Decide How Much is Enough...Together
Twenty One Clear's February Newsletter
Hey there, and welcome to the February newsletter. I want to share four thoughtful questions with you this month, and a story about how they influence your inner family business.
Four Powerful Questions
I recently attended a wealth management conference that focused on generosity. They shared four questions that I think have a place in one of your Family ACTion Meetings (recurring meetings of family owners, employees, and members that build alignment, communication, and trust).
Here are the questions:
Take these questions in for a moment. Is the company yours or yours to take care of for the good of others? Is there a limit, in fact, to the financial benefit you should receive from the company?
These questions seem as simple as they are heavy and can be life-changing.
Professionals have dedicated their careers to helping family company owners answer these questions and build technical vehicles (irrevocable trusts, wills, shareholder agreements, life insurance policies, etc.) to enact them.
But they seem personal. Why would you discuss them with the family who works with you?
Why do these questions belong in a Family ACTion Meeting?
I met Nakosha, a third generation family executive. She was the family company’s COO and also owned 15% of the organization. And she was exhausted. Nakosha’s father, Jason, in his mid-70s, kept scaling the business by acquisition. They were already a solid regional player, and their annual growth outpaced their industry’s average. In her judgment, the company outpaced its operating capacity, and the family lacked alignment on risk and debt. Yet Jason kept pushing.
Imagine he said, “I am an owner first.” And then, “Enough for me and my wife is as much as I can earn.” In a vacuum, these answers may work for him and them. But note, when you work with family, those answers have consequences.
Jason’s quest for more may gain wealth for the family, it may increase their reputation and influence, but it could also burn out Nakosha, saddle the next generation with debt, or set the company on a path to decline as growth outpaces operations.
A friend of mine said it well,
“What is the probability that a decision involving millions of dollars and affecting future generations will be perfectly accepted with zero input from those it impacts?”
Family ACTion Conversation
Imagine Jason and Nakosha hold a quarterly family meeting, and they include Nakosha’s sister Courtney, who owns 7%. Different from company executive meetings with the CFO and CHRO, here the three family owners talk about, for example, ownership succession, Courtney’s daughter who wants to intern with Nakosha, and review the code of conduct they have between them as family owners.
One quarter, Jason brings draft answers to the four questions above. There, Nakosha has the space to say, “Jason (or Dad, depending on their code of conduct), I do not need more. My husband and I are in a great financial place; we are even well on our way to funding 529 plans for college. We don’t have to outpace industry growth for me; in fact, I would prefer we slowed down.”
Whatever they decide, Jason opened a powerful conversation with his daughters, one that allows them to shape the company together. Check your schedule. Do you have your next family meeting on the calendar? These meetings, odd and uncomfortable as they may be, increase alignment, communication, and trust and help prevent chaos.
Till next month
As my grandfather would have said, thank you so very, very much for reading.
Adam, for 21 Clear
