Family Enterprise Businesses Can Thrive with the Right Advisor
Working with family isn’t always easy. Structure, personalities, finances, and even the line of succession can complicate the most well-rounded family business. Establishing a Family Enterprise takes a family business to a whole other level, factoring in an all-encompassing array of family dynamics and characteristics that must be organized and well laid out for success. A Family Enterprise Advisor (FEA) helps make this simple and is a must for a well-oiled and well-rounded Family Enterprise Business.
“A Family Enterprise is the entire encompassing enterprise beyond the operating business,” explains Aleks Dobrich, a Family Enterprise Advisor and Financial Planning Associate with Private Financial Group. “When most people think of a family business, they think of the physical location of the operating business. The Family Enterprise includes assets, real estate, heirloom assets, philanthropy, deferred assets, and human or non-financial assets—human capital. By taking this all-encompassing approach, the transition of ownership, succession planning, and continuity take on different lenses.”
According to Dobrich, a great Family Enterprise features a series of healthy characteristics, such as open and clear communications, an ability to resolve conflict, and a high level of trust between family members. An FEA helps build up these characteristics by helping to lay out clear goals and values for the family, establishing clear boundaries between family and business, planning a line of succession early, building financial literacy early, as a family member might not actively work in the company, but could still own it and benefit from it, and to establish a functioning independent board of directors.
Unfortunately, sometimes obstacles stand in the way of success. For Family Enterprise, these may include disparate family goals, values, and needs, conflicts among siblings in the line of succession, weak next-generation leaderships, resistance to change, maturing business life cycles, increased competition, limited capital, lack of communication, family members’ employment status in the business, and, ultimately, change, both in the family and in the enterprise.
“An FEA addresses the entire system and thinks systematically,” explains Dobrich. “Understanding that the work they’re doing doesn’t just impact the business system, rather the entire enterprise. Also, they utilize models like the Three-Circle Model, which focuses in on the Family, Business, and Ownership circles independently, but also where they overlap.”
He says a good FEA works in tandem with other professions and learns to rely on their expertise and abilities, but also embraces technical, interpersonal, consulting, and team skills to excel at meeting their clients needs, has both knowledge in a technical area and Family Enterprise, builds relationships with the client family, and sets clear boundaries around their work.
There are plenty of advantages for a Family Enterprise Business to use an FEA for their gain. FEAs can help map succession and enhance the family’s understanding of the big picture, maintain up-to-date technical knowledge, communicate and help educate clients when appropriate, maintain an in-depth knowledge of the family and the business, as well as their dynamic, advise and counsel as needed, initiate meetings with the client for updates and to review, and is resourceful—spotting opportunities, sharing information, and contacts.
According to Dobrich, FEAs should show empathy, patience, and trustworthiness, a willingness to work with successor generations, and raise questions about the future. They promote collaboration among advisors, gives honest advice even when it may jeopardize the client relationship, and identify needs or challenges and communicates them, all while motivating the client to address the issues.
“We establish the relationship to last for years,” he adds. “Things don’t happen overnight.” FEAs are here to help your Family Enterprise work, make it last, and make it grow. Family isn’t always easy, but that doesn’t mean your Family Enterprise doesn’t have to be.
