Business Planning

Bringing Children Into The Family Business

In my work with entrepreneurs and family business owners there are quite divergent views about whether to bring children into the family business when they are young adults, or even at any stage. Some say never and others have a desire to perpetuate the family association with the business. There are cases for both. Of course, rationality plays into it and the family legacy.

In my own case, I had to work through many of the issues because our family had a pastoral (cattle ranching) business which I eventually managed for a number of years. I enjoyed it from a business perspective but ultimately did not have the passion to make it a life long endeavor. My brother was not interested at all.

The big issue is, do the children want to be involved in the business? Then importantly, what is their passion for the business?

On one side it is wrong to force the children into something they do not want to be part of. However, is it wrong to deny them the opportunity? Often parents do not want the children in the business to avoid family problems by not mixing family and business.

I believe each case needs to be looked at on its merits. The starting point should be the DNA of the family members and also the DNA of the family and the DNA of the business. By looking at the question from the inside out, the answer will soon be apparent. If the children have a very strong passion for the business then the next issue of how they are involved should be looked at. Who can blame them if the business has been discussed around the dinner table every night for 20+ years?

In considering the involvement of the children, their aptitudes and abilities need to be examined. Passion is one important aspect, having the capability is another. Often this will come down to the role they play – certainly at the start. Thrusting them into a leadership role without experience and knowledge could be a disaster. Protocols need to be put in place for evaluation and determining their place on merit.

Overall, a family governance structure will be needed which properly regulates decision making. The decision making structure needs to be separate for each of the family, investments and business. They are all quite different areas. A key part of this will be the involvement of children in the business.

The Big Question

Last week I participated in a learning program for fast growth businesses conducted by Verne Harnish (founder of Gazelles, Inc) who is world renowned as “The Growth Guy”. Verne has run training workshops for and coached many great entrepreneurs all over the world. He has a very straightforward approach to helping an entrepreneur stay focused.

After listening to Verne for a while, and I have been in his workshops before, it became very clear to me that the Big Question we need to ask ourselves is: What is your success impediment? That is, what is getting in the way of your success? I believe we can continuously ask ourselves this question in every area of our life, at whatever stage we are at. In many instances, it is “you”. So, the question becomes what are you going to do to get out of your own way? Are you self-aware of what is in the way? A lot of this is about your DNA. A lot of the time, we are not aware of what our natural blind spots are which are a core part of our behavior. Ultimately, people succeed or fail because of their behavior. Taking this further into a business or a family, the behaviors of the team or family member will also be important.

This is why coaching is very important. If you are an entrepreneur, Verne will certainly endorse that a coach is critical to your success in business. The same is true in life generally – a good life coach can really help your quality of life. If the coach starts by asking the big question every time then your feet will truly be held to the fire and the right focus will come.

Importance of Private Businesses to Business

When one looks at business, it is easy to miss or not appreciate the importance of private businesses and entrepreneurship. How often do you look to the larger public companies for opportunities, marketing and jobs? Probably a lot. This is what many first think of doing.

I would like to suggest that you change your thinking and focus on private companies. Information from the recent G8 Summit in Italy shows that 70% of the world’s jobs are provided by private companies and 100% of job growth. This would mean the energy forces are with entrepreneurship for many business opportunities.

Think about this next time you hold a strategy session for your business.

Effective Board Behavior

In recent months I have written a few blogs about corporate governance and business risk management. I have expressed the view that many of the corporate problems we have today are related to ineffective board governance. It has been interesting being in Europe for the past 2 weeks where this subject has come up in many discussions with business leaders and in the press. Clearly, the topic of corporate governance is high on the agenda. It needs to be because this is the source of so much corporate damage.

The 2 business problems related to corporate governance getting mentioned the most are executive remuneration and then acquisitions. In both of these areas, executives have allowed their own greed to take over at the expense of the company. This is where the business leaders have really lost sight. The key point then is that the Boards have been too weak to stop them. This gets back to the structure of the board, in particular separation of chairman and CEO/President, majority of non-executives, minimal conflicts of interest and then importantly the right mix of non-executives who have the right behavioral styles to oversee the executives.

