How Can Family Businesses Grow and Transition Successfully with Jonathan GOldhill

Welcome to the B2B Growth Blueprint podcast, where we talk with entrepreneurs, founders, and leaders at B2B services, tech, and SaaS companies to learn the systems and processes they've used to create success for their business. We'll also learn from marketing and sales experts to provide insights to help you grow your business. I'm your host, Mark Osborne, and the podcast is brought to you by Modern Revenue Strategies and their 10x ROI B2B Growth Guarantee. Schedule a free diagnostic call to learn the fastest path to double your B2B revenues in just 90 days. Hello and welcome to another episode of the B2B Growth Blueprint Podcast. I am your host, Mark Osborne. Today, I'm very excited to welcome my guest, Jonathan Goldhill. Now, I'm going to read Jonathan's bio to make sure I, I get at least most of it right. He's a veteran business coach, author, and podcast host specializing in helping next-generation leaders in family-owned businesses and founders in closely held businesses scale up, professionalize operations, and successfully transition leadership from one generation to the next. He has over 35 years of coaching and consulting experience and has guided over 100 business owners, leaders, and managers through the complex intersection of family dynamics and business growth. He's the founder of the Goldhill Group, and he's developed the 7 Ps framework for growing family businesses, which is a proven roadmap that blends strategy, structure, and succession planning to build sustainable enterprises and lasting family legacies. His newest ebook, The Family Business Trap: 11 Uncomfortable Truths That Will Save Your Business and Your Relationships, has been widely praised for its best practices and approach to transitioning the business. So, Jonathan, welcome to the show.

Thanks, Mark, for having me. It's always a pleasure to be on someone else's podcast instead of my own.

So, you've obviously had an interesting, you know, sort of career path. Why don't you give our audience a little bit of background of The twists and turns that brought you to where you are today.

Yeah. So, look, I'm the product of a family that built a very large multigenerational family business on the East Coast. And when I was 20, I moved to California in search of freedom and my own version of fortune. I discovered that I really had a real interest more from a, like, a student, a studying perspective of entrepreneurs and entrepreneurship. And so after having invested in some companies in my 20s and spent some time trying some startups and, you know, kind of failing to some degree, I decided it was time to go back to school and I got an MBA. From USC in Southern California.

Right on.

