By: Don Tyler
In working with many multi-generational businesses over the past several years, I have gleaned a few consistent philosophies that separate the most successful ones from those who are average. One of the philosophies that seem to be consistent with the most successful is the overarching philosophy that they are, and will always be, a multi-generational business. These operations have been successful generation after generation and make constant progress towards extremely long-term goals that will take several generations to achieve. Some of the traits that set them apart from the average business include:
• They are always thinking about the next generations, even the ones that aren’t born yet.
• They never make a major decision without considering how it will affect the next generations of ownership and management.
• They rarely think about what is best for them personally, but rather what will be best for the next generation.
• Their attitude about income is to earn what they need for a comfortable living. They do not think, “Once the next generation takes over, I’ll live off the rental income and they will have to figure out how to make it work….” They don’t consider taking all that the operation can afford—even if it is the going rate—for their personal income, just what they need.
• They consider themselves “renters” of the business assets—even if their name is on all the deeds and titles—because they know that they are only going to be the caretaker for the span of their life and someone else will take over after they are gone.
• The leaders of these businesses realize that they can’t manage the business from the grave, and are diligently mentoring the next generation for their role as caretaker for their generation’s years of leadership.
• They teach very specific skillsets to the next generation, and they also teach the core philosophies, strategies and values that helped to keep the operation productive and profitable, even in the worst of circumstances.
• They have a broad historical perspective of their business and deliberately teach the his-tory of the business to subsequent generations.
One other essential element of this mindset is their personal passion for their business and the industry. Passion is what keeps them going when there are multi-year droughts, low markets and other threats that are not under their control. They know that without this passion, others have given up.
This mindset is essential because it maintains the proper focus for crucial decisions, and teaches each generation that they, also, are only renters. The current generation of the business realizes that it has an obligation to teach its lessons to the next generation and ensure that those lessons will be utilized.
One of my clients stresses this to his family on a regular basis, and one tool that he uses is a financial spreadsheet that shows the return on a one-time investment of $10,000 at various interest rates over many years. The data showed that this investment, left untouched for 45 years at 18% resulted in just over $17 million dollars in accrued value. His operations yield well over this amount on a regular basis, so the numbers are not unreasonable. He makes it a point to share this with his children at times when they want to spend money on things that don’t net any return and could be delayed for some time. It is not done to try to convince them to not spend the money, just to remind them of what that expense is really costing them in the long term. It is one way he helps them understand how their one-time decisions have the potential for long-term impact.
Don Tyler is the owner of Tyler & Associates, Clarks Hill, IN. For more information on these and other employee management topics, contact him at 765-523-3259 or firstname.lastname@example.org