Remuneration is a hot topic because it is visible and generally reported in some way by public companies. However, acquisitions are a major issue because of the high potential for destruction. Of course, there are executive remuneration motivations by expanding the company. How many acquisitions really work? Not many and there are plenty of stats to show that. Although, some do. The business integration and financing issues are very difficult. From a governance perspective how much are the boards really looking through these transactions? To what degree has management pushed them through? What is the DNA of the leaders? What is motivating them?

As we move through these turbulent times I hope that more companies will start to look at their board behavior and make changes. This is the first step to true leadership development. Investors also need to look at these issues when making long-term investment decisions.

Identifying the Human Behavior Risks in Your Business

Back in March of this year, I wrote a blog about managing the human risks in your business. This issue has not gone off the radar screen. Identifying the human behavior risks in your business is critical to success. Every person has natural “blind-spots” which, if they go unchecked, can lead to individual performance failures, team failures, leadership failures and ultimately significant business problems. Regardless of the size of your business, the behavior of your people will influence the result. The influence will be higher the more senior the person is in the business. Look at why some major companies have failed in recent years – it is not the poor economy or financial markets, rather they have exposed the fundamental issues, particularly the behavior of leaders.

Some of the blind-spots may not seem that bad – e.g. uncomfortable to confront a problem, lack of patience, emotional decision-maker, poor planner, too driven and so on. However, these problems easily compound themselves at the individual level, then escalate when combined with others blind-spots.

Do you know where the blind-spots in your business are?

We have recently launched the Business Risk Management Report from our Business DNA profile which specifically identifies these risks. Please click here for an example.

New DNA Behavioral Solutions to Accelerate TRUST and Your Relationships

At the moment, more than ever, the whole notion of trust in every aspect of our lives is important. For many, trust is very low, if not shattered, with our leaders, advisors, partners and family members. Furthermore, trust in ourselves is low, which is the core of the issue. If your business and personal relationships are not working as well as you would like, or your performance could improve, see whether it is because your trust is low. Relationships of trust depend on our willingness to look not only to our own interests but also to the interests of others. ? Peter Farquharson

My starting point with trust is always to ask 3 questions: How much do you trust others? Do you feel others trust you? Importantly, do you trust yourself?

When you reflect on these questions, the foundation of trust comes back to whether you trust yourself. The answer to the other 2 questions will be determined by the answer to this question. Firstly, trusting yourself is a foundational life issue. Trust impacts your level of confidence to be who you are, to perform to your maximum potential and then how positively you relate to others. Importantly, when relating to others, your level of personal trust will impact the ability to be open, transparent, mutual and generally act in their best interests. If you act with a low level of trust (even though you may not be aware of it), you will trigger distrust from the other person.

There are many factors that contribute to whether a person trusts themself. Let me be clear, when I am talking about trust, I am not just referring to character or integrity. Our research has shown that your propensity to trust is influenced by both natural hard-wired behaviors and learned behaviors developed from life experiences.

This is why our firm, DNA Behavior International, has launched a new series of behavioral development tools focused on accelerating trust:

  • LeadershipTRUST for business leaders and managers
  • AdvisorTRUST for financial and professional services professionals
  • FamilyTRUST for family members and their advisors

The approach we are adopting through these innovative tools to help you build trust is to firstly uncover your natural propensity to trust, based on your natural hard-wired behavior. This behavior is the core of who you are, and was shaped from birth to when you were approximately 3 years old. For some, high or low levels of trust are relatively ingrained. Therefore, the challenge becomes to work on trusting yourself more. Then our TRUST tools are used to help discover your ability to build trust in specific areas based on:

  • Communication
  • Achieving Results
  • Building Relationships
  • Emotional Intelligence
  • Trust Building Skills
  • Values
  • Competence

These TRUST tools have a 360 rating system, enabling you to assess yourself and have others rate you as well. This will help uncover your blind-spots, which we all have. In the end, with greater self knowledge your personal confidence will increase and so will your trust. If you want to learn more, please email us at inquiries@financialdna.com