Two critical areas for success of a family business are mission and margin. They provide the fulcrum for long-term and short-term term goals, both integral to a family business.

 Together, they are the balancing point between a family-first business–one that offers employment to all family members, and a business-first business–one that operates for the primary purpose of providing a return on investment.

‘Mission’ describes the core ingredients that define your family and family business–your fundamental reason for being. ‘Margin’ recognizes it is a requirement to be profitable–for your family, your customers, employees and suppliers–and to sustain fulfillment of your mission.

I often hear it said with conviction that the reason entrepreneur-founders of family businesses don’t turn over the business to the next generation or even institute a process for succession is because they can’t give up control.

Certainly this occurs in some situations, but it is inaccurate to apply this characterization as a general rule. Other factors may be at play. The founder may have no plans for a life after relinquishing the role in the family business, or may not have built a life outside the business. It is also possible that the founder has not adequately educated business stakeholders, such as key employees, clients, suppliers and colleagues about the transition, and consequently is concerned about the potential repercussions.

All family businesses are unique; and it is important to understand the dynamics of each individually before reaching conclusions and recommending approaches to support them.

I recently received an email from a colleague who says she read that a professional practice differs from entrepreneurism, though she had thought of a professional practice as an entrepreneurial activity, and asked me what I thought.

It reminds me, initially, of the 3 blind people coming upon an elephant. One grabs the tail, one the trunk, and the other a leg. One says it is a rope, one says a hose, and the other says a tree trunk. A professional services business may or may not be an entrepreneurial endeavor. It depends upon whether you are observing someone looking at his or her practice as an entrepreneurial endeavor or a business.

I know professionals – chiropractors, attorneys, physicians and architects whose business depends upon their constant presence, and I know those who have developed a structure, a team, and systems whereby the business is self-sustaining, running without their constant presence.

You may come across the metaphorical elephant of a professional business that is entrepreneurial in nature and you may come across one that is of a sole-practitioner.

There is a difference between a small business owner and an entrepreneur; and there is also significant overlap. One quality of a small business is that the owner is interested in generating the income, with the long-term growth. The entrepreneur is interested in creating equity and then moving on.

For the business owner the reward is in the business. For the entrepreneur the reward is in the creation. I think the analogy applies to the professional practice as well. It is important to realize that there are other possible scenarios along the path. It is more of a gradient rather than one or the other.

There are benefits of each and a personal affinity for each; as I learned from my Dad that reason there is chocolate and vanilla ice cream is because some like chocolate and some like vanilla.

The perspective really needs to fall back to your primary reason for going into business. Your business is a tool to an end. I have found, however, that understanding exactly what that ‘end’ is for each of us, however, is easier said than done. But understanding that is where one needs to start with their business plan… what is it that you really, really, really want both from your business and in life. An answer that comes by listening to yourself away from the good opinions of others.

Godspeed and all the best to you.

Transitioning from one generation to the next is one of the biggest challenges in family businesses. I liken it to changing canoes in a middle of a lake. While there can be different issues at play, sometimes the challenge is that the parent can’t let go because of a felt loss of identity giving up the role they have had.

Rather than a sense of loss, Richard Rohr (https://cac.org/richard-rohr) believes letting go is the source of a renewed peace of mind. As long as you think you’ve got to fix everything, control everything, solve all the problems, explain everything, and understand everything you will never be at peace.

Unique to family businesses is that the dance of life is at hand. Simple in thought, though recognizably more difficult to achieve, your identification with the pattern of life of next generation going forth from the vantage point of having ridden on your shoulders is the beginning of letting go and peace.

Transitions in family businesses happen whether we plan for it or not. Unlike Armand Hammer who, when asked of his plans about the transition of the leadership of his firm, stated “If I die the board will decide,” we all encounter that day where we tire, get bored, or are perceived as hanging on longer than we should.

Succession does not mean giving up on life but more so, if we allow it, an acknowledging of life cycles and a grabbing on to life in a way that creates a legacy.

The architect of a family legacy and transition in the business can only be the current leadership, not their children. The head of the family must set the stage and initiate the conversations that create the legacy.

I’m taking a photography class and last night we were discussing the significance of framing–the placement of the subject in relation to other objects in the photo. It determines the success or failure of the photo.

Framing in conversations sets up the choices we make and influences them, and is critical for success in family businesses.

I’ve been having conversations with fathers and sons about their current and future roles in the business. These conversations are often framed in a zero-sum, emotionally charged context where the father may feel devalued.

The opposite is a positive-sum game, which come from a discussion of what a family can accomplish across generations, and creating a family legacy.

What would you like for the business and the family when your grandchildren are running the business and are head of the family?

Seth Godin recently wrote that framing tells us how to judge something, saying “When you make the effort to give us a hint (that something is important), we’ll often take the hint. (http://sethgodin.typepad.com/seths_blog/2014/10/put-a-frame-around-it.html)

There will be children who love the family business and those who do not

 A client told me that he was planning on giving his business to his 2 children who worked in the business, when his wife reminded him that they have 4 children. This illustrates a natural inclination to include the business as part of an equitable distribution of the estate. It’s important to remember in these situations that there is a difference between fair and equitable when it comes to succession planning. The “equitable” part takes into account that one child may be a school teacher and another an investment banker. The “fair” part comes about as the result of open and clear communication. Paraphrasing an ancient Chinese proverb: Starting this communication 20 years ago was not too early. Starting it today is not too late.

I recently had an opportunity to speak to first-generation family business owner from Brazil who asked how to decide which of his children would be the better choice to take over management of the business. I saw that he was not falling prey to the idea of primogeniture succession (the oldest assuming leadership regardless of business needs and individual abilities).

My response rested on a statement by Sam Johnson (former chairperson of S.C. Johnson & Son) that each generation needs to declare a vision for the business for themselves. If vision is a variable from generation to generation, the unchanging foundation of successful family enterprises is the values that the family and the individuals within it express through the medium of the business.

My recommendations to the Brazilian businessman were:

• That he and his family identify and discuss the values (those things that are important to them) they hold for themselves and that are important to the family in the context of the business.
• That with his children he undertake a family discussion of their five-to-ten-year vision for the business and what skills and leadership would be needed to achieve that vision.

I stressed that it is important that this conversation be a family effort. Also included should be his board of advisors or business mentors. To be done well this process may be expected to take from 6 to 24 months to complete.

The outcome should render an obvious choice and enable a smooth transition.

As you may realize, I am a fan of Seth Godin. His posting “Worthless (priceless)” rings of challenges and benefits (or perhaps the good, bad and ugly) inherent of family enterprises.

“We can transform a priceless thing into a worthless one. Mishandle it, disrespect it, break it, leave it out in the rain. The compromise of the moment, the urgency of now, the lack of a long view–it’s trivially easy to destroy things we think of as priceless.

But we can also transform the worthless into things valuable beyond measure. When we attach memories to something, it becomes worth treasuring. And when the tribe uses it to connect, we have a hard time imagining living without it.”

http://sethgodin.typepad.com/seths_blog/2014/09/worthless-priceless.html

…as though there won’t be afterwards. Sadly, I’ve heard this fear expressed all too often, and just as often the decision was made not to discuss any of the plans for the estate until after a death, so as to avoid discord. Upon hearing this, an image of an ostrich with its head in the sand leaps to mind. Aversion to conflict is a malady that can sink a family. While the legal structure of wealth transfer is the will and estate plan, the indispensible foundation is communication and trust, best built as early as possible. It’s here that a professional with expertise in family dynamics can add significant value.