In the world of family businesses, there’s a secret weapon that many overlook: the power of outside experience.
A recent interaction with Lee, the heir apparent to a thriving 75-year-old family business with 50 retail locations across the South, illustrates this.
The Three-Year Rule: A Game-Changer for Family Businesses
Lee’s family business is a story of success, boasting growing sales and margins. But what set them apart? Lee’s commitment to a principle that could be called “The Three-Year Rule.”
This rule, echoed in the story of Scott from the Succession Planning for Impact book suggests that potential family business leaders should work outside the family enterprise for at least three years before taking on a significant role.
Lee worked outside the family business until he was thirty.
Why is this a good rule? Let’s break it down:
Skill Development: Working elsewhere allows family members to hone their skills in a neutral environment. They face challenges, learn new systems, and develop expertise that can later benefit the family business.
Establishing True Value: Outside work helps set a fair market value for the family member’s skills and compensation. This prevents the common pitfall of under- or overpaying relatives.
Building Credibility: When family members return with outside success, they bring credibility. Employees and stakeholders are more likely to respect a leader who has proven themselves beyond the family name.
Fresh Perspectives: Exposure to different business models and practices can bring innovative ideas back to the family business.
Lee’s Advice: Beyond the Three-Year Rule
Lee, drawing from his own experience, offers additional wisdom for those eyeing a role in their family business:
1. Prove Yourself Until 30: “Hone your skills, be accountable, and prove yourself until you are 30 with anyone else,” Lee advises. “It matters less what you do, and more that you keep moving.” This approach builds a solid foundation of experience and work ethic.
2. Appreciate Everyone: Lee’s grandmother wisely says, “When you do that, you know them better.” This attitude fosters strong relationships and a deep understanding of people – crucial for effective leadership.
3. Understand Your Unique Abilities: Lee emphasizes the importance of self-awareness. “Learn YOUR unique abilities. Be able to answer the question: How do YOU work? What are your strengths? What do you enjoy? What should you delegate?” This knowledge is invaluable when finding your place in the family business.
The Bigger Picture
The strategy of working outside the family business isn’t just about individual growth – it’s about securing the future of the enterprise. This approach can lead to significant benefits:
It allows the current generation of leaders more flexibility, potentially extending their tenure.
It provides opportunities for the next generation to develop leadership skills gradually.
It ensures that when family members do join the business, they bring valuable, market-tested skills that can propel the company forward.
The “work outside first” strategy, championed by successful family businesses like Lee’s and Scott’s, is more than just a good idea – it’s a crucial step in ensuring the longevity and continued success of family enterprises.
By embracing this approach, family businesses can blend the best of both worlds: the passion and commitment of family ownership with the skills and perspectives gained from external experiences.
Remember, in the words of Peter Drucker, “Build on your islands of strength.” For family businesses, those islands of strength can often be found in the experiences gained beyond the family’s shores.
I believe in you!
Harry T. Jones
P.S. Don’t go it alone and waste years spinning your wheels on succession planning. Bring in an advisory team from the start by joining our Succession Planning for Impact Mastermind. You’ll get guidance through the proven 7-step method to build your leadership team, define your legacy impact, and execute a smooth transition - all while you spend less time on daily operations.
Email me at harryt@cultivatingimpact.biz with “Mastermind” in the subject line to get on the waitlist for our next mastermind. An outside perspective from day one could save you decades of frustration.
Comments