Healthy family business communication rarely happens all by itself. Without awareness and effort by all parties to keep it moving smoothly you may find communication sliding off course, leading to misunderstandings and conflict.

Here are four takeaways from the Family Business 360 episode “Avoiding the Ditch: Keeping Your Family Business Communication On Track,” featuring Mark Wickman of Family Business Counsel. Listen to the complete episode online for more insights on family business communication.

Increasing awareness is a first step

Clear communication requires an increases level of awareness. By working to increase our self-awareness along with awareness of what’s happening in our family and our business, we can start to better understand what potential motivating factors affect the people in our relationships. “If that kind of thinking becomes contagious and awareness increases we’d be much better off in our families and our businesses,” says Wickman.

Understand the difference between intent and impact

What one person says often ends up being very different from what another person hears. Acknowledging and understanding the difference between what you intend to communicate and how others might interpret it is powerful. By focusing on this difference we can ask questions like “what do you think I meant, and how did that make you feel?” Mark adds “if we slow our communication to really clarify and understand one another, we would avoid some of these ditches.”

People assign values differently from one another

People value things differently. Some people may place greater value on money, some on the legacy of the business, or others may value the ability to be creative on the job. By understanding how other people assign values we can communicate more clearly and avoid misunderstandings of motivation. “If I speak your language there’s going to be less chance for unnecessary conflict. When we clarify what matters to you and what matters to me, where there is conflict, we may actually be able to find common ground,” says Wickman.

An outside facilitator can help

When family communication seems stalled, an outside facilitator or trusted advisor may help resolve issues. Because this outside party doesn’t have a vested interest in the family dynamics, they can act as an objective voice to share comments and concerns among family members. Mark says “the space created by that third party opens up room so that I can hear something [from another family member] that I couldn’t prior, and vice versa.” In other words, it may be easier to hear certain things from a third party than it is to hear from a sibling, parent or child.

Listen to the complete episode online for more comments and insights on keeping your family business communication on track.

Thank you to Mark Wickman of Family Business Counsel for appearing on the podcast.

As family businesses grow and branches of the family tree spread, an increasing number of family members may have an ownership stake in the enterprise. In most cases the business has become a highly profitable and professionally run organization. Family owners may find themselves in need of services to help manage accumulated wealth, plan philanthropic giving, coordinate family meeting activities, or arrange other financial and personal services. Family offices, which are a professionally managed financial organization formed by a single or multiple families, can be used to manage and support many of these needs.

Here are three key takeaways from the Family Business 360 podcast episode “Family Offices: An Introduction and Leading Practices,” featuring Carol Wachter and Eric Johnson of Deloitte Tax LLP, and Larry Donckers of Progeny 3, Inc. You can also listen to the complete podcast episode online.

When should a family business think about starting a family office?

In general, there a couple of times when it makes good sense to consider a family office. The first is when the family has a liquidity event, such as a sale of a portion of their assets, and they find themselves with cash they would like to invest or use to provide services to family members. The second is when the functions of a family office are already being performed within the operating company and the family wants to structure those functions more formally as a separate entity.

There isn’t a set list of requirements to meet before a family considers establishing a family office but it’s important to look at value of assets, complexity of family structure, and how much control the family wants over family office operations.

Typical family office structures

Family offices can be highly customized for the needs of each family, therefore family offices are defined less by the functions they serve and more by the overall operating structure. Single Family Offices (SFOs) are separate operating entities that are professionally managed to serve a single extended family. SFOs usually require the largest investment of time and resources to establish but provide the family with the greatest level of control over services and function.

Multi-Family Offices (MFOs) can function similarly to SFOs, except they serve the needs of several unrelated families. Joining an MFO usually requires less of investment of time and resources than a traditional SFO, but the family may not have as much control over how the office is run.

Virtual Family Offices (VFOs)  typically occur when a family’s outside advisors work together to perform the functions of a traditional family office, but is not a separate operating entity.

Family offices can deliver a variety of benefits

Family offices can serve a variety of direct and indirect benefits to family businesses. First, they provide a higher level of control over assets and investments, and offer an opportunity to bring services offered by outside providers under the family’s control. Family offices can help a family set up a more formal governance structure and engage family members that don’t work directly for the family’s operating businesses. The family legacy can benefit by a more structured approach to family philanthropy and education.

From a financial standpoint, the family may save by not paying outside firms for services that the family office can take over. Pooling resources may allow a family to make investments that would normally be impossible if each family member were limited to their own individual assets.

Listen to the complete episode on the Family Business 360 podcast for more comments and insights on family offices.

Visit our website for a listing of upcoming Family Business 360 breakfast events.

Thank you to Carol Wachter and Eric Johnson of Deloitte Tax LLP, and Larry Donckers of Progeny 3 Inc. for appearing on the podcast.

 

Children raised in Oregon’s family businesses are one of our community’s greatest resources. Among INC’s 500 fastest-growing private companies just under half were run by entrepreneurs who grew up in a family business.

Whether there is room to return to the business or in starting new businesses, next generation business leaders have learned critical skills for growing Oregon’s economy.