Yeah, right. The other USC, not the one on the East Coast. And I studied entrepreneurship. I got my MBA in entrepreneurship with an emphasis on consulting. And then I must have been too timid, Mark, to get back into an entrepreneurial business. I didn't really have a vision for a problem that must be solved. Be solved, you know, and I didn't, there wasn't any problem that I was falling in love with. And so, you know, smart entrepreneurs will tell you that you should fall in love with the problem, not the solution. And so the conservative part of me said, well, why don't I become a consultant and I'll be a consultant to entrepreneurs? And so that's really what I set out to do. And rather than go work for one of the large consulting firms where I would be consulting with big corporations, that wasn't really my thing. I spent the next 10 years working for an economic development firm that provided business consulting, entrepreneurial training, and small business financing. And it was an entrepreneurial business in and of itself because we ran it like a business. And our, most of our funders were public sources. They were some private money, but most of it was coming from the city, the state, the county, or the federal government. And we were really good. We grew our business pretty rapidly to a $3 to $4 million company. And for anyone who's ever built a business from scratch before, I mean, literally the first year I was there, we were doing $100,000 after our executive director left, and it was just 3 of us. And we borrowed money from the Chamber of Commerce downstairs, and we borrowed $10,000 from them. We paid it back within a few months. But it took a while to get to that first million. And the first million, I always say, is like the hardest million. And then to get to the next $5 million, it's somewhat easier. That's right. And to the next $10 and then $20. So I left after about 10 years. The company was doing almost $4 million in revenues and had about $7 million in assets, which was pretty pretty significant for a small business. And then it continued to grow for many years thereafter. And I left to basically get involved with the internet. And I thought that that was gonna be the next wave and revolution. And I literally got a job that was very short-lived working for Bill Gross at Idealab, which Bill was He was churning out companies by the day, sometimes in some cases by the week. And then I— that situation didn't work out. So, I went to another organization that was supporting folks in the new economy. And then that went the way of the NASDAQ, which crashed in about March of 2000. And that's when I started my consulting career. And so, I've been a consultant and a business coach ever since, focusing on my coaching practice. Every three to five years, it's taken its own twists and turns in terms of the the format or delivery. I.e., it was group coaching, and then it was one-on-one coaching, and then it was running CEO peer groups, and then it was back to one-on-one, and then I was working with teams at companies, and then and so what happened for me in twenty. 20 was I sat down to really think about who was my ideal client, Marc. And I said, you know, family businesses have been my clients. And as a matter of fact, I have a lot of father-sons that I've worked with and sometimes parents and sometimes multiple kids. And I thought these businesses have some unique challenges that are different from just companies that are trying to scale up. Well, one, they're not trying to scale like you know, VC-backed companies with a hockey stick-like projection, right? They're not trying to go from $1 million to $10 million in one year and then $10 to $100 million in the next 3. These were slower growth companies, but they still were growing at 10% to 25%, which meant that, you know, a company that's growing at 20% every 3 years or 3 to 5 years, it's outgrowing its It's space, it's capital, it's people, it's their own leadership. And so these became good clients for me and very loyal because if you get a family client, they tend to treat you like you're part of the family. And so they become loyal clients and not treating me like a vendor. So I really enjoyed a long run. And in 2020, I wrote a book and came out with a podcast and focused it around one of my particular clients who had grown from $1.5 million to last year, 10 years later, he did— they did $20 million in revenue with a very— with a 15% EBITDA, really nice profitability. And now they're looking to acquire companies and he's become a bit of a coach. He's built a community of disruptors, as he calls them. My book was called Disruptive Successor, and he was kind of the muse or the person who was the most disruptive successor in my book of examples. So, you know, it brought me full circle back to, huh, my family's business was really something I never got to participate in, but always fascinated me. And it also afforded me some early financial, like, inheritance, basically. Because that business was, or the assets that were generated and the wealth that was generated, I should say, was divvied up into trust funds for children, grandchildren, none of whom really became successful as entrepreneurs or business people, which is, I think, really not surprising. They say it takes 3 generations to go from shirtsleeves to shirtsleeves. And so, I always was I think, and honest and hard enough working, but I never had that drive to go from nothing to make something and become that entrepreneur. So, so that's been my story. It's been one of being more of a consultant, a little bit on the sidelines, but always studying the best practices and always being alongside my clients, helping them through the difficult times, whether it was Difficult conversations with family members, difficult terminations with key employees or equity-owning family members, and coaching them, being there. I hate to call it business therapist, although that's what some clients and friends have called it. Maybe consigliere.

Sure.

So yeah, that's my story, Marc. It's the honest story I could tell.

Well, and, and so often, especially, you know, when there are those interpersonal family dynamics at play within a business, having that outside point of view is just so necessary. Uh, and, and we— I sort of teed it up a little bit at the beginning, this, you know, your new ebook around these sort of 11 uncomfortable truths that'll save your business and your relationship. What are some of those uncomfortable truths that, you know, generational businesses or family businesses maybe often want to overlook or try to overlook, but that, you know, must be faced in order to build that success?

Yeah. Well, you know, they have to have a shared vision, right? So, that's the first one I have. And the uncomfortable truth is, you know, just because no one's fighting, it doesn't mean that you're aligned.

Yeah.

You know, Pat Lencioni wrote a book called The 5 Dysfunctions of a Team, which is probably one of the best-read business books.

Yeah.

And, you know, he kind of talks about like fake harmony kills progress because you can't really build a team if you have this artificial harmony where it seems like everyone's just getting along. But the truth is Nothing's really being discussed. So I have found oftentimes when I go into a family business where there's this either lack of tension or tension between the 2 generations, it's that they're not really having honest dialogue and communicating around the future of the company and where it's going and where it needs to go. And, and You know, that's just one of the uncomfortable truths, but it ties in with others, which is that, you know, they don't have maybe any kind of established structure for having conversations of this and meetings, you know. So there are— maybe there's a leadership team meeting or a management team meeting, but is there an ownership team meeting? Is there a family meeting? Is it appropriate to talk about family issues in a management meeting? No, it's not. You know, no, it's not in a leadership team meeting. And so, when people, family businesses start to compartmentalize, hey, this is something that's really a family issue, we should talk about this outside of work, or this is a leadership team or an ownership team meeting, like, let's figure out which room and which time slot this ought to be covered in. And, you know, God forbid, what would it be if you had a clear role and clear set of responsibilities, right? Most companies have this. Good companies establish key roles, you know, key responsibilities, and a set of values or what I might call operating behaviors that we're all gonna play by.

