Latest / The SmallBizChat with Melinda Emerson / Transitioning Leadership in a Family Business with Barry Banther

Transcript

Transitioning Leadership in a Family Business with Barry Banther · The SmallBizChat with Melinda Emerson

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  Let's work with your family to see what is the success path for every member of your family,
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  but it happens to work out that the business has a need or a place for that wonderful.
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  But the worst thing you can do is think that because if you're a member of the family, you
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  have a position in the company.
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  So those who are able and I've got clients that are in their 5th 6th generation, That's because
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  they're doing succession planning constantly, which revolves around helping every family
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  member determine what do they need to do to be successful.
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  What's their gifts?
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  What are their talents?
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  Helping them achieve that.
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  And then looking at the business in a separate way.
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  3, 2, 4, 0 ignition, flips off.
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  Ending small business failure.
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  Welcome to the small biz chat podcast with the number one small business expert, Melinda
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  Emerson.
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  Melinda's goal is to end small business failure.
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  And she'll give you biz chat lady herself, Melinda Emerson.
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  Hi, everybody.
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  I'm Melinda Emerson, the small biz lady.
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  America's number one small business expert, and I'm so excited to welcome you to a special
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  national small business week edition of the small biz chat podcast live.
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  I am so excited to introduce my guests for today because I have the AT with me.
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  So now if you are running a family business, and you're thinking it may be time to have a
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  transition in leadership.
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  You're in the right place.
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  We're gonna be talking about that today.
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  If you're thinking about a business Exit.
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  One of my experts is gonna talk about the right way to do secession planning.
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  Now here on the small biz chat podcast, we talk about Business from all different angles to
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  give you sage advice.
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  This advice you wouldn't be able to pay for.
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  We consider this a peer to peer mentoring show.
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  The mission of the small bitch chat podcast is to end small business failure.
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  And that is what we're here to do today.
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  Our broadcast can be seen on my small biz lady fan page on Facebook as well as my small
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  business lady page on YouTube.
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  So I invite you to leave us a comment, share, and let us know if there's a topic you'd like
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  to see on the show sometime in the future.
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  Now what we want you to know is that I am here to serve all of you as the small business lady,
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  but I always have to bring in my super friend to give you some extra sage advice.
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  So now it's time for me to introduce my first guest, Barry Banther, Now I have known Barry.
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  Oh my gosh.
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  I think a dozen years, he is a family business expert He is a speaker.
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  He is a gentleman, and he has been helping family businesses work together and live
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  together in harmony for over 3 decades.
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  He's been a lead consultant on over 400 engagements to help improve small business for
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  performance from strategy to planning to secession and exit strategies, Berry's clients
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  depend on him A client and president of a hundred twenty year old family business
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  described Berry this way.
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  Barry is a leader of leaders, his wisdom, encouragement, and knowledge have helped us
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  grow personally and professionally for the past 10 years.
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  If you want more information about Barry Panther, go to Barry Panther dotcom.
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  Very welcome to the Small Gridschat podcast.
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  Thank you, my friend.
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  I have looked forward to this, and I'm excited to learn from our other guest as well.
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  I really appreciate the privilege and welcome to all those who are big fans of yours and
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  small business leaders themselves.
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  Awesome.
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  Awesome.
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  Well, Barry, give us your backstory.
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  How did you get started as an entrepreneur and then find your way to Coaching family
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  businesses.
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  So I grew up in a sawmill family in the mountains of North Carolina.
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  You've seen any of those Appalachian books that show up.
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  Little sawmill house next to a sawmill.
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  That was my experience.
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  My grandfather was the general superintendent of a large sawmill company.
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  He had 10 kids Every son or son-in-law worked in one of those sawmills across North Carolina,
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  Georgia.
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  My dad was one of those son-in-law.
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  And so every Sunday, we would all gather at Apple's house and I watched small business and
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  family business right in front of my very eyes.
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  I saw my dad and an uncle get a little bit angry, break away, and start their own sawmill,
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  And that's literally where I grew up about 10 feet.
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  My bedroom was here, and the sawmill was right here.
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  However, I was left handed.
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  And my dad said, Sunday, you can't work in the middle.
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  You'll have to do some of that else like maybe teacher or something.
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  And so I went to college for that very purpose.
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  First member of my family to do that.
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  Right now the college had an opportunity to help develop a nationwide broadcasting company
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  made up of small businesses, radio stations in Baltimore, Cincinnati to lead the Los Angeles
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  Miami and to I'm twenty three years old making a lot of mistakes that I write about in in one
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  of my most recent books, but then I began studying small business doing my graduate work
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  in, and then I began to teach in college, teaching small business and business
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  management.
