familyownedbusinessblog

Family Stories Important to Tell

At the Oregon FFI Study Group, family members from three successful family businesses each of which had been in the family over 100 years discussed the importance of know the history of the family business. As each representative member introduce the business, they spoke of the founder, their great-great grandfather. Each knew when and where that founder was born, traveled to the US or traveled within the US finally arriving in Oregon. Each knew how the founder got started in the current businesses and how each succeeding generation passed the business onto the next generation.

During the discussion following the introductions, one of the family members made the observation that part of the success of these businesses was due to the connection each of them had to the founder of the businesses.  In turn each member agreed how important that story was to them and feared that their grandchildren would not know that story.

These stories are important. It is who we were and who we are. Capturing these stories and passing them onto the next generation and the next is important work. It may be that it is the work of the current generation to capture these stories orally and in writing as they hand over the business to their successor.  These should be seen as a gift one generation gives to another...the story of who we were and who we are. it will be for the next generation to be who they become. Their story will then be told by their children but always in context of who we were.

Words of Wisdom

On Friday, May 7, 2010, the Oregon FFI Study Group met at the offices of Ater Wynne, LLP, in Portland, Oregon.  There we met with a family member from each of three family-owned business each of which had been in the family for over 100 years.  While each family business differed in their governance structure and size, there were important similarities.

First, the current generation in management of the family business had worked outside of the family business as adults where they were able to find success and build confidence. And, each speaker thought this was a significant element in the success of business currently. Their insight is supported by the best practices espoused by consultants in the field of family-business advising and succession planning.

Second, each representative discussed the importance of a trusting relationship between the family members. Two of the families felt that to continue that trust it was important to only have those working actively in the business be the owners of the business.  The third family has built trust through professionalizing management and adopting governance structures that include family members.  In both cases, the family has found a mechanism for allowing non-interested and non-involved family members to withdraw from any participation or ownership in the family enterprise. There has been sufficient resources in the family to equalize the value of business with other assets so that fairness in the estate plan is achieved.  Treating children equally is such an important consideration for parents who are owners of businesses or business interests that a way must be found to equalize the the wealth among the next generation.  In these 100 year old family businesses, the generations have found a way to do this.

Third, each of these businesses have a generation in management and control that is able to clearly articulate what is expected of the next generation and what the next generation can expect. There is no guessing. There are clearly defined rules regarding entry into the ownership of the businesses and management in the businesses. While each of these businesses differ as to the expectations, there is no doubt within each business what is expected and what is to be anticipated.

And lastly, the current generation sought the assistance of professionals skilled in family business succession planning to assist them in gaining an understanding of succession and articulating the expectations for and of the next generation.