My Top 10 Tips to Shorten the Life of Your Family Business
I’ve certainly enjoyed more than my fair share of quality time on airplanes to contemplate some of the fascinating family business stories I’ve collected on the speaking circuit.
It’s pretty common for professional speakers to spend a little time with audience members who confess their stories and share details about their family firm fiascos after an event – typically during the book signing.
Sadly, most of these stories are stranger than fiction. Some people who share their tales are looking for a kind of absolution for their family business sins. But dispensing penitence is a task I’ve never done particularly well; it’s always my cue to send someone in the direction of the advisor who hired me so that they can receive the proper professional care they deserve and require.
Underlying these tales of family business woe is always personal tragedy on a scale that for me is unfathomable: estrangement between children and parents and between siblings, and physical violence that’s been known to include murder – and I’m not kidding.
On a lighter note, as I vacation in Spain recharging my battery before another busy fall speaking season, I’ve prepared a lighthearted list of the Top 10 Tips to Shorten the Life of Your Family Business. Read ’em and weep.
Top 10 Tips to Shorten the Life of a Family Business
Invite all your children into your business as soon as they’re able to walk so that you can enjoy as much of their free labor as possible. Remember to promise them that “one day all this will be yours” and look closely for the excitement in their eyes. Those are tears of joy.
Always give the most important jobs to your eldest child (but only a male) and pay him (if you must) vastly more than your other children – this is how great family dynasties are built. It may seem unfair, but it’ll toughen some of them up and really set the stage for great Thanksgiving dinners for years to come.
Talk about your family business history often with your children and remind them that “we have always been (fill in the blank – shoemakers, dry cleaners, widget makers…)” and that this is all they will ever be. This will instill great pride and confidence that life is about tradition and not about pursuing their own dreams and definitely not about reaching their full potential. Talk about how Henry Ford should have followed in his father’s footsteps as a farmer and Steve Jobs in his father’s footsteps as a restaurateur.
Tell your children that the only reason you work so hard is so they will have a guaranteed job waiting for them when they graduate from school. Definitely do not let them work outside the family firm, for that will only build their self-confidence and fill their heads with crazy ideas about how other firms succeed in a changing world.
Some children who have watched their parents struggle and work hard at their business express a desire to pursue a different path. Mothers can play an important role in dissuading them from doing this by encouraging their husbands to hire the children (especially sons) and over-pay them for jobs they do poorly. This way, you can keep your children close and your grandchildren even closer. When this plan is in place, sit back and watch that special bond between a mother and daughter-in-law blossom – it’s really indescribable, especially when a son and his wife have no options because they could never replace their current salary elsewhere, especially when their only work experience is in the family business.
Always tell your non-family employees that there are two sets of policies and procedures – one for family and one for everyone else. This way, when your children show up for work at 11:00 a.m. (when they show up at all) and leave at 2:00 p.m., everyone will know they are following the rules and earning their bonuses. This is a fantastic technique for attracting talented non-family employees and retaining them for up to six months. The idea that experienced, long-serving employees are valuable to a business is highly overrated.
If you happen to be lucky enough to have one of those children who actually works harder than you – I mean really works long and hard – make sure you never discuss selling the business to him (and definitely never sell to a daughter, especially if she has an MBA). It’s always much better to leave your son – and your entire family – assuming that he will inherit the business. Hint at this plan but never really commit. Think of the excitement when your other children learn only when you and your spouse have died (likely when you’re both in your nineties) that in the spirit of fairness, you have left an equal number of shares to all the children. There is nothing like brothers and sisters becoming business partners late in life and working shoulder-to-shoulder, especially when one is married to a lawyer. Remember to keep your real business succession plan a secret – surprises are what make families strong.
Instill in your children the idea that a business is not about making money but rather about staying in business at any cost – the older the business, the better. Old is good! You can make this point by talking about how bankers will always lend money to an old family business to support its growth. But steer clear of examples involving buggy whips, slide rules and BlackBerries – they are just anomalies.
It is important to concentrate all your wealth in your business, especially as you near retirement. When you make money, reinvest it in your business year after year and tell your children that this is the full extent of your retirement plan. Tell them that when you die their mother will inherit the business and that she will need all of their help running it. If all goes well, the business will fail and everyone will gather round and reminisce about what a magnificent businessman you were – after all, clearly only you could run it profitably. This is okay because remember: you are dead and no longer require money.
Definitely do not write a will. Some of the best family moments come when everyone testifies in court and offers his or her own version of what you really wanted. Why deny your children an authentic Darwinian moment? Why deny them the sheer joy of learning who you really were as they riffle through your personal papers and slug it out mano-a-mano in open court? This makes for great front-page reading in your local paper. If you insist on a will, definitely do not get professional help writing it – those $9 do-it-yourself will kits are awesome and take only 10 minutes to complete. But remember, that’s 10 minutes of your life you’ll never get back.
Bonus Tip for Advisors:
If you’re an advisor who wants to give something different to your clients to read – something to really get them moving forward with their planning – definitely don’t buy Every Family’s Business. Even though you can order securely online by clicking here, bulk rates for orders of 10 or more copies are amazing and express shipping is free, the book is absolute rubbish.