Familosophy v6#2 - February 2023

Why Join the Family Business?

Q. My child (age 20) has no interest in joining the family business. What can I do?

A. Very sorry to hear that; unfortunately, your options at this stage in your child's life are far more limited. Any motivation you might provide for them to join is likely to be extrinsic and therefore may not be enduring. I'm going to defer on this question and discuss when to start preparing successors.

By the time they are in their late teens, your children will have some very entrenched views about the family business, which will be gleaned from years of observing its impact on you and the family at large. What you think might be motivations to join (job security, being an 'insider' with respect to the family wealth) might actually translate as negatives for your child (workaholism, working under the scrutiny of judgmental family members). While there are financial benefits of having a family business, these may be offset by the lifestyle burden associated with being an owner-operator, or the constant talk about the business around the kitchen table.

What can make a big difference in their perception is the family business?narrative?within the family. Family businesses are about much more than just the financial. They have elements that other business do not have: they can embody the values of the family, and they can have?socioemotional wealth?- non-financial benefits such as the sense of identity, the family's contribution to the economic and social benefit of community, and the power and influence that comes with all that.

Family businesses with more socioemotional wealth are more likely going to stay in the family from one generation to the next. Preparing successors starts with nurturing that from a very young age.

Consider This:?What are the pros and cons of being part of your family business? How are these perceived differently across different generations of your family?

Further reading:?https://www.forbes.com/sites/dennisjaffe/2022/09/01/values-define-a-family-business-but-who-defines-the-values/?sh=6a26f1d4813e ,?https://www.thomasnet.com/insights/family-businesses-rarely-transfer-to-the-next-generation-here-s-why-it-matters/ ,?https://www.entrepreneur.com/article/383633 ,?https://www.philstar.com/business/2021/06/27/2108306/family-business-most-valuable-family-asset ,?https://www.campdenfb.com/article/what-impact-family-business-family-office ,?https://www.financeasia.com/article/planting-the-seeds-of-success-creating-an-enduring-legacy/454702 ,?https://lighthouse.mq.edu.au/article/april-2019/why-would-anyone-go-into-the-family-business ,?https://www.crainsdetroit.com/special-report/beyond-profits-family-businesses-can-create-socioemotional-wealth ,?https://www.smartcompany.com.au/partner-content/articles/family-business-and-the-secrets-of-successful-succession/ ,?https://www.biztimes.com/2019/industries/human-resources-management/what-happens-when-theres-no-one-to-take-over-the-family-business/ ,?https://www.scmp.com/business/china-business/article/2172343/why-mainland-chinese-children-are-starting-turn-their-backs

#familybusiness #succession #socioemotionalwealth

Are We Ready Yet?

When taking young children for a long drive in the car, we would regularly hear them ask "are we there yet?" Children quickly become bored and impatient, and don't always have a sense of time (especially if they are too young to wear a watch).

In families, rising generation family members are wondering "are we ready yet?" to take a position of responsibility or leadership within the family enterprise. They have a very keen sense of the passage of time. The family may or may not have the forum where that question can be asked, and even if they do, it may not result in a clear answer. While they may even have something of a succession plan, the incumbents might continue to stall, often with the excuse that "the kids are not quite ready".

First question to ask is: why is this happening? Most likely, it's coming from a place of fear on the part of the incumbent generation. Fear of a future when the the family enterprise is no longer a big part of their lives (what will replace it?), and general fear of the unknown. Families need a safe space to discuss these fears, both individually and collectively. Mentors, confidantes and independent advisors can be very helpful here.

So when your children ask "are we ready yet?", you really need to ask?yourself?"am I ready yet?"

Consider This:?What discussions has your family had about succession? How broad are these discussions - have they allowed the voices of the incumbent generation, the rising generation, and other stakeholders? Are family members able to say what they really think?

Original articles:?https://www.campdenfb.com/article/next-gen-report-discovers-generational-disconnect-succession-readiness ,?https://www.forbes.com/sites/dennisjaffe/2022/12/13/older-and-younger-generations-are-colliding-as-family-enterprises-face-new-realities/?sh=179150328b2b ,?https://www.barrons.com/advisor/articles/the-ultrawealthy-need-to-hand-off-to-the-next-generation-dont-ignore-family-dynamics-says-this-advisory-51663358401?tesla=y ,?https://www.campdenfb.com/article/re-engaging-next-generation ,?https://hbr.org/2020/01/does-your-family-business-have-a-succession-plan ,?https://www.dtnpf.com/agriculture/web/ag/columns/farm-family-business/article/2019/11/11/succession-second-mountain ,?https://www.campdenfb.com/article/why-blocking-next-gen-succession-gulf-zero-sum-game ,?https://www.manilatimes.net/the-curse-of-failed-successions/505687/

#incumbent #prepared #succesion