Category Archives: Call to Business

An Important Truth for First Generations to Learn in Family Businesses

When an entrepreneur starts his own business, from an ownership perspective, one of the key hurdles to overcome is securing enough capital to survive, then thrive. The principle sources of this capital are usually the savings and assets of the owner plus “sweat equity” invested by the owner and perhaps family and friends. The owner usually makes significant, personal sacrifices which help him and his family survive while their business is being built into a thriving, growing entity.

When ownership is passed to the second generation and the entrepreneur decides to share ownership between his children, the complexities at the ownership level increase exponentially. This complexity is a key hurdle for the second generation to overcome. Whereas the entrepreneur had sole control and could offer clarity in direction and decision, now that the ownership is shared, roles must be established and siblings must negotiate how they will cooperate in a shared power, shared authority model.

This complexity only increases if the entrepreneur decides to stay involved in the business without a clearly defined role. If he is vague about when full control will be passed to his children or if he is prone to take a extended time away from the business only to come back and start ordering his old staff and his children around, he will effectively create such havoc that his children may decide the family business isn’t worth their effort and time.

After passing control to his children, you might hear him talk about the old days – the work and sacrifice that was needed to get the business off the ground and make it successful. What’s ironic is that he’ll likely talk in such a way as to indicate that his children have no idea how much he has sacrificed and how they really don’t understand just how much has been given to them. In short, he’ll likely talk with an attitude of “they just don’t appreciate what they have”.

In this scenario, what isn’t appreciated is the comparison of apples to oranges. Yes, the entrepreneur sacrificed much to get the business to a thriving, sustainable state. But what he is passing to his children is not only a thriving business, but a set of complex, emotionally-charged elements that affect both their business and their families. He never had to negotiate power, control and the dual (sometimes triple) relationships that his children are negotiating. In short, he doesn’t appreciate what he is passing on and the potentialities for failure that could destroy his children’s and grand-children’s family relationships. Not only does a family business have the potential unify and support an extended family and their community, but a family business also has the potential to divide and destroy an extended family and damage the broader community in which they live.

This important truth sometimes is not appreciated by the members of the first generation. This is why clarity and intentionality in a succession plan is so important. If the children of the entrepreneur seemed to have harmonious relationships while growing up, one cannot assume that they will be free of conflict in their business roles. On multiple occasions where siblings who grew up together in happy, harmonious relationships, I have seen siblings never talking again in life because conflicts in the business drove a deep wedge between them.

So, what can be done? Here are several ideas:

First, the entrepreneur should have his children assessed for their real strengths and passions. Just because they inherited his DNA doesn’t mean they are the right people to lead his business moving forward. I’m not talking about just a matrix of psychological tests, which can be helpful. Instead, I’m referring to having his children work for someone else for at least five years, preferably ten, to have an objective, real-world assessment of their abilities, talents, passions and interests. Incidentally, this has the added benefit of giving them an opportunity to observe and learn from managers other than their father.

Secondly, don’t assume children in the second generation are the right people to lead the company moving forward. There are a number of family owned businesses that fail who could have succeeded had they decided to have nonfamily leadership run their family business. In a nutshell: be willing to be “family owned”, but not “family operated”.

Thirdly, give the children a “trial” period of running the family business before passing legal ownership to them – say two or three years. See how they interact. See who emerges as a peacemaker or a troublemaker. See if running the business changes their relationships. Then assess and make a decision about passing ownership to the next generation. The entrepreneur may be surprised by the decisions he ends up making.

Appreciating the key hurdles that the second generation will face and helping them over those hurdles will be one of the greatest, most enduring acts of love and kindness an entrepreneur will ever accomplish.

Bill English

Blowing Off Steam

Have you ever “vented” or “blown off some steam” to another person about your frustrations and ended up saying something that, after you calmed down, you disagreed with yourself? Because of the intensity of your frustration and some temporary lack of self-control, you said something that you knew wasn’t true: it simply represented how frustrated you were.

We all get frustrated at times. We all need someone to “unload” on who will listen, understand and perhaps empathize. We’ve all done it. And if there is one characteristic about venting, it is this: when we vent, we do it all the way – 100% – totally unvarnished – we just “let it fly”. People who are good at sarcasm can be funny when they are venting, but most of us are not and we say things that is not intended for public consumption.

But what do you do when you, a Christian Business Owner, overhear your employees venting about you, their boss? That 100%, totally unvarnished talk may hurt you deeply. You may not like it, but there is probably some truth in what they are saying, even if it is wrapped in a thick layer of sarcasm, hurt and/or anger.

If you’re like most bosses, you’ll swiftly acquire an air of superiority and self-righteousness. You may confront that employee directly or you may go away and sulk, promising to get revenge later is some passive way (we call this passive-aggressive). But if you’re mature, you’ll realize that your employee is just venting and that after a day or two, his old, likable self will come back.

