There’s no question that many family companies were founded by people with extraordinary vision and passion. But where do things stand in your business today? Take a look at these characteristics of entrepreneurs and entrepreneurial companies and answer the questions for yourself. Just how entrepreneurial is your family business?

Creativity
In some family enterprises, there’s an unspoken belief that creativity is reserved for writers and musicians. In others, there’s an underlying mindset of “this is the way we’ve always done it.” Either attitude can stifle creativity, which is a precursor to innovation, which is essential to entrepreneurship. Creativity comes in many forms – the ability to generate multiple approaches to a problem, having heightened perceptions or awareness, seeing things differently or seeing different things. Which of those creative talents are present in your business? What are you doing to develop them?

Growth Orientation
Think for a moment:  In the last year, what specific plans have you made to pursue a new area of growth for your business? How motivated are family members and non-family managers to pursue strategic growth opportunities? An entrepreneurial family company can be both prudent and opportunistic – they’re not mutually exclusive – and both involve an orientation to growth. How prudent is it, after all, to stay in the same place you were last year?

Adaptability
In a family enterprise, there are many good reasons to honor and respect past traditions. However, this must be balanced with the need to adapt to changes in the family, the structure of the business and to the marketplace. When was the last time your company ventured out of its comfort zone? Is your family business a model of flexibility and enthusiasm for change? Are you?

Future Focus
A majority of family companies say they want to continue family ownership through the next generation; one of the great strengths of family companies is the ability to take the long view. Paradoxically, a great weakness of many is a failure to plan for the future. How committed is your family business to a long-term, forward-looking business strategy? What concrete plans have you made that demonstrate your commitment?

Self-Determination
Great entrepreneurs are determined to win. They love what they do, do whatever it takes, and good or bad, are willing to live with the results. But entrepreneurial parents may unconsciously encourage just the opposite from their children. Parents naturally want to take care of their children and to protect them from painful experiences. Unfortunately, the best intentions can dampen the entrepreneurial spirit. The best way to protect the next generation is to encourage self-determined behavior. Do your next generation leaders set challenging goals for themselves? Do they take the initiative to reach those goals? Do you allow them to make choices and experience the consequences?

If your answers to the questions above indicate that you need to rekindle the entrepreneurial spark, what steps will you take? If entrepreneurship is alive and well in your family business, we invite you to share your successes and insights with others here.

Don’t wait until conflict rears its head at the Thanksgiving dinner table. Practice discussing your differences and learn to better manage conflict all year round using some of these approaches.

• Stay in the present. Families working in business together have long shared histories. Don’t bring up past conflicts that have no bearing on a current issue. Stay in the “here and now,” instead of dwelling on the “there and then.”
• Examine your assumptions. Too often, we react to situations without having all the facts. Before you draw a conclusion, consider your assumptions and where they came from. Do you have all the facts? Are you reading hidden meaning into an innocent remark? Take a step back and ask more questions to understand the situation before you react.
• Deal with differences directly. Any two healthy people should be able to resolve disagreements between them directly. When you seek out a third party to act as a go-between, the odds of miscommunication increase greatly. Drawing others into a conflict also can erode trust and breed deeper conflict.
• Deal with differences immediately. When conflicts arise, deal with them as close to the actual event as possible. Don’t store up grievances so that you can launch a bigger attack later on. A time-tested principle is, “Don’t let the sun go down upon your wrath.”
• Separate the situation from the person. Sometimes, our natural reaction when we’re angry or hurt is to attack the other person. Anger is a natural human emotion – just be sure you express it appropriately. Focus your energy on the situation or problem, not on the person or personal characteristics. It’s a more effective and quicker way to resolve the conflict.
• Take responsibility for your part. Few, if any, problems are created solely by one person. Before assigning blame, ask yourself what you contributed to the problem. Own up to your part in co-creating the conflict. Be willing to admit that you might not be right.

If you’re concerned that the dining room may become a battleground, be sure to communicate your needs and desires for the Holiday well beforehand. Create strong boundaries by letting family members know that certain topics are off limits. If they forget or choose to ignore those boundaries, then it’s up to you to remind them, firmly and respectfully, that they’re out of bounds.

Guidelines like these can prevent conflict from escalating at the dinner table on Thursday, or on Friday morning back at the family business. Exercised regularly, these practices will bring your family members closer together, instead of driving them apart.

