Why are Family Meetings Important in a Family Business?

Family meetings are all about reaching down to the brass tacks and figuring out the role and ambitions of the human capital. Furthermore, the business owners can get answers to critical questions such as whether it is time to retire or Is it time to pass down the business? Finally, families can take a clear course through communication and discussion about what’s next for them. 

The storm, aka “time” 

Let’s try to understand the reasons that contribute to various issues within families. 

An automotive business owner started with a small shop. He constantly hustled and spent every day aiming to make an empire out of his vision. Fortunately, he followed the right track and soon enough was on his way to success. 

One summer, he hit the jackpot, dropped his kids at school, and signed a major deal. Years went by and the grind never stopped. One day his grown-up kid tells him that he is off to college. This comes as a surprise. Why? He was busy being busy. The realization was a powerful one. His mind was inundated with questions like:

The most challenging step

Anybody who owns a business might believe that the most difficult step would be the actual strategic decisions, such as coming up with an exit plan. However, that is not the case here. When I started providing services, I struggled with the scheduling of the meeting, to my surprise. Yes! You heard it right. 

Business owners and family members aren’t always on the same page regarding third-party-assisted meetings. One cannot reach the deeper psychological issues that are causing a disconnect between the family members without holding such gatherings. So, what is my solution to this problem? 

“Identify the Alphas”

I try to identify the key players to jumpstart the five-step process, starting with the first family meeting. For instance, if there is an automotive business, I will talk to the owner or his wife. If the owner’s children have a significant say in business decisions, they are the focal people to whom the whole family-business meeting in a relaxed environment can be pitched. 

Ensuring clear communication

Most of the time, the children are cut off in the middle of a conversation by their parents. For instance, when a dad tries to tell his kid that “you don’t know what you are talking about”, or “I have built this business, so I know what is what”. 

It is plain leveling and feeding of words. In such situations, the children, regardless of their age, do not communicate in front of their parents. Due to this, these meetings go into a nosedive. Nothing is achieved due to constant shouting and yelling. 

What does Matt do in such a chaotic situation? 

An answer to this “controlling issue” is to resolve the conflict between the parent owner and the children. I stress that a conversation with the children regarding the dad’s or mom’s mindset will benefit. 

They should know that they want everything dropped in their lap right away, and they are capable of it, but they are not ready for this yet. The father has to be eased into the process through trust and by articulating his deep concerns. Once identified, these issues can be redefined as children will open up and help their father adapt to the change. 

“It is not necessary that the one who is piloting or sailing the ship has to be right.”

The case of sporting goods wholesaler 

Usually, things are not exactly how they appear to be. That is what makes the plan implementation phase a rocky road for many clients. There are instances when the client and the stakeholders fail to get along as they do not share the same thought process or end goal. A decent relevant example here is the experience with a client at a sporting goods wholesaler. 

The father seemed reluctant to pass down the business to his children. On the other hand, the children were competent and willing to continue operations and take control. The tug of war of meeting control was never-ending and became a massive hindrance in the plan’s progress. Now, it painted a picture of the father as a control freak and a rigid man who thought nobody was good enough for his business. This created conflicts within the family. 

However, upon digging up, it was discovered that the father was insecure as he had witnessed the tragic death of his parents in their early 40s, which instilled the fear of uncertainty in him. He kept contemplating if his children could handle the enormous responsibility with him gone. On the surface, his conflicted behavior seemed petty to his children, but that is where the problem lies. They can never know the deeper underlying issues without effective channels of communication.

“One plus one could be 10.”

The client who never made it to Stage one

Another case with a worse scenario comprised a well-aware client who needed professional assistance but never sought it.  He could not make it past the first stage; communication. The owner could not manage to address the issue due to unknown reasons. After a great deal of convincing, he gave in and opened up about a few severe issues he had been facing. 

He had control issues and was afraid to rely on his kids, whom he deemed incompetent. After coaching and opening the communication lane, he started seeing his children in a new light. The problems got resolved, and now they are on their journey to a smooth succession plan. 

Nonetheless, the gist is that these issues are like a wound. If they are not taken care of, they will get infected and get only worse with time. On the contrary, if parents start to communicate better and cultivate relationships based on trust and respect, it will be highly beneficial in the professional and professional perspectives. One plus one can be ten and not two if done strategically. 

Disclosure 

The information compiled and posted here solely represents the opinions and views of the guest. It might not necessarily be similar to the opinions and views of High Lift Financial. The availability of this content only serves educational and informational purposes. It is in no way a substitute for tax or legal advice or professional investment. 

Always make sure to consult your financial advisor with any queries related to personal or business planning. DiFrancesco Financial Concierge, LLC. d/b/a HighLift Financial is a Registered Investment Advisor registered with the State of Pennsylvania and subject to the State of Pennsylvania’s regulatory oversight.