This is the fourth article in a series about transitions and transactions for midsized companies authored jointly by Karen Albritton and Deana Labriola.
Karen Albritton: Growing up in a family business, and now advising closely held companies as a consultant, has given me an unusual seat at the holiday table. At times, that’s a board seat, and at other times, it’s at the metaphorical kids' table.
Deana Labriola: I’ve had a similar experience, but at my family business, I sat at the end of the bar. My family owned a pub for over 50 years, passed down through three generations. It was entirely normal for me to spend time there as a child. My grandfather worked there, and my grandmother ran it for many years. Growing up, my dad owned it and worked there, and my childhood coincided with the business, its customers and employees. I use all of what I learned from that experience in my law practice today.
As the daughters of owners of a business, what advantages do you think you’ve had from watching a predecessor generation within the family business?
KA: I still remember when my parents bought the business that my Dad worked for, along with his brother and a friend who also worked in the business. At the risk of sounding clichéd, it was the realization of the American Dream. My Mom later started her own business, and that was a similar watershed moment, filled with pride.
The career advantage that I’ve had seeing family businesses from the inside is looking at every company that I’ve worked for, owned or worked with as an owner would. And when you always work like an owner, I believe you care a little more, you work a little harder and you stay at it a little longer because you feel your identity is wrapped up in that business. That approach served me well throughout my career, ultimately making me the type of person that someone would want to have as a partner in their business.
DL: Watching my family gives me a deep understanding of the emotional component for my clients in running a family business. Growing up, my family’s life revolved around the business. We made decisions about holidays, philanthropy, vacations, spending, and budgeting all based on the family business. Seeing decisions through this lens is powerful because it takes you outside of yourself and your family. You are thinking of your customers, their families, and your employees. In many ways, it makes objective decision-making nearly impossible, but it feels human.
Translating that now into my legal practice, I recognize that the emotional side of a family business drives nearly all decision-making. I don’t know whether all practitioners that service family businesses recognize this fact, but it is essential to understanding the client and his/her/its motivations. Asking deeper questions, learning what drives the family and its owners, and recognizing that emotions can overplay even sound business judgment (and often will), are all a part of the process of advising family businesses. I’m grateful for growing up in this manner because it connects me to this emotional component in a real way.
What do you see as the biggest gifts a family business can give the owner’s family?
KA: The potential financial gifts are significant. My family’s businesses sent two first-generation college students to local universities and helped both of us buy our first homes. And, family businesses are one of the best sources of personal wealth creation. It allows the owner’s family to go from working for a company to building something of value.
Then there are the intangible gifts. I worked for both of my parents at different times and I wouldn’t trade those opportunities for anything. Their companies were dramatically different. One was an automotive parts distributor and the other a home furnishings retail boutique. There were some long days doing whatever needed doing. I have great memories ranging from delivering batteries to staging a showroom for the holidays. I didn’t realize it at the time but I got the gift of hands-on business experience that I wouldn’t have gotten working in a typical high school/college job.
DL: A family business gave me the gift of “purpose.” Through the vehicle of a business, my family was able to hire employees and service providers, provide meals to neighborhood families that did not otherwise have the means, listen to customers, and support the community in which it served by purchasing surrounding properties for improvement. It was more than just a bar. It was an establishment where generations themselves grew up. We sat with community members at deaths, births, and weddings, and cried and cheered alongside them.
Personally, it gave my father and I some of the best times of my childhood. My father taught me about the bar. He made me count money with him, keep the books and made me clean it every Sunday morning during my teenage years. The bar itself, and that process, made me interested in business, made me understand hard work, and made me appreciate the sacrifices my family made to give me something better. A family business provides the vehicle by which all of those lessons and memories became possible.
Families are under pressure to make memories, enjoy long-held traditions, and enjoy the holidays. How does that change for those in a family business?
KA: My Mom had a retail business, so Christmas was her bread and butter. In some ways, the store added to our memories. She hosted an amazing open house just before Thanksgiving and it was a joy helping customers (many who we’d known for years in our community) with their holiday decorating and gifts. My pediatrician (retired at the time) would come in on Christmas Eve to do last minute shopping and that became a new tradition.