After a few moments of silence, one family member broke the ice by saying he felt his sister wasn’t grabbing the reins fast enough. The sister reluctantly acknowledged that might be true and admitted that she felt intimidated at times by her father’s business success. Mom chimed in with her concerns about Dad’s interference in day-to-day operations and how that made it more difficult for others to take responsibility. Dad expressed a few doubts about whether he really wanted “out.”  And by that point, this family was having a real conversation.

That family meeting illustrated a bedrock principle:  One of the most important things a business family can do is prepare themselves for the conversations they don’t want to have.

For a family business, success or failure often depends on the ability to engage in productive dialogue with each other. Susan Scott describes this concept superbly in her book, Fierce Conversations. She asserts that “doing business” is really just an extended series of conversations with other people. And for those conversations to be meaningful and move us toward our goals, they must be “fierce.”

A fierce conversation is not about adversaries pushing for their position, but about members looking at issues together, striving for a more complete understanding. In a fierce conversation, Scott says, we must “interrogate reality,” separating out hearsay, speculation, assumptions and the party line, to get to the truth of what’s really going on.

We must be clear about our purpose and what needs to be accomplished. We must keep our egos in check, acknowledging that everyone has a unique perspective and that each is valid. When we tell ourselves, “he doesn’t know what he’s talking about because…” we miss important information. That someone who “doesn’t know what he’s talking about” might be the person who offers insights we couldn’t see on our own.

Finally, when we “come out from behind ourselves” into the real conversation, we provoke learning in ourselves, deepen the relationships that are important to us and strengthen our ability to tackle challenges head on.

Think about a conversation your family business needs to have, that you’ve been avoiding.

1. What’s preventing you from having this conversation?
2. What needs to change for you to approach this conversation in partnership rather than as adversaries?
3. If you were in another family member’s shoes, how would you see this situation?
4. What would you like the outcome to be?
5. If the situation were resolved, what would be different for your family business?

If you want to see real change in your family business, change the conversation and make it fierce.

One night after work a few weeks ago, my husband and I were having dinner and sharing tidbits from our day.

“So how was your day?” I asked.
“Not bad,” he said. “I did some work on my internet marketing strategy.”
“Sounds interesting. Who are you working with on that?”
“Todd Baylor. I really like his approach.”
“Todd Baylor? From ABC Marketing Strategies?” I asked.
“Yeah, that’s the guy. Do you know Todd?”
“Sure, I know Todd. How did you meet Todd?”
“Oh, I haven’t actually met him yet. I just know him from LinkedIn.”

With the explosion of social networking, it seems that we all know a lot more people than we used to. But do we really know all these people, or do we just know a little about them?

Don’t get me wrong – I’m a big proponent of social networking. It’s a powerful tool for business and a great way to keep in touch with acquaintances. But we shouldn’t kid ourselves that adding more Facebook friends or keeping up with their latest Twitter feeds does anything to deepen our relationships.

The same is true in some family businesses: We think we know our family members a lot better than we really do.

This may be especially true of parents and children working together in the business. As a parent, you want what’s best for your son or daughter. And like most parents, you probably believe that no one knows your child better than you do. Plus, you work together every day! Of course you know what they want!
 
You may be right. Or you may be seeing your children as they were, rather than the people they are today.

Not long ago, this issue came up in a family meeting with the founding owners of a contracting business and their two adult children. The son and daughter, both in their late 20s, had been working in the business for several years.

As we were discussing the daughter’s evolving role, she expressed an interest in working with the chief estimator for a few months. But before she could explain, her father quickly jumped in: “Do you really think that’s a good idea, Kelly? I mean, I’m not sure that estimating is the right area for you in the long run. You remember we had to get an algebra tutor for you in high school, right?” However well intentioned, this father seemed to have an outdated perception of his daughter’s interests and potential.

The same thing can happen with siblings. Adult brothers and sisters can become locked into old patterns of behavior. They may push each other’s buttons without even knowing why or how. Instead of getting to know one another as adults, they can stay stuck in their childhood roles: You’re the responsible one. I’m the peacemaker. He’s the free spirit who gets away with everything.

