The Secret To A Successful Business Advisor And Family Business Partnership
By Kyle Danner - March 05, 2019
Business advisors face a unique challenge. They have to win over the family and help the business succeed. Of course, this is much easier said than done. When sales waver and tensions grow, you may find it more challenging to make a significant impact on the business. Even worse, the business owner may start to question your services.
Few things are as frustrating as having your partnership end on bad terms. So how can you ensure you leave a positive, lasting mark on the business? The secret to a successful business advisor and family business partnership is simple: meet the client where they are, not where you want them to be.
It’s easy to say but hard to do. The assumptions and experience that are part of advising family businesses often get in the way. By following these proven strategies, you can help set your clients up for success and earn some referrals in the process.
Reframe The Continuity Bias
There’s something different about family businesses. Everyone assumes the only mark of success is keeping the business in the family, passing it from one generation to the next. If the business is sold or the family is no longer in control, they failed.
To provide some perspective, advisors, including myself, use statistics like “only 30% of family businesses make it to the second generation.” Our intent is to encourage thoughtful planning, but it sounds threatening. Our client may be convinced the only option is to keep it in the family out of pride or respect for tradition.
Move beyond the bricks and mortar of the business to counter the bias towards continuity and consider another definition of success: preservation and growth of family wealth. If a family remained committed to owning the business due to family pride but lacked the resources to meet new market challenges, they could lose everything. That includes the pride they want to preserve in the first place.
If your client’s business is better off being sold, try to reframe the thought of selling into a win rather than a failure. By selling then reinvesting in a new venture or in philanthropy, they can use the proceeds to start a new venture with the potential of increasing the family’s wealth and their prestige.
Experience Says Differently
Your new client isn’t your first family business. After the initial meeting, you see the trainwreck happening in slow motion because you’ve seen it before. Maybe the client refuses to consider any planning and has no intention of slowing down even though he’s 75 years old. He refuses to confront his own mortality, despite the fact that it could jeopardize the financial security he’s worked so hard to build for his family.
Or, perhaps there’s a family member in the business who clearly shouldn’t be there. I saw it with a mom and dad who wanted their daughter to stay in the business. For her, the family business was the last resort, a place to work when all other options fell flat. She was miserable. She knew she wasn’t performing and she felt stuck, but her business-owning parents insisted she remain. There were doing what they’ve always done, which was helping their daughter. However, in this instance, their helping was hurting.
It would be tempting to force a solution that seems logical to you, like selling the business or firing the daughter. But that doesn’t get to the heart of the issue. In both cases, it requires some patience to understand what the client truly wants and then tailoring appropriate solutions.
For the business owner who refuses to slow down, explore options that keeps him working, and therefore feeling like he has a purpose, while protecting his family’s financial security. For the daughter stuck in the business, suggest a coach who can help her find a career that fits. Then, support her as she transitions to the new job. Your clients may spend more time, effort and money, but the long-term rewards are well worth it if the decision preserves the family’s financial security and family harmony.
It may feel at odds with your role as an advisor to offer solutions that cost your clients more, but that’s not the point. The point is offering solutions that are the best fit for your client: ones that meet them where they are, not where we want them to be.
Don’t Get Caught Up In Family Drama
As a family business advisor, I know first hand how difficult it can be to do right by your client when they’re in an emotional place. They might drag their heels to make a decision. Or maybe, you’ve reached a standstill until the elephant in the business is resolved.
Talking about the issues preventing the business from succeeding is the first step toward a happy advisor/family business client relationship. And this free chapter of my ebook, Is There An Elephant In Your Family Business?, can help you do just that.
In this chapter, you will learn how to determine if there is an elephant in the family business, how to start the conversation, and what to do if things get tense. Click the button below and fill out the form to get your copy.