Family is at the heart of creating a wealth-generating enterprise, and the human talent within the family is the most powerful investment and opportunity any one family has in achieving this mission! Of course, measuring the value of any single family member’s potential contribution to the enterprise may seem hard to quantify, but should certainly not be taken for granted. The intangible talent contributions of your family—children, cousins, in-laws, grandchildren—undoubtedly impact the overall value of the family’s shareholder enterprise equity.
Identifying Family Talent Assets
The talent asset is easy to overlook for a number of reasons. First and foremost, many business owners are accustomed to taking charge and getting things done on their own. Or, they already have an infrastructure of advisors already built up that they rely on to support business operations.
Moreover, looking at family members objectively is hard. We all have our own histories and biases about the people closest to us. We may have seen some of them at their worst moments or be privy to their most egregious faults. This can make it hard to see these individuals as positive assets (rather than risks) to the family enterprise.
But beyond these personal histories, there are a number of other reasons business owners are hesitant to “mine” the family talent pool for skills and expertise that could benefit the enterprise:
- They don’t want to push them or place unwarranted pressure on other family members.
- They fear other family members may not commit the time or energy necessary.
- They feel their family should have the opportunity to develop in their own way.
- They fail to see how certain family talents could benefit the business.
- They don’t believe the family member can handle the role in question.
Unfortunately, though, these limiting beliefs can greatly reduce the options for both the business and the family members not currently involved. A daughter, cousin, or even a sister-in-law may be able to use the talents they have learned and perfected elsewhere to positively influence the family enterprise.
If they can’t contribute now, do not discount their ability to do so in the future. A grandchild studying marketing may be able to begin with the family in an internship role, and take on more responsibilities as she ages. An in-law who specializes in commercial real estate may be able to advise on future business locations. These contributions may not always be easy to identify up front, but with a little digging, business owners often uncover some invaluable talents they are not yet capitalizing on.
When Is the Right Time to Begin?
Whether it is easily recognizable or not, children, grandchildren, and other family members are watching and absorbing the way you operate the family enterprise from afar—soaking up little bits of information here and there as they are exposed to the operations. But are they learning the right lessons?
A subject as critical to a family as the business it shares, is too important to be learned “on the street”. After all, who else knows your business better than you? It is you who should be in control of the business legacy. It is better to involve the family early and often to ensure you are passing along the seeds of wisdom and guiding principles that reflect and align with your family’s mission.
Evolution and Development: The Long-term View
Just as your business will develop and evolve over time, so too will the individuals within your family enterprise. So often we see parents look doubtingly upon their heirs’ ability to step into a certain role in the future. They allow their close personal relationships to eliminate constructive and favorable opportunities.
Family relationships must be viewed dynamically and continuously nurtured for each generation to prepare to be the stewards of their own wealth-building generation. The teachings from your generation to theirs, and so on and so forth, will pave the way for the family to pass on all six of your family’s elements of wealth well into the future.
Preparing Your Heirs to Benefit from Your Hard Work and Success
The first order of succession planning for any business owner – in both priority and chronology – should be incorporating the preparation and training of the next generation of managers into your long-range goals. You plan for your business and employees, why not family talent?
For more on this topic, listen to Aggie’s interview with Greg Lewis on the Family Business Today podcast.
At WillKate, we firmly believe that it requires more than money to build lasting wealth and your family is at the heart of that endeavor. Whether you have been planning for a generational wealth transfer for years, or are just getting started, the advisors at our family office can help.
If you’re interested in learning more about our exclusive work with multi-generational family enterprises, we encourage you to download our more extensive guide here. Email Somer Schimke at somers@will-kate.com or call 605-275-9181 to schedule a first conversation with our team.