It’s understandable. It’s hard not to project your own needs and goals onto your children. It’s tough to be objective about someone who made you into an older brother or a little sister. But when we hang on to old views that don’t match up with who our family members have become, when we mistake frequent contact for true understanding, we run the risk of having a virtual relationship, rather than a real one.

Reason #1: The immediate future is the one you’re focused on.
It’s not surprising when leaders focus their energy on dealing with the immediate – especially now, with the uncertainty in our economy. But the economy alone can’t account for the widespread lack of succession planning in private companies. It wasn’t a top priority before the recession and it’s not one now. The reality is, unless a top leader pushes succession planning because he or she thinks it’s a vital, strategic issue, it won’t happen. Day-to-day business concerns will always get first dibs on your time.

Reason #2: You’re not ready for the difficult conversations.
Very often, when we say “I don’t have time,” or “the business needs my attention,” what we really mean is “I’m not prepared to look it (or them) square in the eye.” There’s no getting around it – succession planning requires difficult conversations and self examination. But instead of putting it off because you’re not ready, think about what you can do to get ready. Susan Scott, author of Fierce Conversations, said it best: “The most valuable thing any of us can do is find a way to say the things that can’t be said.”

Reason #3: You don’t have a good reason to.
Whether you’re 48 or 68, stepping away from the business can seem like it’s light years away. So it may feel like there’s nothing pressing you to plan now. But in the back of your mind, there’s that niggling doubt. So how can you inject a sense of urgency into your thinking? You could set yourself a challenging goal, or give yourself a limited timeframe for taking the first step. You could “burn the boats” and go on record so there’s no turning back. Or you could recalibrate your thinking by talking to other business owners who’ve navigated succession. Widen your perspective and you might find just one good reason to start.

Reason #4: You’ve thought about ownership, but not management succession.
When private companies talk about succession, they’re almost always referring to ownership – who will own shares or control the business in the future. Management succession on the other hand, is all about who’s going to operate the company in a way that makes the shares worth having. It means preparing people to do the work that needs doing so that the company continues to be viable. Ask yourself these questions:

• Has anything changed in the business in the last two years? Have the demands increased? Are any new skills required?
• Will you have any retirements other than your own in the next five years? If so, how will you replace the talent?
• Can you fill those positions without over-promoting people and risking the “Peter Principle”?
• Do you have the people in place right now to fill key positions without making costly external hires at the last minute?

If you haven’t thought about management succession, you may be planning, but only partially.

Reason #5: You’ve developed a successor, but not the organization.
Business sustainability is all about replacing reliance on individuals with creating organizational systems. (This is one reason why franchises have a much higher rate of success than other small businesses.) When asked “What’s your succession plan?” far too many owners answer: “Karen. She’s been working here 20 years and knows everything I do.” But what happens if Karen decides down the road she doesn’t want to be the CEO? Or gets lured away by a competitor? Or the unthinkable happens and Karen becomes disabled? Some owners tell themselves they’ve planned for succession because they’ve chosen a successor. But it’s much more than that. Succession means developing the organization and its systems so that if something happens to an individual, the business can go on.

If you’ve been telling yourself that you don’t need to worry because you’re not ready to retire, or you have good people to step in, or you’ll figure it out when the time comes, take another look at the reasons why.

Shirtsleeves to shirtsleeves in three generations. This saying is so universal, it appears in almost every language and culture: clogs to clogs (Scotland), stalls to stars to stalls (Italy), rice paddy to rice paddy (China). Certainly, we have an intuitive sense that the three generations phenomenon can be the case. Family business statistics also bear this out. However, it isn’t pre-ordained for every family business. And it doesn’t take into account the new businesses that are started in succeeding generations. The adage isn’t helpful or necessarily true, it’s just fatalistic.

If you fail to plan, you plan to fail. Does anyone plan to fail? Really? The advice behind the words is good (planning is important), but it’s a bit too simplistic to be very helpful. People put off planning for all kinds of reasons – indecision, uncertainty, fear, inexperience, conflict avoidance, simple procrastination. Knowing what we should do doesn’t have nearly the impact as understanding why we are or are not doing it.

She’s the Chief Emotional Officer. This pseudo title might seem catchy, but it usually reflects an assumption that the husband / father is Chief Executive Officer, while the wife / mother is the Chief Emotional Officer who tends to family relationships and makes sure everyone is playing nicely. No doubt, this is still true for some families. But in others, the roles aren’t nearly so clear cut. Also, whether referring to a man or a woman, the phrase sends a subtle message that the emotional life of the family or the needs of individuals is one person’s role. In reality, it should be part of everyone’s thinking.