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  I served in the administration of 3 Florida governors as their Pointe to oversee all
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  private higher education in Florida, and I was selected 3 back to back terms as chairman of
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  the state board.
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  Responsible for about a half a million students in a 100 and 6 schools, and I really didn't
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  like it.
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  In fact, I remember the day that we had a hearing in Tallahassee We got back to, the
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  executive office building, and I said to our leader at the time, our executive director, I
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  said, get governor Bush's chief of staff on the phone.
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  I'm I'm quitting this job today.
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  And he said, you can't do that.
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  Everybody wants your job.
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  I said, tell them to come get it.
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  Well, I was only 37, but I knew I wanted to spend the rest of my life with small businesses
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  just like the ones I grew up in.
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  That's when we began resulting in all these years later.
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  We're very pleased that some of our families were now in our 3rd generation.
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  They've been our client for over 25 years.
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  Some are brand new, but it's really the same thing, Belinda.
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  How do you work together in business and yet live together in harmony?
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  Sometimes the latter part is the most
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  Well, let's let's talk about that because I wanted fascinating as you have had clients
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  through 3 generations of the family running the business because I wanted to share some
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  statistics with you.
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  13%, only 13% of small businesses make it to the 2nd generation in a family.
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  And when you get to the 3rd generation, it's actually 4%.
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  I want to know if these statistics were shocking to you or if you were like, yeah.
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  That's pretty much what it is.
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  Here's a myth we have to expel.
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  There is no such thing as a family business unless maybe if you've got a fertility thing,
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  you would call.
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  But, actually, it's a family who owns a business or works in a business together.
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  And the first thing we do with this family is help them bifurcate.
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  Here's the business.
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  Here is the family, and there are very certain things we have to do in both in order for that
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  to succeed.
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  So succession planning, we'll get a call in our office.
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  Barry, we understand you do succession planning.
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  And a member of my team sort of tongue in cheating, Linda will respond and say, well,
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  unless you're calling from London and quite frankly, it's not working too well for them
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  right now.
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  How about if we do success plan?
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  In other words, let's work with your family to see what is the success path for every member
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  of your family, but it happens to work out that the business has a need or a place for that
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  wonderful.
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  But the worst thing you can do is think that because if you're a member of the family, you
• 7:38
  have a position in the company, So those who are able and I've got clients that are in their
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  5th 6th generation.
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  That's because they're doing succession planning constantly which revolves around
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  helping every family member determine, what do they need to do to be successful?
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  What's their gifts?
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  What are their talents?
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  Helping them achieve that.
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  And then looking at the business in a separate way.
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  Now what do you think are the biggest, like, the 3 biggest issues that family businesses
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  have?
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  Well, understanding what what part of the business you're in, you can be an employee.
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  If you're an employee in your family business, being a family member may get you the
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  interview, not even get you hired.
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  But once you're hired, it has to be very clear.
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  You're reporting to a non family member and you have to perform like everyone else.
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  You can be terminated.
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  We call it the 2 hat theory.
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  In the two hat theory, a young man saw that somebody had been promoted, and he thought,
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  well, now I'm a son of the founder.
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  I should get that job, and he went to see his dad.
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  And he walked in his dad's office and there were two hats on his dad's desk.
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  One said dad, one said boss, and he put on the boss sat and he said, son, you're right.
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  Someone's been promoted but I need to tell you you've not been performing or letting you go.
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  Then he quickly put on the dad hat and said, your mom and I are concerned you don't have a
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  job.
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  How can we help understanding that dip separating those 2 out.
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  That's number 1.
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  Then you can be an an employee and a manager, and that requires that you have all the skills
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  that are requisite.
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  In other words, if managers in your family's business need to be cert certified in a
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  particular still, if they need a particular degree, you have to have those as well.
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  Third thing you can do is you can be just an owner, which is your shareholder.
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  And that's why all of our family businesses develop 2 entities.
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  1 is a business board.
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  Which will have non family members, which provides that governing oversight that every
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  business needs and the others, the family council, where family members come together
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  whether they're shareholders or employees, and it's in a setting where they learn all about
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  the business where everyone's equal at the table.
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  So the 3 mistakes is not understanding you, mind employee, amount employee manager, amount
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  this to Cheryl.
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  Get those cleared up, make that real evidence to everyone, then you've got a much better
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  chance to succeed from generation to generation.
