Partner Article

Keeping the Business in the Family

A Charter for Keeping the Business in the Family

The old Lancashire proverb ‘from clogs to clogs’ implies that, however rich a poor man may eventually become in business, his great-grandson - the third generation - will almost certainly squander the wealth, dragging the family back to poverty and ‘clogs’.

Richard Bosworth, a business strategist and executive coach with three decades of expertise in boosting the effectiveness and profitability of family businesses, believes there is more than an element of truth in this idea.

He says, “I’ve witnessed the passion of entrepreneurs that drive their business to the total exclusion of everything – even their family and children. Many say: “When I’ve grown the business to £Xmillion I’ll take it easy and spend time with the family” – but by then it’s usually too late; the children have grown up, flown the nest and created a life for themselves that does not involve the business.”

“Many such siblings have bitter memories of the business overshadowing family life, with missed school prize-givings or sports days and holidays cut short or ruined due to “trouble at mill”.

Then there are the entrepreneurs that manage to maintain a strong bond with their children, often because they want them to follow in their footsteps, but proceed to mess it all up when “handing over the reins”.

Richard cites the founder of a famous Yorkshire family business, who, at the age of 90, was still going into the business and chastising his son for what he was failing to do. His grandson is now subject to this self-perpetuating legacy; as his own father, now well past retirement, is still casting a critical eye over his son’s decisions. Although this sounds extreme is it is not an unusual situation, according to Richard.

“The founders who push their sons or daughters to take on the business, at the expense of a successful independent career, all too often send the family business hurtling back to ‘clogs’. The second or third generations do not necessarily have a love or passion for the company – often taking on the burden out of a sense of duty or, in some cases, succumbing to emotional blackmail.

“The bitterest blow for the founder and heirs is to be told by their own children they would rather: “Sell sunglasses on the beach than step foot inside the family business” – the same business that has paid for their fine education and expensive holidays,” he adds.

The parental sense of loss and failure can be profound – often as if the meaning of life has been snuffed out for them – and many never get over this.

Richard offers some advice for families aiming to navigate their way through these choppy waters so that their business prospers and survives.

• The founder needs to recognise that business leadership and ownership is not in the genes, for the most part it is something that is learnt – and that learning has to be planned.
• Consider establishing a family charter, a written agreement between family members regarding business-related issues such as: ownership, voting/control and employment.
• Think of it as a family mission statement or family constitution. Key to this charter is the issue of handing day to day control of the business to professional management in preference to family members.

Many second, third and even sixth generation members of family businesses have found how to grow their companies and enjoy a family life worth living by regularly assessing and reviewing their businesses and management styles and sharing their expertise and experience with their peers in a What If? Forum

A What If Forum enables you to give some essential ‘critical thinking time’ to your business. Established in 1967, the What If? Forum has been working with national and international businesses, both large and small, helping them to grow.

For more information contact Richard Bosworth at richard.bosworth@whatifspecialist.com or go to @richardwhatif on Twitter

This was posted in Bdaily's Members' News section by Richard Bosworth .