Charlie Leichtweis

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The Power of Legacy

The oldest continuously operating business in the world is family-owned and family-run. 

Nishiyama Onsen Keiunkan is a hot springs hotel located in Japan that has been in continuous operation since 705 A.D.—a little more than 1300 years. It’s been managed, nurtured, grown and sustained by the Mahito family for 52 generations.

What is your legacy going to be? What does that word LEGACY even mean to you and how does a lifetime of hard work become a legacy? For some, it may mean creating a closely-knit, closely held company that can support the founder’s (or founders’) children and grandchildren. For others, it may mean creating a well-run, successful business that can be sold, and the profits shared among all the stakeholders. And there are dozens of variations and options between those two choices. 

I absolutely contend running a family-owned company is the hardest job there is in business. As a client of ours once observed, “Anyone can be CEO of a multi-billion-dollar business with 200,000 employees. Try running my business with my brother, two nephews, my niece, my two children and their spouses.”

Every business wants to grow and profit. But family-run businesses have an added component—they want to sustain and nurture, as well. And sometimes those needs are not in sync. An additional factor that complicates the situation further is the number of people that have or want to have a voice about the business and what should be done with it. That number will grow over time as the number of generations grow.

How a family navigates and negotiates their company governance and management can either build a lasting legacy (Walmart, BMW, Berkshire Hathaway, Ford) or end in a bankruptcy sale six months after the founder dies. Between those two extremes are thousands of companies that struggle with family relationships and family governance. 

A publicly traded, shareholder-owned business rarely faces these conflicts. For example, when a job needs to be filled, the most qualified candidates are recruited and hired. But in a family-owned business, that is not always the case. There are desires, expectations, perhaps requirements, that a generational descendant, who may not have the formal education or experience, become part of the business. In these cases, there is accommodation that may need to be made, some of which may not support the long-term health of the business. 

Tolstoy wrote, “Happy families are all alike; every unhappy family is unhappy in its own way.” He might as well have written, “Happy family businesses are all alike; every unhappy family business struggles in its own way.”

Through our workshops, talks, writing and interventions we have helped dozens of family-run businesses find their unique way to solve their governance and management issues. For some, the results have been stability and success which can endure for generations. For others, it meant stability and success that made the business an attractive investment or purchase opportunity. Or sometimes it meant the current owners could pivot and move the business in directions never imagined by the founder(s).

While every family-run company is different, over the years we’ve found they all faced six common overlapping challenges that need to be uniquely addressed. 

  1. Family Legacy 

Surrounding and defining all family-owned, family-run businesses is the underlying question, “Why?” Why are you doing this? For whom are you doing this? How does your business support your family values? Has anyone in your family ever articulated those values? Does every family member share a common vision of the business future?

  1. Generational Engagement

What phase of life is each family member in? Have senior family members considered when they’ll move from founder to manager, manager to owner, owner to investor, or step aside completely? Are the younger generations ready to take over…or move on? Is each successive generation surveyed and involved in the future of the business? How soon should future generations be engaged in the business?

  1. Corporate Governance

Are the business rules written down in a form everyone can understand and observe? Is there a board of advisors/directors that can give an outside point of view? Are key owners even comfortable with the word “outside?” How will the family provide oversight without losing control of the business?

  1. Succession Planning

How are new owners brought in and brought on? Who’s going to run what part…and when? Who are the family members who won’t even discuss this issue? Which family members are truly qualified to be senior managers, advisors/directors, or owners?

  1. Leadership Development

How are family members developed for leadership? How are new family members brought on board? Is there a useful, realistic process for bringing on new officers—or is it just “plug and play?”

  1. Business & Family Architecture

How the business is structured and how that connects to the family structure lies at the core of all these challenges and drives all business decisions. What does it mean when successful family business owners say, “What is best for the business must come first when making decisions?” Do the business owners understand the balance between recruiting the best person for the job or the best-available relative in key positions? Are participants of the same generation at different stages of professional development? What happens if you bypass a family member in favor of the business? How does that choice impact both the family and the business?

Each of these challenges has a different answer for every business; but each one must be addressed if the business is to succeed and grow.

I’ve authored the book The Power of Legacy to help all family businesses of every size understand their minefields and map a way forward. You’ll find in-depth, real-life examples of each area and helpful tips and exercises you can use to bring your entire family into alignment.

While you will find dozens of anecdotes and family stories in this book, you may not find a situation that exactly matches yours. That is okay. As long as you understand the principles we have outlined, it is our experience you can use them to get everyone to agree to move your business into the future, not into court. 

Will your family still be running your business successfully 52 generations from now or even ten? Whether it will depends on choices you make in your generation. The Mahito family proves it can be done.

By Charlie Leichtweis

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