The Advisor: Finding a Path Toward Conflict Resolution

15 Feb The Advisor: Finding a Path Toward Conflict Resolution

The data shows that only 30% of family businesses survive into the second generation.

Businesses fail regularly, whether because of a faulty business model, a lack of capital, or even the wrong kind of marketing. Yet when a family wants to create financial stability for its members and when it is determined to create a stable structure through which family members can inherit ownership or acquire leadership roles, it may be useful to enlist the help of experts.

Experts come in many forms. Just as you would look for the best cardiologist to take care of your heart condition, you will need to look for an expert advisor to assist with the care and support of your business. In particular, it’s a good idea to look for an advisor who is experienced in working with family businesses.

Common conflicts in the family business include:

• Battle of the generations. The younger generation wants to take the business in a more modern direction, but the older generation is happy the way things are.
• Changing directions. A key stakeholder (i.e., the founder’s son) wants to leave the organization to pursue other interests, but there isn’t a clear exit plan in place.
• Personality conflicts. At times, family members simply can’t get along, and it impacts their ability to function as a team at work.

If your family business is struggling with conflicts of various types, look for an advisor to support and guide the entire family. The advisor can provide a variety of skills that can help determine the best course of action and also can support each of the players in the way they require.

When meeting with a potential advisor to determine fit, keep these areas in mind:

Hard Skills

• Subject matter expertise. Usually, you begin with an advisor that has experience in a specific area of expertise, whether it’s legal, financial, business or any other area. Risk management is important to every aspect of managing a family business, and the information an advisor brings to the table can assist in decision making and planning for the future.
• Family dynamics. Advisors who have worked with family businesses understand the dynamics of families and their personalities. They are familiar with the particular risks that family businesses face and the challenges that family members cause one another. They understand the intersection between family and business and can help clients to navigate those challenges successfully.

Soft skills

• Listening. An expert advisor can hear the words a client uses as well as the intent behind them. Many times frustrated clients need to be heard and validated, and an adviser who can do this effectively will be able to gain trust and share solutions more quickly.
• Communicating. The next step is sharing the expertise with the client. Effective communication includes a deep understanding of the client’s needs and circumstances, as well as sharing best practices and tips for improving the situation and creating strategies for the future.
• Experience. It’s helpful if an advisor has previous experience with other family businesses. They can then draw on those experiences to offer the best advice for your situation.

Looking for a business advisor can be a challenge. Yet the right advisor can create a smooth transition for your family business, allowing the older generation to feel comfortable letting go and empowering the younger generation to step forward. And for a family business, that’s a mark of success.

To learn more about succession planning for your family business, contact us.

Joel Rose

With over 35 years of experience, Joel Rose helps families – and their businesses – to prepare for the future. He offers guidance and support to help his clients create estate plans and succession plans that meet the needs of the whole family. Through his extensive professional and personal experience, Joel is known for his compassion and his ability to find a creative solution to meet each family’s needs.