Ask an expert - How to combine family and business
David Irvine has more than 25 years of experience as a family therapist, consultant, professional speaker, facilitator and executive coach. He is also author and co-author of critically acclaimed and bestselling books.
Should we be striving for a family-first business or a business-first family?
I think the family has to decide that. I have a bias that the business is a tool to create what the family wants. We don’t get a lot of training in how to communicate with each other. We get training in production.
It’s vital to get the family together so everybody can be asked what they really want. What are their goals, and how can the business support the family? Because frankly, the family is going to outlive the business. This is what I ask farm families – any business family: What are you in business for? Don’t give me your business statement. Give me your personal statement. What’s the purpose of the business in your life?
The challenge is that most of us are driven by production and then we squeeze in quality of life. My premise is, let’s start with quality of life. What do we want to leave our kids and grandkids? How much time off do we need? What are our long-term goals personally? How hard do we want to work? What, and how much, do we need to produce to support our quality of life? When we’re clear on our quality of life, we can see how the business fits into that.
Can a sense of entitlement be a problem in a family operation?
What I tell farmers is, your kids have no right to the land and no right to the business unless you deem it so. Don’t wait until they’ve worked there twenty years before you tell them that. In an affluent society, it’s tough to build an accountability mindset. The more we get, the more we want. Rights and obligations always need to be kept in balance. If you keep giving and giving, it can breed entitlement. We all have to watch this.
How should governance work in a family-based operation?
Most successful businesses have governance whether they recognize it or not. Essentially, in any family business there are three circles. One circle is the owners who have shares in the business. Another is the employees – the people who work in the business. And the third is the family members. There is obviously overlap and there are areas in those circles that don’t overlap. Every one of those three circles has to be taken care of.
Owners have goals, and there has to be a process whereby those goals are met. Then, the people who operate the business need to have a set of goals. The family also has to ask: How do we make sure we take care of the interests of our family? How does the business support that?
This isn’t something we talked about in any previous generation. We just worked hard. We didn’t talk about quality of life or business goals to one another. But today, the world is so much more complex that we have to make sure that the interests of all three circles are considered. And there has to be a set of goals that clearly state where each of those circles is headed.
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