Matters Column

Service providers, trusted advisors: How to work with family businesses

December 15, 2012
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Are the majority of your clients family businesses? Chances are, yes. Of all the business entities in West Michigan, 88.8 percent identify as family owned. Family enterprises take many forms — large, small and in every industry. Our community wouldn’t be what it is today without our family businesses planning for the future, giving back philanthropically, and treating their employees like an extended part of the family.

Advisors play a critical role in the success of their family business clients. Are you a service provider or trusted advisor for your family business clients?

When working with their clients, a trusted advisor should consider that family businesses are different, and no two are the same. This should come as no surprise. Any time you add family dynamics to business, the entity may not behave exactly as predicted.

Have you ever had a deal “blow up” and it had nothing to do with business and everything to do with the family? Recently, when I asked this question to a room full of attorneys, CPAs and insurance providers, about half raised their hands. When working with family businesses, family dynamics are real and influential. Here are some tips and insights on working with family businesses to make sure your work is successful and impactful.

Identify the family businesses: Look at your client list and identify the family businesses. What makes them a family business? Do they have multiple family members working in the company? Multiple generations of family owners, perhaps? Does the spouse play an important role in the company? Do they even identify as a family business? I had one family business CEO who told me he had never thought of his company as a family business even though he had nine family members working in the business. 

Identify hurdles: After you identify your family business clients, think about what hurdles, issues or obstacles each is facing or will face in the near future (up to five years). By writing down a few questions and notes, you are on your way to helping them plan for the future. Questions to consider include: Who are the decision-makers? Are they facing succession or some sort of transition, considering options for gifting stock, getting a divorce, having a baby or grandkids, growing into a new market, or hiring a family member?

Legacy and culture: When having conversations with clients, ask what legacy they want to leave and what the values and mission of the family business are. Harvard Business Review, Business Week and many other periodicals regularly report how successful family businesses compare with their privately held or publicly traded counterparts. In fact, many of these periodicals are advising non-family enterprises to start thinking and acting like a family business. People want to work in a company that has a similar set of values as theirs and that invests in employees as it looks to increase productivity and reduce turnover.

Share best practices: There are several “best practices” as identified by studying thousands of successful multi-generational family businesses. Most articles and books written about this issue identify the following as some of the most important best practices: 1) Having a plan for strategic planning, succession planning, family employment and next-generation development. 2) Considering an outside board or group of advisors. 3) Recognizing that communication is one of the most important keys to success by creating family forums or family meetings to discuss and engage as many family members as possible. A quote from the Journal of Small Business Strategy states: “The more inclusive the family meeting membership is, the greater the positive effect on the firm; what is discussed is not as important as who participates in the process.”

Develop the next generation: Help get the next generation what they need to succeed. This may include finding good leadership development or mentoring programs. Do you feel comfortable asking your clients what expectations they have of the kids working in the business? Does the next generation know what is expected of them — in other words, are these expectations spelled out? Often parents complain about their kids to others but haven’t set up a plan where the kids can learn what is expected of them and then develop their own personal curriculum in order to succeed within the family enterprise. Your role as a trusted advisor can help link the two generations and perhaps the next generation will feel you understand them a bit better.

Get out of the middle: Connect, check in, find the right resources to help when needed, and then let your clients do the work. As Author Dennis Jaffe states in his book “Stewardship in Your Family Enterprise”: “Family conflict is inevitable. … The challenge for a family and their advisors is to find ways to deal with conflict that sustain the family’s overall financial and business health.” This should be done while respecting the personal perspectives and relationships within the family. Jaffe says one way trusted advisors can be effective in helping their clients is to learn how to be a great mediator “whose task is to create a safe setting for the family members to come together and find their own resolution.”

Read: There are so many books and articles on family business, a quick Google search would bring you thousands. A great periodical that every business office should have in their waiting room is the Family Business Magazine, but there are other ways to be informed. There are blogs and online resources to review, or have you read a good family business book? Consider passing it along to one or more of your clients as a gift. This shows you listened to them when they told you about their plans and company values. Also, create a network of other trusted advisors and field experts that is available to answer your questions and/or your clients’ questions concerning their family business. Need book ideas or other resources? Email me and I’ll send you a list.

To be a great trusted advisor, take the time now to better understand your family business clients.

Ellie Frey is the director of the Family Business Alliance,,and can be reached at The goal of the Family Business Alliance is to help family businesses succeed generation to generation.

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