From Business Founder to Family Business
A Primer for Founders Who Have Dynastic Intentions
The personal evolution of a business founder from entrepreneur to chairman (or CEO) of a family managed enterprise is pivotal to all the other transitions that must occur to ensure survival and success as a multi-generation family business.
Most business founders could be described as practical romantics – practical or they wouldn't survive, romantics because they believe intensely in their own ideas, judgment, ability to do everything connected with their business, and are going to live forever. If the business grows they're not going to be able to do everything. And they're not going to live forever. But in the early years of the business, these are strengths as well as self-delusions. In the later years, however, these self-delusions become the founder's greatest enemies. The businesses of founders who believed they were going to live forever are usually buried with them – or shortly afterwards. As a group, these founders aren't inclined to written plans – a fair number could probably write their long-term business plans on the back of their business card – or to any future plans that don't include themselves in a starring role.
"It's difficult for business founders to write themselves out of the script, but there are rewards for those who can move successfully from star to supporting character role."
As the business grows, it evolves – and its founder should be evolving as well. In our experience, we've seen that the founder must develop new attitudes and approaches to his/her business not only to cope with growth and success but in preparing him/herself and the firm for succeeding generations of family management and ownership.
It's not easy as many of our founder/clients have discovered, but the results they've found include a more rewarding balance of family concerns and business priorities, an increased sense of pride and accomplishment, and a smoother transfer of ownership and management responsibilities to other family members.
A number of our clients have implemented personal development plans to help them through the transition of entrepreneurial enterprise into a family business. Some have developed these plans informally, others developed plans during the course of our work with the founder.
There are common elements in all personal development plans for founders and they all can be implemented by taking the following steps:
- Articulate your personal vision for the future of the company. Describe your goals, any obstacles to their achievement, and the steps you intend to take to overcome those obstacles and achieve your objectives. Is the business simply a vehicle to earn a living without the bother of a boss or is it an entity that will have form and substance far into the future? Just how do you want the company to grow; to what size. Outline your strengths, weaknesses and preferences. Identify various financial considerations.
- Educate yourself to understand the phases that you, as founder, need to go through, recognizing that you alone cannot continue doing everything.
- Critically assess your present involvement in the business. What phase(s) are you involved in? What are the primary roles that you perform? What phases/roles should you be in?
- Ask the other significant players in your business (family members, key managers, members of the board of directors, and trusted advisors) to answer the same question. Articulating your personal vision, as well as your present and future roles in the business to your spouse and children can only help to increase their understanding and acceptance of your emotional investment in the business. It will also demonstrate to your children – the potential owners and managers of a family business – that you love what you do, that it is worthwhile doing it, and if in later years they also come to love doing it, nothing would make you as founder/parent happier than to share this wonderful creation – the business – with them.
- Compare the answers you've received from family members and others and reconcile any differences.
- Put together a personal development plan to move yourself to the next phase of responsibility. In that plan, specify the role you will play; what actions will be taken to function in the role; the responsibilities that will be reassigned and time frames for these transitions to occur. One of those roles should be as mentor to your children – share your love of your work with them and involve them any way you can.
- Share your plan with those who should and will be involved in its execution. Particularly with your spouse and children. No child is too young and no spouse too disinterested that they don't want to share somehow in an obviously important part of your life.
- Implement and monitor the plan.
- Revise the plan, as required, to move yourself and the business to the next and subsequent phases.
It is essential that this kind of plan be committed to paper so that the founder, and all others involved, have a clear understanding of the direction in which the company is heading.
In the early stages the plan will be fuzzy and constantly modified to account for new opportunities, ideas, more children, and a thousand and one other factors that may come into play.
Once in written form, the plan can be de-emphasized. The real plan, and the real value, is not the written document itself. The real value lies in the act of planning for continuity of the business from the founder to his/her children. Personal development planning also leads to focused decisions and enhanced communication with other family members.