• Why And How To Hire A Family Business Consultant
  • May 5, 2003 | Author: Glenn R. Ayres
  • Law Firm: Fredrikson & Byron, P.A. - Minneapolis Office
  • Let us start with some fundamental truths:

    • I want to be remembered as a good parent;

    • I have a responsibility to provide leadership to my business; and

    • I need to do what is right for me.

    Simple enough, right? Sounds a little like the American flag and apple pie; who could disagree with such universal statements? Perhaps no one, but when we translate these "truths" into what they so often are, the struggle to integrate family and business, many of us will go to almost any length to avoid addressing the family side of the equation. If it makes anyone more comfortable, this fact merely puts most of us into the vast majority of the human race. Given the choice (or at least the perceived choice) most of us will do business or other mechanical tasks all day rather than struggle with something as tenuous as what it takes to maintain a balanced, happy family. It is not that we care so little about our families -- for most of us there is nothing higher on our priority list -- the problem is that we do not have all the answers and most disturbing, we know it. That leaves us without control of the situation; swimming around in the murky waters of feelings and emotions. Territory, we all recognize as uncomfortable at best and dangerous at worst.

    Not yet a believer? Try the following simple quiz:

    [Pick one alternative that best answers the question, "If I had a choice I would rather. . ."]

    1. Struggle with a customer complaint: _____ or

    Explain to my daughter why her brother deserves a position in the business, but there is no place for her; _____.

    2. Meet with the banker on a new credit line; _____ or

    Tell my son why he should dedicate himself to the business until I am good and ready to let go; _____.

    3. Confront a long time supplier who tried to cheat me; _____ or

    Rationalize for my spouse why two of her children have what it takes to make it in the business and the third does not; _____.

    4. Address my peers on what it takes to be a successful CEO in this industry; _____ or

    Let my family know over the holidays that I have decided that my eldest son gets the business and my other three children will have to be happy splitting the remaining 1/3 of my estate _____.

    This was not a trick quiz, it is the real world. If you honestly picked any of the second choices, my hat is off to you; you know your priorities and you are not afraid to trod unproven ground! If you are like most of us, your "rather" answers were universally the first choice. This means you are normal. These are the "business as usual" choices. This does not mean you are a bad parent, an irresponsible business leader or that you cannot identify your own needs; it simply means that you prefer the known over the unknown, and that you are more comfortable and feel more in control in an arena where you have some very real, practical experience.

    Like it or not, however, when a family business is in transition because of a sale, exceptional growth, retirement, or simply a child wanting to follow in a parent's footsteps, it is no longer business as usual. Family and its murky agenda of feelings, values, and emotions are now a part of the equation. When this time comes, you can do one of two things: you can either ignore (avoid if you will) the family issues and pretend that continuing to make good business decisions will be enough; or you can acknowledge that you do not have all the answers anymore, but that you are willing to struggle to come up with solutions that maintain a balance between these two fundamental systems.

    Where is it written that just because you are a great parent and a very successful business person, that you have to be good at everything? It is OK to admit that perhaps, just perhaps, you are a little too "close to the trees" to be very objective when family and business issues collide. What is wrong with asking for a little help in sorting out priorities and making sure everyone gets heard without the roof blowing off? Is your situation so unique that no process that has worked for other families facings these issues will possibly be of any benefit for you, your family, and your business?

    The simple answer to the, "Why Hire a Family Business Consultant?" is that he or she has walked that path before. They have a process to help you, your family, and your business build a solution that works and that is tailored to your individual family and business needs. Most certainly, they do not have a magic solution (or if they say they do, watch out!), but they do bring an outsider's perspective and an expertise in guiding your family and your business through a decision making process that allows you the opportunity to define solutions that work for everyone.

    How to find such a consultant is a product of knowing what you are looking for and being able to ask the right questions. Many disciplines in today's service professions say they do family business consulting. The trick is to pick one that has a proven process that will work for you.

    Here are three questions you might try asking a would-be consultant:

    1. What is your background and experience in this type of work?

    (If they talk principally about their training as a lawyer, CPA, broker or financial planner and the number of family businesses they currently represent, be cautious. What you want to hear is a description of their cross-training. A good family business consultant will have a strong business background either as a former executive or as a professional, but he or she will also have both training and experience in some form of family systems theory, psychology, group facilitation and/or alternate dispute resolution. Many in today's market use family business consulting as a marketing tool for selling their primary expertise or product (i.e., estate plans, strategic planning, tax planning, ESOPs, benefit plans, financial services or even securities and life insurance). These services or products may be essential to the final implementation of your plans, but do not get the horse before the cart. Your primary need is for a practical, business oriented, process consultant to help you grapple with what will work for you and your family. Do not worry, you will get around to all those documents and agreements eventually and you will probably find you already have a number of trusted advisors that can fulfill those needs when that time comes.)

    2. How many family businesses have you worked with?

    (Assuming you have now found someone who is not merely trying to sell you a product or service, you will quickly discover that very few consultants have a great deal of experience in this rather new discipline. Many, if not most, are academics with little if any real consulting experience, or therapists who are not equipped to handle the business side of the equation. These people too can be a great help in understanding some of the theories at work here or in dealing with family relationship issues, but what you need now is someone who has worked with real families in depth and helped them struggle, not with just one element of the problem or another, but with the central issue of figuring out what works for both the family and the business. If you have doubts, ask for client references. Because of the essentially private nature of such proceedings, a good consultant will need to first ask a client for permission to use their name or discuss the nature of the engagement. In a minimum amount of time, however, they should be able to give you three or four family/business owners for you to talk to about the process they went through and how it worked for them.)

    3. Ask them to describe their process and how they charge.

    It should be easy to understand and you should have a clear picture of the ground rules for the engagement. It should also have a definitive beginning and ending, and it should not be tied to your using their firm or products to implement the resulting plan. Similarly, the basis for the fee should be explained and a quote given after the consultant has had an opportunity to learn enough about your business and family to make an intelligent estimate. A fee range is probably the most honest quote you can expect, but the upper end of that range should represent your maximum fee exposure unless you wish to extend the engagement beyond that previously agreed upon. This work will not come cheap. It is intensive and requires a good deal of preparation on the part of the consultant. When done well the results will be worth the expenditure and almost certainly will be a whole lot less expensive than re-tooling your plant, or hiring a new chief executive officer. Both of which you would probably do in a minute if you felt the business need justified the expenditure.)

    No one is suggesting that moving through such a process is easy, but it is essential in one form or another to the successful transition of a family business from one generation to another and to the maintenance of the balance between the family and business. It can and should be a very rewarding experience for everyone involved and it should be expected to pay significant dividends in enhanced business productivity and family harmony. All too often we consultants hear would-be clients exclaim, "My god it will be World War III if I ever involve my family in discussions like that!" Well, from my perspective, I can only tell you it has never erupted into World War III. On the other hand, having watched the probate process for the past 25 years, I can almost guarantee that if these issues are not addressed as a family while mom and dad are still alive to provide the loving leadership that only a parent can supply, the chances increase tenfold that it will be World War III after they are gone.

    Strange as it may sound, some clients' families have even been known to have found the process FUN.