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  So what is the first decision that a family business has to make together.
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  If they think it's time, there's it's time for a transition.
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  What is the first decision?
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  The first decision is it takes 3 to 5 years to do that.
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  Some people think 6 months before I retire, I'm going to decide.
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  There are three ways that you can have a business in succession or in an exit if you
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  will.
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  So the first is you train someone that's a non family member to be able to run the business.
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  And so your decision has to be, is this person the most competent And if they are, then
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  naturally, that's who should get that position.
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  Then then there's a whole way you manage that.
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  The second decision would be do we have a family member that needs to prepare for this?
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  Sometimes we'll see a non family member become the CEO while they're training another family
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  member in 3 to 5 years to step into that position.
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  And then the third part of that is to really clearly understand the exit strategy.
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  Do we plan to have this family in business for generations and generations Or do we plan to
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  have an exit where we sell at some point?
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  It's doing all of that plan.
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  That comprehensive family business planning Then you're able to respond to the tyranny of
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  the urgent that occurs at the unexpected, and you can make an informed decision.
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  So it's not Melinda, it's really not too much different than in business it's not owned by a
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  family, but in a family owned business, it's imperative that you do the planning that's
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  necessary to make sure you're ready for any contingents.
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  Now one of the questions I wanna ask you is sometimes I think people in family businesses
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  get messed up because it's like what comes first, the business or the family.
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  And I think that You have seen, you know, brothers not speaking for, you know, a dozen
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  years or whatever because of some fight at the office.
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  So how do you How do you maintain the cohesive myth of your family when there are big business
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  disagreement?
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  So I have one family that's very well known family.
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  Some of your listeners undoubtedly would know their name if I mentioned to them.
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  You see them on the front page in the newspaper and television.
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  They're all together truth is they don't speak.
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  When I have their family council meetings we're in a hotel, I have one family in one room,
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  another family in another room, and I'm going back and forth between them.
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  And so for families that are in that time to division, we we look for the opportunity to
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  recommend to them to get counseling.
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  I have 2 clinical psychologists on our team.
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  That are prepared to help a family.
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  We've had some great success with families moving through them.
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  But if they can't, and we have a little sign in our office that says every family's normal till
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  you get to know them.
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  And they all then have those same issues.
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  Let me explain what I mean.
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  My managing partner is my oldest son.
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  When he graduated from college and came home with a wonderful took her almost 9 years, she
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  earned partner status.
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  She runs one of our divisions.
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  We have someone like me who works with us who helps us through these issues.
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  So you can be in disagreement and still work together, but you have to have a process to do
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  that, or else that in fighting will eventually destroy morale among employees innovation to
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  destroy your customer base.
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  So, ideally, you wanna have principles in place for here's how we agree to communicate, and
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  here's the most important thing.
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  First question to ask a family Tell me how you fight.
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  Tell me what happens when you fight.
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  Tell me how you resolve a fight.
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  Janice and I have been married 47 years and sometimes Young couple will say, tell us the
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  secret, and I'll say, well, a couple of things real quick.
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  Love has nothing to do with it.
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  Black won't have a whole lot to do with it.
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  You've got to learn how to disagree, how to find, and the work together.
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  That can be done if you're willing to put in the work.
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  Well, that sounds like good advice for work and life.
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  Okay.
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  Very years ago, you wrote a wonder a book called The Leaders gift.
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  And you talk about how people have to earn the right for people to follow them.
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  And it made me think about What role does leadership play in in a family transition of
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  any kind?
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  We've got this, you know, amazing TV show called secession, you know, that that's got all
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  these characters and all this stuff, and and you see how toxic and and and bad a family can
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  be run and how, you know, siblings could be pitted against each other and all this stuff.
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  I mean, How can we how can the parent or the founder or the 2nd generation leader help
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  everybody through this process so that people come out whole and that the business survives.
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  So there are three things, hon.
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  The first of all, if there's a member of the family whom we believe is the right person
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  eventually lead, There are 5 skills they have to develop.
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  First of all, they have to develop the skill to invest time and be they can't lead from the
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  front of a engineer's truck.
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  They can't leave from, the backroom in the doctor's office.
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  If they're going to leave the business, especially if it's family owned, They've got to
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  be willing to invest time and the people who work in that business.
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  And that means they have to put the business first before the family.
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  Now I'm very honored to be part of coach, Tony Dungey's all pro dad with Mark Merrill.
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  He and I began that work so many years ago.
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  I believe it's strong in the family.
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  But if you put the family ahead of the business, you're gonna be disappointed.