You just have to separate business from family. This one ranks up there with another favorite: “It’s not personal, it’s just business.” As any family business will tell you, it’s never just business. As if it were that simple. And it’s bad advice to boot. The combination of business and family is what makes family businesses unique and powerful. The better advice is not to separate the two, but to accept that priorities in one or the other may overlap or be in conflict and need to be consciously managed.

Let’s lay these family business axioms to rest. Their popular wisdom is misleading at best and insulting at worst. More importantly, they’re a poor substitute for the deeper thinking and intentional discussion needed about legitimate family business challenges.

At some point, most family businesses are faced with questions such as:

• What does “fair” compensation mean?
• Should we pay family members differently than non-family employees?
• How do we reward the different contributions that family members make to the business?
• How can we avoid creating conflict among family members due to compensation disagreements?

Family businesses, like other businesses, should have an established basis for determining compensation. While there is no “one size fits all” approach or foolproof plan for family business compensation, most experts agree that an ideal plan includes the following:

1. Family members should be paid “fair market value” for their responsibilities and performance.
2. The compensation system should be based upon performance, not seniority or longevity.
3. Large distributions should be made only in profitable years and only after other financial needs of the company have been met.
4. Family employees should adopt lifestyles appropriate to their current level of income.
5. High compensation or “phantom jobs” should not be used solely as a way to create tax savings.
6. Family members working in the business and contributing directly to profitability should be rewarded at higher levels than those who don’t work in the business.
7. Compensation should not be based on family members’ need or lack of need.
8. Compensation should never be used to maintain control over family members, or as a subconscious way of resolving or avoiding emotional issues.

As a family business and the number of potential shareholders continue to grow, the issue of compensation becomes even more critical. Many family businesses have found it beneficial to examine their compensation system in order to implement practices that are fair, communicated and understood by all, and that promote harmony and teamwork within the family business.

Signing on the dotted line is just the beginning. Here are four principles to prevent culture shock and ensure a successful acquisition.

1. Incorporate human capital strategy early in the process. In recent years, the M&A process has evolved to include human capital in the due diligence process. When evaluating an acquisition, be sure to assess people, talent and culture with the same rigor you apply to the company’s customer base, profitability or market potential. In the case of two family companies becoming one, don’t assume your cultures or values are the same just because you’re both family-owned.
2. Communicate quickly and clearly. When it comes to employee communication, time is never an ally. People in both acquiring and acquired companies often express that they don’t know what’s happening. When they don’t know, they speculate. Fill the vacuum by anticipating employee questions and concerns before they raise them. Communicate about the culture so that people know what’s most important and how they’re expected to do their work. Remember that to a large extent, the new culture of the combined organization will be shaped by these early communications.
3. Accelerate the integration process to reduce anxiety. Believing that too much change too soon is overwhelming to people on both sides, some companies proceed too slowly. Though it’s counterintuitive, an accelerated pace actually helps with cultural integration. What creates the most stress for people is ambiguity, so the sooner you make changes and put an end to the uncertainty, the more quickly everyone settles in. In an acquisition, there’s also a unique window of opportunity to make important changes because everyone expects change.
4. Focus everyone’s efforts on the customer. Immediately after an acquisition, it’s natural for the focus of both organizations to turn inward. However, this can be a negative distraction to the real intent of most acquisitions, which is to attract additional customers through more compelling products and services. Having a clear priority around extraordinary customer service can become a rallying point for the new team and a cultural touchstone of the new organization. Not to mention, it helps everyone focus more on business goals and less on personal concerns.

Buildings, equipment and technologies can be acquired. People and cultures cannot. To ensure the success of an acquisition, they must be carefully integrated before, during and after the deal is done.

What is “Culture”?

Ignoring a company’s culture is the leading cause of problems in acquisitions. But what exactly is this “culture” thing? What does it mean to pay attention to culture, not just in connection with an acquisition, but all the time?

Generally, culture is about how things work in an organization. How things really work, not just how things appear on the website or in the employee handbook. Are we truly innovative or more traditional in our thinking? Are managers directive, collaborative or a little of both? Are leaders visible and available or do they work behind closed doors? How do we communicate and in what direction does information flow?

