In this room there are children who believe their parents will gift their business to them, and parents who believe their children will purchase their business. – Dr Tom Deans
Family businesses can be incredibly difficult to run – performance management, blurring of boundaries and succession planning are all veritable minefields because they’re subject to personal nuances that wouldn’t be such an issue in a standard professional environment. Is the older sibling in a more senior position than the younger purely by virtue of age? How do you manage a family member’s poor performance? How do you solve squabbles over ownership and succession plans? What if a child wants to buy your business? What if several do? What if they don’t?!
Hundreds of murder mystery books, films and crime dramas have used family businesses as the basis of storylines, exploiting the tensions that arise from the entanglement of personal emotions, professional ambitions, financial concerns and family dynamics.
Dr Tom Deans’ book “Every Family’s Business” is like a minefield-navigating map. Suiting both left and right brainers, the book is written in two sections. The first section concentrates on the meeting of John and William on a flight to Barbados. These are two men who have both recently exited a family business with differing levels of success: John sold his business against his son’s wishes, whereas William’s father and he mutually agreed to sell the business. William’s family is still on excellent terms, whereas John’s family is still not speaking to him. Through their confinement on the flight, the men investigate their experiences of all the issues that can arise in family business and examples of how they can be handled successfully and not so successfully. William’s family secret is a list of 12 questions that he and his father (and his father’s father) revisit on an annual basis to ensure they are all operating under the same set of assumptions and expectations, defusing any conflict before it can even start.
The second section of the book lists the 12 questions and provides worksheets for families to work through annually to help minimize conflict by bringing plans, expectations and desires out into the open. By creating mutual understanding of the business, its state, its direction and the goals of all family members involved, then the wealth can be managed, succession plans drawn up, and appropriate responses enacted when unsolicited offers for the business are received from third parties.
Deans’ most challenging proposition for many participants in a family business will be that longevity should not necessarily be the sole aim of a family business – a concept that will likely be challenging to parents whose most ardent wish is for their child to buy them out and continue ‘the family business’, or for children who expect to inherit the business and continue on in the same way until they can pass it onto their children. But the underlying issue is this: unless the family business has been exceptionally successful, a majority of the parent’s capital is tied up in the business. To retire in comfort, to benefit from their years of hard work and self sacrifice to the business, the parents will generally need to access that capital. How is your family planning to manage this?
This is a well-written book that provides immediately actionable strategies to help families manage their wealth, and their relationships, as well as their business.
Dr Tom Deans spoke at two sold-out TEC Canada leadership sessions last week, and all attendees received a copy of his book. If you missed out, you can grab a copy from his website: www.thomaswilliamdeans.com.