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  Business comes 1st and best time in the business.
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  Secondly, you have to create openness.
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  In other words, the people that work for you, whether you have 10 employees or a 1000
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  employees, they have to know that you're open to listen to them to encourage them.
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  And that's the 3rd thing and that's learning how to listen with empathy.
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  Listen, and and we've all heard this statement from that great Wharton professor speak or
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  argue like you're right, Listen like you're wrong.
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  And the best thing a family business leader can do when they're listening to an employee or
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  anyone else, listen like you're wrong, then you have to encourage feedback.
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  You have to be willing to listen to anything.
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  Most important words, you'll ever hear the words you say to yourself as a leader when no
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  one else is speaking.
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  Encourage candid feedback.
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  Then you have to know how to show appreciation.
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  You have to know how to invest in people and hold up that mirror and help them see the best
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  in themselves.
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  And then the 5th and final skill is it's regular communication.
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  Whatever your professional skill is, and you've had positions and manufacturers and engineers
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  and lawyers and accountants, All of that will go by the wayset.
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  If you don't develop these 5 skills to lead people, that's first.
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  Then secondly, with your family, you have to be able in that family account to help them see
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  that we have an obligation first to our customers.
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  Our customers, our clients, our patients are the only people that write a check-in this
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  business.
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  We then take that money invested and eventually the family receives this as wages or as a
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  return on their investment or as a dividend or a distribution.
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  So first, developing the skill to work with the team, secondly working with the family to
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  understand the importance of our customers.
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  And then the third thing that's absolutely essential is what you're talking about today.
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  Having that business coach, having that advisor that can help you on the collection side of the
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  planning set, realizing you can't do this all by yourself in a silo.
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  If you do those 3 things, you will be one of those that survives gen 2 or maybe even gen 3
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  transition.
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  That's been our experience.
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  So if you are thinking about a transition, let's say I'm a I'm a baby boomer business
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  owner and I'm getting tired, you know, whether in the pandemic was was was terrible.
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  I'm like, I'm just about ready to walk.
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  What is a realistic timeline for how long they need to start preparing themselves and whoever
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  may succeed them in the business.
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  We get about 5 to 7 requests a month in our office to help a family.
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  First question we ask is what time frame.
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  If it's under 3 years, we politely say I'm sorry.
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  We're the wrong ones.
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  The chance of being able to do it under 3 years, 36 months is very difficult.
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  Preferably, it's about 5 years.
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  So about 5 years out whether you're going to exit and sell the business or sell it to the
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  family or the many ways you can do that.
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  It takes about 5 years to put not only the plan in place, but here's the important part,
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  Melinda, to prepare all the people that are involved.
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  To prepare those people.
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  That's why it takes that time.
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  So, optimally, 5 years, but you can do it at 3, but you gotta be intentional about it.
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  Now last question for you, Barry.
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  What is the best business advice that you have ever been given?
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  Gosh.
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  That's a that's a great question.
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  It came from my father who lived and died in that sawmill.
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  And it wasn't you with him, but it's resonated with me.
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  He said, Barry, you won't worry so much about people.
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  Think about you if you realize how little they ever think about.
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  And here's what that taught me.
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  My employees are not thinking about Barry.
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  My customers aren't thinking about Barry.
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  Who are they thinking about themselves if I can come alongside and partner with them.
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  And if I can be thinking about them as well, we did a market survey not long ago.
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  Why do you keep hiring our firm?
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  I was surprised at the answer, Linda, but I was pleased.
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  Here's what they said.
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  We know as a family in business, we're gonna be in trouble this year at some point.
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  We won't bury to be in trouble with us.
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  So the best business advice I ever received was make it all about your employees, all about
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  your customers.
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  If you do that, you'll be taken very good care of.
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  I love it.
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  I love it.
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  Thank you so much, Berry.
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  Thank you.
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  What a privilege.
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  Thank you so much for your sage advice.
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  I felt like you just drop pearls everywhere of of wisdom I'm Melinda Emerson's small biz lady.
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  America's number one small business expert, and I will leave you with this last thought.
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  You never lose in business.
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  Either you win or you won't.
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  God bless everybody.
• 19:05
  Thanks for listening to the small biz chat podcast with Melinda Emerson.
• 19:10
  Subscribe to this pod cast wherever you listen to podcasts and join us next Wednesday for more
• 19:15
  fantastic information and interviews.
• 19:20
  Success strategies by visiting Melinda's website succeed as your own boss dot com.
• 19:26
  Thanks again for listening, and we'll see you next week.