About 25 percent of Oregon State University students grew up in a family business. In fact, 8 percent of these students are shareholders in the family enterprise. I have the opportunity to teach these students each spring term as part of the Family Business Management class at the OSU College of Business.  These students are consistently thoughtful, hardworking and emotionally intelligent young professionals who have much to offer their families, their professions and Oregon.

The seminar format featuring invited guest speakers offers frank discussions from a variety of family business CEOs. These exchanges help students navigate complex career and family issues with helpful insights. Each year a common set of student concerns emerge.

Who will take my work experience seriously if my family’s name is the employer on my resume?

Family business students have more meaningful work experience than their peers do because they are part of the family. Giving young family members appropriately titled positions and delineating responsibilities allows them to document transferable job skills.

How do I work with my cousins who don’t seem serious about the work but have been hired by my family?

Preparation to support the returning business graduate can occur while children are in high school and making post-secondary education decisions. Developing a family employment policy that delineates the requirements of relatives working in the business clarifies expectations and opportunities for a family business career.

One highly talented student did not even consider the family business because of a less committed older cousin. Over the course of the term, she realized, along with her parents, that she had significant contributions to make in leading the family business. They also realized that her cousin would flourish, in a separate division, with his technical skills. The second-generation family team running the business worked to define these roles and contributions based on education, placing the third generation in positions that matched their fullest potential.

How can I have more balance in my life than my parents had in theirs?

Lack of family time is pervasive among students and sometimes reflects their experience of a “missing” parent during their childhood. Visiting CEOs are challenged by this question. Every family business owner meets their family commitments differently. The importance of family harmony should not be overlooked because it will drive the long-term success of the business.

How do I tell my parents that I don’t want to work in the business?

When students honestly examine their experiences, they may realize that they can’t commit to leading the family business if their interests are in other areas. It’s better to have this conversation honestly and early than to build a succession plan based on a promise that will be broken down the road.

Two factors can help in this situation. First, we encourage families to have conversations with their children about their business interests on a regular basis. Interests, and businesses, change over time. The ongoing dialogue removes the high drama and tension associated with a single decision point, often under stressful circumstances.

Also, students can stay connected to the business as shareholders or as part of the advisory board. One of our recent graduates helped his family sell the business after none of the other children were interested. He helped his parents gain more value in the sale of the assets to another family business and honored his grandfather’s legacy in new and related ventures.

Giving young professionals from Oregon’s family businesses the opportunity to plan their entry into the state’s business sector intentionally has longterm rewards. Students appreciate and build on the advantage of their experience. The informed and intentional commitments they make will have lasting impact and honor theie family’s enterprising legacy.

One of the primary challenges for any growing family enterprise is moving beyond the “start-up” mentality to prepare for the next level of growth and complexity. Structures and processes that worked in the less formal earlier stages of the business are usually not suitable for long term growth and eventual succession.

Here are three takeaways from the Family Business 360 podcast episode “Beyond the Start-Up: Taking Your Family Business to the Next Level,” featuring Don Krahmer and Matt Bisturis of Schwabe, Williamson & Wyatt, to help you think about growing and professionalizing the family enterprise. You can also listen to the complete episode online.

Looking outside the family can help fill gaps

As a family business grows there will inevitably come a time when the needs of the business outpace what the founders or other family members can provide. Sometimes this is a result of limited resources (there aren’t enough family members to fill all the roles that the business requires), or limited knowledge or ability (there aren’t family members with the right skill sets to fill critical needs). Bringing in outside help in the form of professional advisors or key employees can help fill these resource and ability gaps. Matt Bisturis, Shareholder at Schwabe, Williamson & Wyatt, also emphasizes that distributing knowledge beyond the founders to other key personnel is just smart for succession planning; “If all of the knowledge is tied up with one or two founders, it makes it very difficult to successfully transition to the next generation.”

Finding investment partners that share your vision and values is critical

Access to capital through outside investment can be a key driver in growing the family business. It’s important to be thoughtful about who to bring in as a partner; not only will this person or entity bring money, but they will also be part of a long-term relationship and potentially have decision-making ability within your business. As Don Krahmer, Shareholder at Schwabe, Williamson & Wyatt, puts it, “Choose your partners wisely in life and otherwise.” He adds that it’s critical to take the time to really get to know the professionals with whom you plan to do business to ensure there is a values and chemistry fit.

An outside board of directors brings several benefits

Having outside perspectives in the form of a board of directors or advisors can be a huge boon to a growing business. A board can add a healthy level of formality to the business, provide expert insight on critical business decisions, and even help groom family members for leadership positions. In addition, embracing opportunities and taking risks to grow the business is easier with a solid team of trusted advisors around you. Aim to have a board that meets together in the same location rather than relaying information individually; the group dynamic is well-suited to addressing critical business questions.

Listen to the complete episode on the Family Business 360 podcast for more insights on taking the business to the next level.

Visit our website for a listing of upcoming Family Business 360 breakfast events.

Thank you to Don Krahmer and Matt Bisturis of Schwabe, Williamson & Wyatt for contributing their expertise to the podcast.