Tammy Buss: Poor Communication Destroys Businesses
This is the second in a series of weekly posts sharing lessons I’ve learned working with interesting authors.
TL;DR: The lesson I took from writing Tammy’s book Passing Down Your Success: Talk to my kids early and often about money, about our business, about estate planning, about what we have and what we want, and about what they want. Do not make assumptions. Do not keep secrets. Be honest with each other.
Tammy Buss has spent her career helping small family businesses in Ontario, Canada. As I wrote her book, she and I focused on the behaviors that mortally wound family businesses when the time comes for the founding generation to hand control to the next generation. As I worked with Tammy, I sensed the decades of frustration she had gone through while watching hard-working, well-meaning people screw up the critical transition to their kids.
The biggest problem? Failure to communicate. She told me story after story of families that, in one way or another, didn’t talk about what mattered. For instance, there was the couple that wanted to hand their family business down to their son—only to discover that their daughter was deeply upset because she had never been asked if she wanted to be involved, and she did. Then there are the founders who don’t talk to their kids when doing estate planning. This can result in very unpleasant surprises for everyone involved—for instance, giving a quarter-share of the family business to each of four children, when only one of them works in the company or has any interest in it.
At least those families plan. Others fail to plan at all, and when there is a sudden death or disability, the business can fall to a child who is wholly unprepared to take it on. Or the founders haven’t figured out how to exit the firm and retire, so they have to keep working in order to have something to live on. Retirement becomes a mirage.
The core issue is letting go of control. It’s hard for parents to hand over the company keys to someone whose diaper they used to change, and this is especially true if the parents need ongoing income from the company in retirement. But the future is coming, and one way or another you will lose control.
Passing Down Your Success: How to Prepare Your Family and Business for the First Transition