On the flip side, having a retail business adds another layer of stress and pressure to the season. That may also be the same for businesses who are pushing to make revenue goals at year end. One trend I’ve seen in business in recent years is a tendency for employees to take off a lot of time in December. It’s good for employees to take time off, but it can also put more pressure on family business owners to fill the gaps to support customers and make budget at year end.
DL: The holidays present a unique opportunity for family business members to come together for themselves and their business. Many owners that I represent use the holidays to show appreciation for the folks that got the family business where it is at - the employees and/or customers. Finding meaningful ways to show appreciation is what I remember as the best part of the holidays. In my own family business, my dad and I would deliver Christmas gifts to kids in the neighborhood in need, we would serve Thanksgiving dinner to customers at the bar eat with them, and we would reward employees with bonuses and gifts. The holidays were a major undertaking, but also provided the most rewarding experiences inside the family business. Those experiences became our traditions, much like going to see the Nutcracker or seeing the neighborhood Christmas lights does for many families.
However, the family business can also become an anchor at the holidays as well. Because the holidays often present a significant economic opportunity for many businesses, realizing those economic opportunities can consume the owners and/or the family during this time. To that end, it is important for family members to understand and plan for this dynamic. Caring about the outcome of your business and memories during this time is important.
What kinds of things do you think family businesses should be discussing at year end?
KA: Family businesses should be undertaking the same disciplined planning that all businesses should take at some point in the year. I start with reflecting on the long-term vision. Is it still on-target? What are the goals that need to be in place to support the vision? What are the major issues that should be front and center in the coming year? And fundamentally, what is the plan to accomplish the goals and address the challenges?
DL: Operationally, business owners should always assess where the business is going relative to where it has been. Because of the mindset of the holidays, I find that this assessment and “thinking” often happens at year-end. As we reflect what we may be grateful for, we realize that it is a unique time of year to self-assess. Business owners should assess whether they have the right leadership, if the goals of the business remain the same or are different, and whether the business faces unique opportunities and challenges ahead.
Legally, year-end is a time when a business owner should assess its estate plan. As part of assessing the owner’s goals operationally, knowing what the goals are for the future, and then matching those estate planning techniques to achieve it, is a very important part of the process. While this does not have to occur at year-end, the holidays provide a time of reflection and opportunity for owners, so these decisions should go hand-in-hand.
As professionals, you spend your time working with midsized companies. Why do you like advising family businesses?
KA: I love working with business teams who care about each other and that’s almost always a key component of family businesses. That doesn’t mean there aren’t disagreements or politics to navigate, because there always are. No matter the personalities, I know that the work I’m doing is making it possible for them to increase the value of their business and create long-term possibilities for their family.
DL: Because the work matters. I feel privileged to have learned so much of my business acumen through the lens of a family business. I felt what it was like for my dad to (i) be responsible for his employee’s financial well being, (ii) give of himself both personally and economically to his customers (even when it was against his or the business’s interest), and (iii) navigate interpersonal dynamics to work with his mother and father-in-law as critical parts of the business. These are lessons that so few people experience. Moreover, family businesses drive a large part of the fabric of our economy. Supporting those dreams for generations to come is meaningful work, and work that I do not take lightly. The work of a family business is always challenging but is often rewarding beyond measure.
Other articles in this series:
- Private Company Concerns: Expanding the Equity Pool
- Owner Dilemmas: Should I Stay, Go, Lead, or Follow?
- What Team Should Every Business Owner Have?
About the authors:
Karen Albritton is a partner with the Newport Board Group and consults with midsize businesses on marketing and corporate reputation management, strategic planning, driving growth, strengthening brand reputation, and driving business outcomes. firstname.lastname@example.org
Deana Labriola is a business attorney with Ward and Smith. She regularly advises midsize companies in merger, acquisition, shareholder, and ownership matters. email@example.com
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This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.