Don Schwerzler is arguably the world’s leading expert on family business. In fact, he has been working and advising in this field since 1967, a track record of almost half a century. Don has been published in many leading business magazines, newspapers, and trade magazines. He is also the founder of the Family Business Institute and runs Family-Business-Experts.com.
Recently, we had the distinct pleasure of picking Mr. Schwerzler’s brain about this topic of family business. Read on for our interview with family business subject matter expert, Don Schwerzler.
What are some typical growth challenges that arise in family-owned businesses?
The scarcity of resources–specifically, time, and money are at the top of my list of growth challenges for small to medium sized family businesses.
Next challenge would be the lack of planning and the lack of infrastructure, because that creates a glass ceiling that impedes and constricts growing the business; and sustaining the growth of the family’s business. Next on the list of challenges would be family issues like family feuds that suck the positive energy out of the family business. Third on my list of challenges would be not having a formal (written) succession plan that the family has agreed to. Fourth would be the business owner not dealing with one of the really tough issues – how to be fair and equal to all of the kids with doing their estate planning. Lastly would be not having a family business advisory board that provides a safety net for both the family and the family business should a catastrophic event occur, such as the incapacitation or the unplanned death of the family business owner.
What are some issues inherent in family businesses that other organizations don’t face?
Our logo has three interconnected circles that represent the three major “systems” that are at play in a family business: the family system; the management system; and the ownership system. For a family business to be successful, all three of these centers of influence have to be connected and working well. The problem for family businesses is that an issue/problem in one of these “systems” will cascade into one/all of the “systems.”
For example, the business owner getting a divorce could affect all three “systems.” A son or daughter who is part of the management team and who has an alcohol or drug addiction problem would impact the family system and the management system, but, if they are not yet a shareholder in the business, the ownership system. Furthermore, these kinds of problems will typically impact or even stall the succession planning and the succession management process.
What are some important considerations for a family business when selecting a member for its board?
If we are talking about a family business advisory board, the most important consideration is in selecting a candidate who resonates with the values of the family. My next recommendation is selecting a candidate who is not connected with the family and who is not connected with the family’s business.
I have helped to create more than 70 family business advisory boards–helping to recruit and evaluate potential candidates–and then coaching the family members involved in the family business to learn how to prepare for and accept the advice from a board member.
What are the most common problems that your clients seek advisory in?
Probably about 70% of my clients come to me because of family problems that have been ongoing for a period of time and the person who reaches out to me understands that they are not going to solve the problem by trying to ignore it. Family disputes that are not addressed and resolved are like a cancer that will wreck the business and destroy the family relationships.
30% of my clients are family businesses that want to avoid family problems–who want to make sure that the “energy” of the family’s business is not dissipated or distracted by family feuds and other types of family related issues. The point here is that almost all of the problems that impact family businesses are avoidable. They just need a map to help navigate the minefield of issues that impact family-owned businesses.
Does a family business have any competitive disadvantage when competing against a public or non-family business?
Just the opposite is true. Family businesses can have a competitive advantage when competing for business.
The problem is that so many family businesses “hide in plain sight” because they do a poor job of publishing and marketing those values of the family that drive the decision making process for the business. Customers and potential customers understand that they can expect a higher level of service when the owner’s name is on the door!
Yet, many family businesses do not talk about the values of the business on their web site and in their marketing peripherals–a wasted opportunity in my opinion.
What are some strategies to prevent family issues from affecting the business?
Improving communications within the family business and amongst family members (both those who are involved in the business as well as those family members who are not involved in the business). Professionalizing the management style of the business and formalizing the communication system for the family can make a significant difference. Having formal family business meetings helps keep the channels of communication open and productive. Having a family business expert facilitate the family meetings and the family retreats can make sure that the “tough emotional issues” get addressed and resolved.
Can you tell us more about the Atlanta-based Family Business Institute and the web organization Family-Business-Experts.com?
An early pioneer in the field of family business consulting, I began studying and advising family business entrepreneurs in 1967–a career span of more than 40 years. Over the years, I have perfected a process for dealing with the unique and complex issues that impact family businesses (especially related to the problems associated with managing the succession process) that have proven highly successful, simple and effective.
In the early 80s, I organized the Family Business Institute, which is based in Atlanta, the very first multi-disciplined consulting firm exclusively serving family-owned and closely-held businesses. We are responsible for developing many of the strategies used by successful family businesses.
In the mid 80s, I became the founding sponsor of the first college-based family business program in the USA. Today, there are more than 300 family business programs at colleges and universities across the US–and many more worldwide.
Late in 2001, we began work on our web site Family-Business-Experts.com–a work still in process! The site does not have any flash or gimmicks, just a lot of great content. Today, because it is a content-rich site, it is the highest-ranked, full-service family business resource site on the Internet. Last month, we registered more than 100,000 page views and each month we host visitors from more than 100 different countries.
Our web site has been twice recognized by the Journal of Accountancy (published by the American Institute of CPAs) as one of the top 10 web sites on the Internet dealing with succession.
The vast majority of businesses around the world are family-owned businesses. These aren’t limited to mom and pop shops. Some of the world’s largest organizations, such as Walmart, Samsung, Tata, and Foxconn are family businesses. You can learn more about Don Schwerzler and family business on his website: www.family-business-experts.com.