Shared Vision in the Family Business

The “Family” in Family Business can have a profound impact on the success of the company.  The degree of impact varies with the stage of a company’s development, from a single founder, to late stage companies with nth generation family members embedded in management and/or holding equity stakes.  The expectations and obligations of these individuals complicate standard business planning practices.

Many TAB members have prospered from the implementation of a Strategic Business Leadership program (SBL).  The second step in SBL is the creation of a Pocket Vision for the principal and a Shared Vision for the company.  When the company supports a complicated family tree, this step can present a challenge.  The challenge of writing the Shared Vision can be met by assessing the primary vested interests of family and management and providing a statement of how the evolution of the company will affect them. 

Interest Number 1 is that the company is managed to produce the best total benefits for its owners.  Determination of what is most likely to produce the best result requires identification of all the interested parties and the creation of a matrix of their claims and obligations.  From this base, sets of goals, strategies and action plans can be built to achieve a “defensible” outcome.  I did not say “optimum” outcome because it is rare that all expectations will be met. 

If the family has not adopted a formal process for growth, succession and the balance of members’ interests, it can be useful to draft a “Shareholder’s Agreement”.  The concept is the creation of Michael Shulman, Toronto.  It is a document that defines the “Rules of the Road” for the conduct of the enterprise.  The preferred process is for the principals in the family to meet to identify the issues that are important to them, propose guidelines for family behavior, listen to dissenting opinions and write down the agreements.  The Agreement is then distributed to all who will be affected by it.

In an ideal world the Agreement would be a collection of unanimous decisions or a democratic consensus.  In real life, the founder or the head of the family may set some arbitrary rules and over-ride the wishes of the majority.  This may not result in harmony but it does describe the reality of the situation and, when it is written, people have a clear understanding of their position.

The value of this document is that it states what the assumptions of the business are.  It allows people to know their rights and obligations.  It is a manifesto that can be challenged and modified, but it is the prevailing authority until it is changed. 

When the time comes, the Agreement can give the founders a perspective from which to consider their plans for retirement and the succession in the business.  It provides the next generation guidance successfully moving into the future.

Family businesses benefit from the commitments, trust and loyalty of family members. The advantage is strengthened by fair consideration in the planning process.

Financial Freedom

By Allen Fishman, TAB Founder & Chairman

Do you have a long-term plan for financial growth? Without a plan, you will have stress.  If your plan is high risk, you will have stress.  Financial growth should be built on a long-term plan. Most of those who gamble for the quick riches in the stock market or other places live with a stress that makes it hard for them to focus on their business. A plan that looks many years in the future is the way to achieve freedom from financial concern so that decisions are not impacted by current financial needs. 

As a business owner, is there anyone who can say that he or she is personally successful without his or her company being successful?  Do you know a business owner who could have a failing business and say "I'm successful" or "I'm happy?"  I would guess the answer would be no because the owner’s business is integral to the owner’s happiness. 

To have freedom from financial worry, you need the ability to meet financial emergency contingencies. You must not be desperate to make deals that are high risk.

One manufacturer took a contract with a large retailer that resulted in over 50 percent of his revenue coming from the retailer.  He financed a major expansion of plant and equipment to serve the retailer.  When the retailer switched to another supplier, he was hurt.  Why did he take the risk?  He did it because he said that it was his chance at big money.

You have the ability to take advantage of situations in which others are motivated to take actions because of their financial needs.  In 1990, a man I know bought land for 10 cents on the dollar from a developer who put the land together.  The developer did not have the financial ability to develop the land and could not carry the cost. 

Financial freedom is the ability to buy what you want without worrying about it.  This is different for everyone.  To some, this means tens of millions of dollars to buy planes.  To others, it means taking great trips when you want.  This will be determined by what is meaningful to you.  

When you look at yourself, do you see a person who is managing his or her life or a person who reacts to challenges and opportunities without a plan for getting you where you want to be?  Business owners starting up are rarely debt free.  They are generally going to be personally guaranteeing loans for some of their expenses.  One thing I constantly hear from business owners who have been in business for 10 or more years is that they would like to eliminate or cap their financing guarantees.  They are at a different time in their life.

Money

What do you think money is all about?  Is it to bring you financial freedom?  To change your relationships with people?  Question your belief system about money.  If money means the ability to have a mountain home, make it part of your plan.  If it means buying a Mercedes, make that a goal.

I wanted to drive a Mercedes and made it a goal.  Six years later, I had a roadster and the largest Mercedes sedan.  I cannot say it brought the pleasure that I expected.  I had a conversation with a man who said that, when he was on his way up, his goal was to have a Cadillac.  Once he did succeed, he realized it did not mean anything.  Then, he bought Chevrolets, because he was proud of not having to worry about having a Cadillac. 

Pick no more than five material things that are important to you, and make a goal to obtain them. There is nothing wrong with it.  Whether they bring you lasting pleasure or not, they may help you to see, once you get them, what actually is important to your feeling of personal success and happiness. 

Non-Monetary

If money was not a factor, imagine yourself in the future.  Say you won $10 million in a lottery.  How would your life change?  Right away, everybody says, "I'd buy this or that," but what about your family involvement?  What about your spiritual life and your hobbies?  There is no right or wrong answer but there must be honesty. 

How often have you heard successful entrepreneurs and professionals say that, if only they had it to do all over again, they would take more time for themselves?  Of course, it is much easier wishing you had taken the time to smell the roses during the climb to business success once you have achieved your goals — but those who are still on the road to success should take note.  Get to know your passions and start planning for tomorrow.

Allen Fishman is the CEO and founder of The Alternative Board (TAB)®, an international organization that provides peer group meetings and coaching for business owners. During monthly board meetings, members discuss their challenges and opportunities and receive advice from their fellow TAB board members and TAB Certified Facilitators. TAB members in each TAB board run businesses in non-competing fields.  For more information about TAB, visit www.thealternativeboard.com.