Loading
The statistics about the longevity of family-owned businesses are quite sobering. Although 90% of all U.S. businesses are family owned, and they employ 60% of the workforce, most won't survive past the second generation. In past articles I have addressed some of the myriad reasons why this is the case. In my mind, of all of the challenges an owner of a family business faces, failing to engage trusted advisers is certainly close to the top.
It's important for all businesses to collaborate with trusted advisers such as CPAs, wealth managers, attorneys and other professionals who have expertise in areas that are critical to long-term business success. The process of selecting those individuals is difficult for any organization, but it's even more challenging for family business owners, who often are reluctant to bring outsiders into the company's inner circle.
For many family business owners who take great pride in what they and their family have achieved, bringing in an “outsider” can feel like a failure. After all, it wasn't needed in the past to get to this level of success, so why now? Even with changes in the economy or industry issues that may negatively impact the current status of their business, bringing in an “outsider” can feel like a betrayal to their family.
On numerous occasions I have been contacted by someone in the second or third generation of a family business to help guide their family successfully through a transition and succession plan or to help resolve conflicts that are negatively impacting the success of the business. Unfortunately, just as often the senior leader of the family is resistant to utilize an outside adviser — even if they are willing to acknowledge some challenging issues exist in their business.
The question then becomes, what is creating this reluctance on behalf of the family business owner? The issue is typically one of trust. However, since trust isn't just earned, but must be given, how do family business owners decide whom to allow into the inner circle of their families?
Selecting trusted advisers based on gut instinct alone is not a prudent strategy. A Harvard Business Review article exploring the critical factors that contribute to trusting others suggests there are two parts to the equation: how easily you trust others as well as situational elements that can impact the decision to trust. The following is a brief assessment that can be helpful in exploring those situational factors:
How secure do the parties feel?
How many similarities are there between them?
How well aligned are the parties' interests?
Does the trustee show benevolent concern?
Is the trustee capable?
Has the trustee shown predictability and integrity?
Do the parties have good communication?
The more factors that score on the high end of the scale, the more likely the decision-maker (the business owner in this case) is to choose trust.
However, my experience working as a family business consultant suggests that it's necessary to break down these issues into simpler and more practical questions to help make a good assessment of potential advisers' trustworthiness. Consider the following:
Assess your values and those of the business.
Clarify the relevant issues in your business.
Determine if you'll be comfortable with this adviser and his/her personal style — because this person will need to lead difficult discussions and help address your fears and concerns.
Ask yourself whether you envision being responsive to a plan prepared by this adviser.
Evaluate whether this adviser's skill set and expertise are a good fit for you and your business.
Ask yourself whether this adviser will respond with patience, understanding and sensitivity toward your concerns — traits that translate into trust.
It can also be instructive to ask yourself why you're reluctant to bring in one or more trusted advisers. Unfortunately, many family business owners wait until they're in crisis before turning outside the organization for help. It's always best to be proactive, choosing trusted advisers who can guide you through issues like succession planning, tax-saving strategies and more in the absence of a “fire drill.”
Denise P. Federer, Ph.D. is founder and principal of Federer Performance Management Group. She has 27 years of experience working with key executives, business leaders and Fortune 500 companies as a behavioral psychologist, consultant, coach and trainer. Contact her at: [email protected]
Your free article limit has been reached this month.
Subscribe now for unlimited digital access to our award-winning business news.
Join thousands of executives who rely on us for insights spanning Tampa Bay to Naples.
