Family Business Matters 10/22 12:02
The Founder's Paradox
Are the goals of business continuity and family harmony mutually exclusive?
By Lance Woodbury
DTN Farm Business Adviser
Many family-farm and ranch owners define one aspect of success as the
transition of the land and operating business to the next generation. "The
opportunity for my kids and grandkids to come back to the farm" is a frequent
refrain when I ask about the hopes and goals of the senior generation.
Another goal often mentioned immediately thereafter is for the next
generation to "get along" and "work together." I often ask which goal is most
important: "If you had to pick, would you rather see the business intact but
experience family discord, or see the land and business sold in hopes that
family members have better relationships?" In my experience, most say they want
the relationships but often end up with a business or family full of conflict.
Neither option offers a guaranteed outcome. Passing the business to children
does not guarantee they will be successful operators just as selling the land
and giving them cash does not guarantee they will enjoy spending time together.
But, neither are the two goals mutually exclusive; some families achieve both.
In many cases, it is difficult to achieve the twin goals of business succession
and great sibling or parent-child relationships. Why?
As much as family members share DNA, a similar upbringing or common family
values, individuals in a family can be remarkably different. Personalities,
conflict styles, political views, cognitive skills, goals, financial skills,
communication preferences, egos -- all of the differences cause some to wonder
if they really grew up in the same household. When you place those differences
in close proximity (working together in the family business), there is bound to
be friction. Even when family members don't work together, the differences can
distract from efforts to build relationships.
Transitioning a business or passing land down involves the movement of
wealth, often in the form of gifts, to the next generation. Those receiving the
gifts, however, are in different life circumstances. Some may be working in the
business or farming the land, while some may instead have a spouse working in
the business. Others may have nothing at all to do with the business. Parents
often struggle with whether a gift of wealth in the form of land or business
ownership should be predicated on whether family members or spouses are
involved in the business. And, indecision, hesitancy or unwillingness to talk
about that issue can create misunderstandings. Parents often add to the
confusion by publicly wrestling with what is "fair" or how to treat everyone
Most family businesses I know feel communication as a family and business
could be better. Particularly when there is conflict, many family members
either blow up at one other or avoid confrontation at all costs. Many also tend
to take those closest to them -- siblings and parents -- for granted, assuming
"they should know" how they feel and think, or how they will decide important
issues. The result is that they either don't say what they are thinking, or
they say it in a rude and disrespectful manner.
Regardless of why it happens, the unfortunate result of poor communication,
different expectations and natural differences is that assumptions flourish
about wealth, inheritance and behavioral norms. The collision of these
assumptions about how the future should unfold or how people should behave are
obstacles to getting along.
But, it doesn't have to be this way. Regardless of whether family members
are in business together, don't operate a business but own land together or
simply rent land to a family member, accepting others' differences, clarifying
everyone's expectations and keeping the lines of communication open are the key
ingredients to achieving the senior generation's goals.
Editor's Note: Write Lance Woodbury at Family Business Matters, 2204
Lakeshore Dr., Suite 415, Birmingham, AL 35209, or email email@example.com.
Copyright 2018 DTN/The Progressive Farmer. All rights reserved.
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