The quiet time between cycles can be an opportunity for growth and renewal…
especially true for family-owned enterprises.
Man has numerous ways to express the passage of time. Nonetheless, all are anchored by the time it takes our planet to make one revolution around the sun. All other measures are sub-units of this predictable, grander, planetary motion.
While we manage our lives by penciling in future events on our calendars, we rarely allow ourselves to think that our plans rest on the tacit assumption that we will be available in the far grander, cosmic sense, eschewing all thoughts of our own mortality.
But there is something special about the end of year holidays. Perhaps we sense that none of us knows how many revolutions remain before we will complete the cycle no more. Perhaps it is this unspoken understanding which, regardless of individual belief systems, finds most of us ending one year and beginning the next with a quiet reverence.
This quiet time between cycles can be an opportunity for growth and renewal. It is especially true of family-owned enterprises. This is also a period where the trusted advisor has a unique opportunity to do good by reaching out.
Whereas large, publicly traded businesses, like ocean freighters, keep moving forward out of sheer momentum even when the engines are temporarily stalled, most family-owned businesses have no such luxury. The day-to-day, week-in and week-out, nature of the family business owner’s struggle often serves as an emotional magnet which draws the family’s attention away from larger, strategic challenges confronting the family.
Together with our innate tendency to avoid difficult conversations with those we love, it is easier for family businesses to continue making laps around the sun without dealing with difficult—sometimes existential—issues affecting family and business, until circumstances beyond our control demand we address them.
Many a trusted advisor has watched while a matriarch or patriarch of a family business has failed to address difficult issues that are certain to affect the business and the family at some point. One common issue avoidance has to do with succession. Let’s set the stage to illustrate.
In this scenario, the patriarch and founder has grown an impressive business that has always taken care of the family. He is the sole voting shareholder of the business. The board, which exists simply to comply with law, is comprised of the patriarch and the matriarch of the family. There are no independent directors, nor is there an independent council of advisors. The patriarch’s adult children have always worked in the family business. They are well-educated, but they have no work experience in other, more mature environments.
Over the past few years, the patriarch has raised his concern with you, his trusted advisor, that he is getting tired of the daily grind. He lacks both the energy and the interest which fueled the business to its present heights. Many of his friends in the industry are retiring.
Though he is proud of and respects his children, he rightfully observes that they lack the hunger and drive which characterized the patriarch’s early years. They are not as decisive as he was at their stage in life. They lack his “street smarts.” He wonders if they have the courage it takes to be entrepreneurial. He’s also troubled by the fact that two of his children suffer from sibling rivalry and he cannot envision one ever working for the other. He also worries about a son not employed by the business. Will his children in the business take care of that son as the father has always done?
Despite the patriarch’s stated concerns, the family continues its revolutions around the sun without addressing this existential issue until it’s too late. A bad surprise happens. The patriarch receives a diagnosis (or worse). The family begins to contemplate a sale of the business, an event which will bring its own brand of trauma to the family because it has skillfully avoided dealing with issues of continuity and governance at a time when such issues might have been thoughtfully and properly addressed. The family comes to learn that precisely because of the lack of organization, the business will not fetch what the patriarch believes to represent its fair value.
Why did the patriarch avoid dealing with the issue? Because he didn’t know how and he had no idea where to look for help. The patriarch’s resistance to deal with the issue of succession was exacerbated by the fact that the patriarch assumed that what was needed for continuity was someone in his own image. This assumption is a common misconception.
I have often pointed out to patriarchs in the situation described, that even if they could go back in time 25 years, the younger entrepreneurial version of themselves would not be what is now needed to drive the business to greater heights in the future. As Heraclitus, the Greek Philosopher, wisely wrote: “No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.”
Most entrepreneurs with whom I’ve had this conversation, upon reflection, come to accept this reality and agree. Instead, a new way of doing business is needed, and that new way will afford the family the opportunity to address those issues which so challenge the patriarch.
Here, the trusted advisor has a unique opportunity to add meaningful value to clients who suffer the frustrations described. Helping your clients understand that the “river” has changed will open their minds to the notion that something different is needed. Helping them to understand that others have traveled this path and can provide guidance to navigate this new river may give them the confidence to take a first new step, in the quiet time, as they begin to prepare for their next pass around the sun.
Until next time…