Make sure you have social gatherings with your siblings.  Bring your children to play with their cousins, building the relationship between the cousins can be the building blocks of future teamwork as they get older and start taking their roles in the business.

Another point worth noting is to be careful of what you bring home to your spouse and children.  Bringing home the baggage and the disagreements and sharing too much with your spouse and children about their in-laws and Aunts and Uncle’s can harm the family harmony at social gatherings. 

These are such two small points during the 2 ½ hours that Drew talked to us.  It would be impossible to cover it all.  I think he will have to make a return appearance in 2013 for the NYFBC.  I’m pretty sure the attendees would have stayed longer if he had kept talking. 

See you all next time.  Thursday, March 8th - Alan Andrews will be talking about boundaries.

Next Weeks Event

Murphy Siblings
Murphy & Nolan

We have a great event next week.  Our speaker is from Chicago and is a Managing Partner of the Family Business Consulting Group, but even more important than that we have some great local family businesses attending the event.  The easiest way for me to talk about the event and what you might get out of it is to simply reprint the article that was in Janauary 20th Central New York Business Journal.  Thanks goes to Eric Allyn for helping me with this. 

Preparation

What can help a family-owned business not fall into the category of Shirtsleeves to Shirtsleeves in three generations; and instead become part of the growing fourth and fifth generation of family-owned business?  We don’t have to look very hard to see many successful second and third generation family businesses in our community.  Some statistics say that only a small percentage will make it to the fourth.  So is it really going to be a matter of blind luck to get them there?   

On the contrary, most experts state that preparation for the continuity of a family-owned business must start at an early stage.  As founders of a business with young children there are steps you can take to begin this preparation.  Starting with assuming your business will evolve into the next generation(s).  As a parent, promoting partnership, communication, and conflict resolving skills at an early age will encourage teamwork between siblings. Giving them team projects, problem solving events or even planning the family vacation together can create great some great team work skills.   Something to avoid might be telling the oldest “this all might be yours some day,” or putting the oldest in charge of the team building projects, or being negative about the business at the dinner table or family events.

Eric Allyn, 4^th generation of Welch Allyn shares that preparing the next generation early through education and building trust in each other is essential from the start.  The Allyn family focuses a lot of activity on educating the next generation, who range in age from new born to 21 years old.  Eric states "We don't provide training on how to best manage the company, or our product lines, or our financial performance.  Instead, we focus our efforts on building trust among the 31 members of the 5th generation.  We have annual team building activities - ranging from 3 generations playing hockey together to a swim across Skaneateles Lake.  Having strong, trusting relationships with one another, coupled with a sense of responsibility in ownership, are our primary goals of next generation development.  Our intent is to ensure that the next generation become great stewards of our business, so that they can keep it family owned into the next generation."

Each stage of a family business is different from the previous and there is no one model that one can follow.  As the ownership moves into the sibling and cousin stage a framework will be needed.  Structure will need to be in place for decision making, leadership, planning, and goal setting.  Meetings will need to be more formalized.  Eric states that outside of the basic steps necessary to address ownership/estate tax challenges, he emphasizes the importance of considering governance changes when moving from one generation to the next.  "The truth is, the way my generation oversees this business - keeping in mind there are 11 in my generation - is very different from how Bill and Lew Allyn managed the company in the 1970s and 1980s.   The governance model needs to adopt as the number of owners increases.  And keep in mind, the 5th generation has 31 people in it (so far!).  One imagines that they will have to re-shape our governance in the future as well".

Your family business could still be a few years away from transition but preparation can begin early.  To learn more about the sibling/cousin transition the New York Family Business Center will have Drew Mendoza, from the Family Business Consulting Group as their keynote speaker on February 9, 2012.