The Bible speaks to this in Ecclesiastes 7.21-22:

“Do not pay attention to every word people say, or you may hear your servant cursing you – for you know in your heart that many times you yourself have cursed others”.

Well, now.

What Solomon is saying is that we should overlook the offense – let it go. Why? Because we have done it ourselves and so who are we to suddenly correct another person for doing what we have done many times? At this point, something about taking the log out of your own eye before taking the spec out of another’s eye comes to mind.

Your employees will blow off steam about you. Get over it. As a business owner – even a Christian one – you’re not universally liked. Not everyone has an enthusiastic opinion of you or your work product. And sometimes, you do and say things that are worthy of a venting session among your employees. Solomon’s advice is sound: if you hear about an employee or another person venting about you, your policies, your processes, your decisions and so forth – let it go because you yourself have done this many times too.

Bill English

The Top 10 Things Business Owners Do that Demoralizes Their Employees

Drawn from my experience of working with business owners in my consulting work at the Platinum Group, I’ve developed the top ten things that business owners do that drives their staff crazy and eventually, drives them out of their business.

#10: You’re a moving target

You’ll tell your staff to focus on task A this week and then blow your stack that they didn’t focus on task B. Or worse, you “lay down the law” and tell them that they “must do” task “A” a certain way, only to instruct them a few weeks later how to do it differently. You can shift quickly on what you want and you get upset when your staff gets confused.

Matthew 5.37: But let your statement be, ‘Yes, yes’ or ‘No, no’; anything beyond these is of evil.

#9: You act childishly

Speaking of blowing your stack, when you don’t get your way, you get angry. You through a fit over minor infractions and have little tolerance for normal differences of opinion. But since you don’t know how to approach conflict and employee management in a mature way, you fume and fuss to yourself, spending way too much emotional energy and thinking time on how crummy and incompetent your employees are. As a result, you stay in bad moods much longer than you should. Others will describe you as being “moody”.

Psalm 37.8: Refrain from anger and turn from wrath; do not fret—it leads only to evil.

Ecclesiastes 7.9: Do not be quickly provoked in your spirit, for anger resides in the lap of fools

#8: You have a low opinion of your employees and a high opinion of yourself

You honestly believe that no one can do it (it doesn’t matter what “it” is) nearly as well as you. You may be a “happy arrogant” in which, through your charisma, you’re able to mask some of your arrogance, but it comes out in your thoughts, conclusions and emails to trusted advisors. You describe your employees as those who act stupidly. They are incompetent, they try to “milk you” for additional pay or incentives and they have bad attitudes. You think you’re able to hide your true opinions of your employees from your employees, but what you think about them eventually gets communicated, even if you never say anything to them directly. Your actions and attitudes will bleed through.

Isaiah 13.11: I will punish the world for its evil, the wicked for their sins. I will put an end to the arrogance of the haughty and will humble the pride of the ruthless.

#7: You are insecure

In the quietness of your own mind, you’re highly afraid of being incompetent. When asked a question to which you don’t know the answer, you’ll “make up” an answer to appear knowledgeable and in control. You think you’re fooling others, but you’re not.

Proverbs 17.28: Even fools are thought wise if they keep silent and discerning if they hold their tongues

#6: You are selfish

You often underpay your employees and yet expect them to flex for your needs while ignoring theirs. For example, if you’re having a slow afternoon, you’ll call your employees and have them come in later in the day to save on payroll, but if your busy, you’ll call them to come in early. It’s all about you and your business.

Philippians 2.3-4: Do nothing out of selfish ambition or vain conceit. Rather, in humility value others above yourselves, 4 not looking to your own interests but each of you to the interests of the others.

#5: You’re egocentric

You interpret events around your only as they relate to you. You lack clear understanding of how these same events relate to others in your life. in the business only as it affects them – they do not understand how these events affect others or how another’s action affects others in the office. As a result, you’ll hear advice, but you won’t listen to it. You’ll often discount sage advice.

Proverbs 12.15: The way of fools seems right to them, but the wise listen to advice

#4: You rarely praise or encourage your employees

You don’t notice when they do something well or go above and beyond their normal job duties. You only notice when they do something poorly or act out of line with your rules.

1 Thessalonians 5.11: Therefore encourage one another and build each other up, just as in fact you are doing.

#3: You pass out titles and responsibilities, but you don’t resource your employees properly

Resourcing is more than telling them to take on a responsibility. Properly resourcing your employees includes giving them authority to make decisions, giving them authority to spend appropriately or giving them the opportunity to fail. If they don’t have this, they will never succeed.