Culture is the company’s leadership personality, management style, strategic focus, history and character. It’s about what the company communicates to employees (intentionally or not) and how strongly people embrace those messages.

Culture is also the story we tell about ourselves. It’s what we believe in, what we talk about, what makes us anxious and what we celebrate. It’s about how we relate to each other inside the company and out in the world. It may even be that we wear jeans to the office and always have pizza on Friday.

Human beings react to culture in much the same way they do politics and religion – small differences in beliefs often unite people more powerfully than great similarities.

In a classic case of turning lemons to lemonade, insurance company Aflac held open auditions in six cities last week, searching for its next “quacksperson.” The former Aflac duck voice, comedian Gilbert Gottfried, was fired after posting controversial statements on Twitter about the recent tragedy in Japan. But Aflac found a creative way to turn around a regrettable situation with a sense of humor. In doing so, what could have been a terrible PR incident for the company will probably end up becoming a case study. Lemonade lesson: When mistakes happen, don’t duck and cover.

Volkswagen is another company that used subtle humor to turn lemons into lemonade. Fans of the television series Mad Men and other advertising buffs may have heard about the 1960s Volkswagen Beetle campaign. As automakers built bigger cars for bigger families after World War II, the VW “Bug” was seen as too small, too slow, too ugly and too German. The now-legendary campaign actually played to these perceptions with headlines showcasing its status as a “lemon” and witty copy that highlighted the benefits of driving a small, German (“well-made”) car. Lemonade Lesson: Being true to who you are can flip negative perceptions.

Wally Amos, founder of the Famous Amos chocolate chip cookie brand, opened his first store in 1975 with a $25,000 loan. He went on to expand the company into a national brand, sold in grocery stores all across the country. Unfortunately, after almost two decades, Amos ran into some financial troubles and was forced to sell the company. And since “Famous Amos” was trademarked by his former company, he not only lost the business, but also his name. But Wally Amos wasn’t down for the count. He went on to start a new company focused on fat-free muffins, calling them “Uncle Noname Gourmet Muffins.” Uncle Noname became Uncle Wally’s Muffin Company in 1999 and the muffins are now sold in more than 3,500 stores nationwide. Lemonade Lesson: If you don’t succeed in one venture, use what you learned to start a new one.

Lemons are good for a lot of things. They can remove stains, soothe sore throats and brighten your whites. They can also be the catalyst for managing mistakes, changing perceptions or prodding us into trying something new. As a family business entrepreneur, you know that life will always have its sour parts. The question is, what will you do today to leverage your lemons?

Now add the additional challenge of balancing business and family and it’s easy to see why members in a family business are especially susceptible to burnout.

When you work in a non-family business, your coworkers probably don’t know you as well as your family members do. When the workday is done, you go home to your family and focus on that part of your life. But when you’re part of a family business, it’s not so easy to maintain the boundaries between work time and personal time. It takes agreement and commitment to keep them separate and distinct, but it can greatly reduce your stress.

Another classic path to burnout is having unrealistic expectations in the relentless pursuit of your goals. It’s a blessing when you love your business so much that you’re willing to work long hours over an extended period of time. It’s a curse when you don’t realize that you’ve moved past the healthy balance point.

When you’re feeling driven by work, it’s also easy to put off physical needs so that you can “get this one thing done.” Unfortunately, that “one thing” turns into the “next thing” and the next and the next. But there’s a big difference between having energy and working off adrenaline. So as simple as it sounds, when you’re tired, rest. When you’re hungry, eat. It’s a simple but effective way to break a cycle that can lead to burnout.

On the other hand, sometimes the cause of burnout isn’t having too many challenges, it’s not feeling challenged at all. We all get bored with our work at times and it happens to even the brightest, most ambitious of us. Left unattended though, boredom can lead to burnout. So keep your business life interesting. Widen your circle of contacts. Get out and about. See what’s going on out in the field or down on the shop floor. Visit with a customer or one of your employees. Shake up your routine. While there’s no instant cure, any action is better than sitting around bored or in a bad mood.

If you’re interested in passing on the company you’ve built to the next generation, you’ve got to be in it for the long haul. So is it really better to burn out than rust out? When it comes to your family business, we don’t think so.