IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog has been provided by Bhaj Townsend of Focus & Sustain (www.focusandsustain.com):
The 8 Keys to Having Successful Family Business Conversations During COVID-19
In today’s COVID-19 environment, family businesses have another layer of complexity to deal with. This layer involves the emotional dynamics in the family, around business topics. Should we prepare for a sale? How should we reopen? Do we borrow money to fund the restart? Do we use our own money to develop new opportunities? How do we listen to each other when we’re not sure the other has the best idea? How do we remain family when we have business issues that need our attention and we don’t agree on how to move these forward, keeping us intact?
These are big and potentially trying questions. I am not going to answer these questions, because they will have different resolutions depending on so many unique factors that face the business and many unique dynamic considerations in each family. Instead, I will look at the importance of addressing these questions, sooner rather than later, as well as provide tips on how to address these vexing issues you might be facing, right now.
I will start with an example: the older family member is thinking the restart, after this COVID-19 wrecked havoc on business productivity and plan for the year, is not worth it. The business is a good business and he thinks that it would be best to sell it, once the economy starts back up. This is antithesis to his two children’s ideas. They want to keep the business and have ideas on how to bring it back stronger than ever, and even with the ability to capture market share. They want to obtain a favorable loan. As they told their Dad: “Who wouldn’t get a loan now? This will be great for us.” How can this difference of perspective be resolved…respectfully and amicably, doing what is best for the family and for the business?
This won’t be easy if you just schedule the discussion and conduct the conversation in the way families normally communicate: from authority by the parents, by unilateral decision by the parents, or if there are louder voices who know how to manage the parents while less listened to members will feel isolated or feel like upsetting the status quo. Instead, you must have a D.O.G. conversation, one that is directed, open and guided. That is tip #1. Doing this will help defray emotions and can remove conversations that slip into personality digs to ones that stay on the issues.
Families and business often conflict. Their intentions are different. Family thrives on harmony and individual development. Business is about profitability and growth. The expectations for each are wildly different. Family thrives on compassion. Business thrives on achievement. You can have both together, but you must have the tools to give you the conversations that matter when both your family and your business matter.
As you schedule a conversation about the future of the business, one that can do a lot to keep the family intact and keep the business stable. Keep in mind these three C’s of communication. The first is Care. If you don’t care about another’s perspective, your meeting will falter. Listen to what the other person’s perspective is, even if you wholeheartedly disagree. It is their perspective. Respect that. Next is Clarity. Seek clarity. When you hold the conversation, know what the topic of conversation is going to be and stick to that topic. Don’t bring in other subjects. Don’t muddy the water. Be clear, seek clarity when you don’t quite understand what the other person is saying. The third is Calm. Set the stage of calmness in this meeting. Don’t expect amicable resolution in 30 minutes. Calmness necessitates giving time to the subject, giving time to the process, giving time to what others have to say. Calmness also demands listening rather than forming foregone conclusions and rebuttals before the other is finished speaking. Calm waters are slower waters, not stagnant, merely slower. You need that here to be able to find resolution that works for you as a family and you as a business. And remember, this is about your family and your business. Calmness will serve each of them well.
And now, here is a guideline of 8 steps to follow to give you calm, clear, and caring conversations for sensitive, critical and necessary topics that have the potential to become heated.
First, set an uninterrupted time for this conversation so that distractions and interruptions do not impede the focus of the topic. Whoever calls the meeting is the host.
Second, limit the conversation time to a maximum of 90 minutes but I prefer 60, for the initial conversation. Schedule a follow up to allow people to reflect on what has been said, what still needs to be covered.
Third, put together and disseminate an agenda, requesting input from those who have a stake in the meeting. It is important to know what is going to be discussed. The agenda should not be a surprise. Everyone wants to be prepared for the meeting and not have their guard on about the “hidden” agenda. Know and state the purpose of the meeting and what its intended outcome is. This gives participants an opportunity to understand the reason for the meeting and prepare accordingly. Your agenda might be: looking at the future of the business: sell, keep, or something else.
Fourth, let everyone have an opportunity to speak on the topic up for discussion, without interruption. If this is difficult to accomplish, a facilitator can be valuable in keeping the conversation neutral and moving forward. It is important that everyone feel and be given the opportunity to give their input. Families can have dynamics that exclude or alienate certain members. This is not the time for this dynamic to show up. A facilitator can be of great benefit here. Acknowledge all attendees’ contributions as each is expressing what is on their mind. This is not a time for unilateral predeterminate decisions. If a foregone conclusion and decision is already made, don’t have the meeting.
Fifth, have other participants say what they heard the speaker say. This allows the participant who was speaking to know they have been heard and for the participants who were listening to recall the issue rather than what they thought of the issue, or what they think of the speaker.
Sixth, stay on topic which means, do not digress into personal attacks or personal innuendos.
Seventh, allow for brainstorming. Have a white board or some other means to capture ideas. They will be coalesced, reduced or eliminated later. All perspectives, ideas, thoughts are allowed regarding the issue. Create the safe environment for that. Conclusions and decisions will come…later.
Eighth, because this is a mix of family dynamics and business decisions, separate the two entities. Know what the mission of the business is and stay focused on the relevance to that mission, in your discussions. Know the mission to your family, and if you do not have one, think about what is important to you about your family before you go into your business meeting. It may be harmony, it may be security; it may be fostering a sense of community…Whatever it is, keep it forefront in your meeting as well. When you find the meeting going off course to either the business or the family’s purpose, take a break to reset, to acknowledge each other respectfully, to remind yourself of the topic you came to discuss, rather than the personalities you want to attack.
Family business meetings can be like traversing a stormy sea. Without proper preparation tools, and capable people at the helm, there is a great risk of having the waves of the sea, harm the boat, harm those on the boat, and render the boat useless and find the crew, unable to get safely to shore. With a capable helmsperson to guide the ship, keep the crew safe and bring the boat and crew back to shore, you can hold family business discussions that can weather any storm.
If you have questions about this article or would like support addressing family business succession or estate issues, Bhaj Townsend of Focus & Sustain is available as a resource at (425) 823-0934 or bhaj@focusandsustain.com
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.