1 Timothy 5.18: For Scripture says, “Do not muzzle an ox while it is treading out the grain,” e and “The worker deserves his wages

#2: You are a micro manager

You hire smart people and then tell them what to do, how to do it and monitor every aspect of their employee’s work performance. In short, you micromanage. Smart, talented people don’t put up with this stuff, so they stay a while, then submit their resignations and move to greener pastures where they can flourish.

Luke 19.12-27: Parable of the ten talents where the master entrusts wealth to several servants, then leaves and gives them the opportunity to grow his money

#1: More than likely, you have significant abuse and family of origin issues that are unresolved

Most of these traits are learned in childhood and are the result of growing up in a highly dysfunctional family system. Perhaps your parents yelled at you. Perhaps they abandoned you. Perhaps they were addicted to alcohol or drugs or sex and introduced you to vices you should have never learned about. Whatever the situation, you need the healing power of Jesus Christ in your life and you need to get some counseling. Until you resolve the anxieties, fears and other emotions inside you, you’ll find that you’re unable to change your behaviors in your business.

What you believe about people and relationships is lived out both at home and in your business. If you find that even two or three of these top 10 items are characteristic of you, then you need to get some help. Don’t delay. You’ll be a better person and a better business owner for straight-forwardly addressing your derailers.

Bill English

Scalability, Power, Control and Risk

Along with his wife, Mark is co-owner of a $1.8M retail establishment that they built from the ground up by investing their own monies and getting two SBA (Small Business Administration) loans. One is a “7A” loan designed to make initial investments into the business. Of the initial $320K, after 2.5 years, Mark still has $220K of that money sitting in a bank account.

Mark has a difficult time trusting other people. His father abandoned him at birth and his mother died when he was twelve years old. He’s on his third marriage (this is her second) and working together in their business over the last few years has taken its’ toll on both of them. Because it is a retail business, they have been at their business seven days/week for over two years. By all appearances, they are not doing well. The jury is out on whether or not their marriage can survive working together in the business they have built. It is profitable and growing. But the personal toll it has taken on them is substantial.

As a business grows, more managers need to be brought in to run parts of the business. You don’t hire good people to tell them what to do, you hire good people so they can tell you what to do. Mark is good at hiring good people, but then he micro manages them right out of the business. He always blames them for his failures. Mark is a moving target with his directives and selectively enforces his rules. His employees don’t like him and don’t like working for him. They avoid him as much as possible, which can be difficult to do when he is roving around the store all day.

Mark wears multiple hats – marketing, floor manager, cash management, vendor relations, facilities manager and so forth. It appears that he loves working all the time. But again, their business is killing their marriage.

Mark and Nancy have reached the “Transition Point” – the point at which they need to either be happy with the size and scope of their business or they need to let go and allow someone else to run their business. They readily admit that they are unable to “take it to the next level” yet they won’t let go of simple spending decisions, hiring decisions or firing decisions. They have hired an outside consultant to be their CEO, but he is CEO in title only. They simply won’t step back and allow others to make important decisions. “If he (the hired CEO) fails, we’re the ones left holding the bag”. They’re right.

From my perspective, their most important priority here is their marriage. Businesses come and go, but marriages do not (or at least, should not). But since their life savings is wrapped up in this business, it has become the core of their marriage. If the business fails, they lose everything – their marriage, money and livelihood. At age 60, they will not be able to recover from such a failure.

So, what should they do?

First, they should take time away from their business to work on their marriage.

Secondly, they need to make a basic decision about growing their business vs. selling it. If they choose to grow, then they need to choose to trust other people to make decisions with “their baby”. If they choose to sell, it will take at least a year to get the business ready for sale, which means they will need to continue to work in the business long enough to sell it. They put at risk their marriage by doing so.

Thirdly, they need to develop some personal, outside activities so that they are growing personally, not always being together every hour of every day.

Lastly, if they choose to keep their business, they need to learn to step aside and let others run their business. They need to stop micro managing every aspect of their business. The problem they will face here is an emotional one: can they let go and trust? Can they manage the anxiety this step creates in them in a positive and mature way?

The worst situation for them is what they have now: they have hired a CEO but won’t get out of the way and let him manage their business. They won’t let go. They won’t risk. Mark is too tied emotionally to the $200K as his security. The CEO is unable to make sensible infrastructure investments, so they continue to struggle with manual processes fraught with mistakes. They have weekly power struggles, paying good money for a highly talented person whom they are micro managing. He won’t last long – he’s too talented and smart to be micro managed. But without a true leader in their business, it won’t scale up and while they might win the power struggles (because they are, after all, the owners), they will have defeated themselves.

If you’re a Christian Business Owner and you find yourself in a similar situation, its’ imperative that you learn to trust others and let go when needed. Good stewardship sometimes requires us to trust and allow others to lead in our business. Only then will you find yourself able to scale up your business and increase it as God asks of us in Luke 19.

Bill English

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