03 Oct How to use Outside Advisors
As a family business grows, it is highly likely that it may eventually need and seek the counsel of outside professionals with specialized expertise. Few businesses get too far in the world without engaging an attorney, financial planner, or accountant, for example, at some point. This period of opening up some roles to outsiders can be a real turning point for many family businesses. It may signify that what was once a fledging operation has now evolved to a new level, one in which resources internal to the original inner circle are not sufficient alone. It can be very challenging for some advisors to break through the tight knit circle of the family system.
My advice is to maintain an open mind to the virtues of leveraging their talents. Resist the temptation to write off challenging advice as criticism. If you can sustain an open perspective, you are most likely to find their skill sets are far more relevant to your goals than their last names. There is much more to consider in advisors than their financial or technical acumen, however. Their understanding of your balance sheet or information technology needs should be matched by their understanding of your history and values. Communicate the story of how your family began the business and share the vision of where you want to go. Providing your perspective on where you envision the business going over the long run will help to build invaluable trust with the new members of your team.
As someone who has operated on either side of the coin – as both a member of a family business and as an outside advisor – I try to always approach my job and any new client with great humility. I bring a great deal of experience and knowledge – but I also am always acutely aware of how much I do not know www.douglasdbox.com.
No matter how deeply into the weeds of the annual report I may delve, there will always be aspects of the family dynamics I cannot fully appreciate from the outside. There will always be shades of meaning in the story that I can’t fully appreciate. Socrates said that real wisdom is “knowing that you know nothing.” For this reason, I spend a lot of time simply getting acquainted with my clients and as much as I can learning about the history of their business by conducting in-depth interviews with the various members of the family. Where are the pain points in the relationships? Who is the resident “black sheep”? Are we hoping for the grandchildren to take over one day or biding our time until we can cash out?
Make sure you help your advisors put the pieces together to complete the picture as much possible – and let them know that you are in fact listening to them. You don’t need to accept their findings as gospel or implement all of their recommendations, but your advisors are far more likely to put the time in for quality work if they have a sense that their counsel is truly important to you. What have you thought of your initial experiences working with outside advisors? What would you do differently in the future?