Yeah.

And we're gonna be evaluated by, are you doing your roles? Are you doing your responsibilities? Are you living the core values? And so would it hurt a family business to have clarity around this? A lot of times there isn't that clarity. And partly that's what makes things work in a family business. But that's what also stalls the growth. You can't scale if everyone's the CEO and everyone's, you know, or that guy's the inside guy. I'm the outside guy, you know. Like, it looks neat and I know it worked. And look, I shouldn't say it can't scale. My family scaled a very large business and there was definitely an outside person, there was an inside person, and there was like the numbers guy. And so it did work. And I think they understood their responsibilities. But so another one of the truths is around, you know, is around healthy communication. It's so tied in with the first thing, but Yeah. The things that your family avoids talking about will eventually tear your business apart. I mean, think about it, right?

Well, and that's true in any business, though. It's those things that— well, and I love the way that you kind of structure it around this clear alignment on where are we going, then this clear alignment on sort of roles and responsibilities. Well, how are we going to get there? And then the other thing that has been, you know, sort of woven through some of what you said is this, you know, sort of structure for collaboration or just sort of setting up a way to communicate and collaborate that aligns with, you know, where are we going and who's on the bus and how are we getting there? And then how do we communicate with each other in a way that opens the door, you know, for that effectiveness and communication? And so often I see companies that They might have one of those pieces, but without all 3 of them, it's really impossible to be successful because if you're not all going in the same direction, well, then you can have great communication while you go off in opposite directions and good sort of roles. But it's that clear vision on where you're going that establishes the roles and responsibilities that need to be had. And then that sort of creates the framework for that communication and collaboration.

You know, there's an interesting dynamic that is at play in both family and non-family businesses. Yeah. Think of the company that they're building like a rocket ship business. It's really growing fast and there's a lot of direction and there's a strong personal agenda. But you don't really know if you're a leader or an employee, what is the agenda of this owner? Like, are we scaling to keep this? Are we scaling to sell it? Well, probably. And when? And so the similarity with a family business is, you know, supposing you're a 40-year-old son of a father who's 65 and you're kind of wondering like, What's Dad's plan here? He hasn't— we've never really been able to have the conversation around equity. You know, he's not working here all that much anymore, and yet he's still drawing a, you know, a few hundred thousand dollars out of the business as if it's like salary for what they're working. I'm doing the hard work, you know, the 40-year-old son. And like, what's the direction here? Are we like— Is he thinking about retiring? Does he have a number? Do we know what that number is that he needs to exit? Uh, because we've got to get clear on, uh, if there's going to be some kind of a liquidity, uh, event. And, you know, do we have advisors that are helping us to—

Yeah.

With this? Just like in— so in the, in the private company, they might have a board or they might have share investors and You know, where, what's the direction that they're taking the business? And so, you know, it's really important to align the transition planning and with estate planning and with the shared values and with the communication so that there's clarity around it. And in a private company, you know, where they're trying to build enterprise value, And that's the, you know, it sometimes is enterprise value at sometimes at all costs.

Right.

How is this being experienced by the people that are working for the business? You know, do they, are they feeling valued in this process? Are they participating in this, you know, grand equity expansion plan or are they, you know, do they feel a part of it or do they feel like they're being exploited a little bit? So I think these are dynamics that show up in both family and non-family business, right? And you and I talked about earlier about the importance of enterprise value.

That's right.

Whether it's a, you know, I've always said, not always, but for 10 years now I've been saying You've gotta build your business as if you're gonna sell it. That's right. Begin with the end in mind. Think about building value into it. Think about removing yourself if you're an owner founder-led business. How do you remove yourself so that you're dispensable? That makes the business more valuable. And yeah.

The startling statistic that I always think of is that 50% of entrepreneurs will be forced to sell when they're not prepared due to disease, death, divorce, disagreement.

Like, for—

so, for half of all entrepreneurs, and I've given this speech at a conference room full of people, I'm like, look to your left. You don't even have to look back to your right. One of the two of you is going to find themselves in this position. And If you haven't done the things necessary for you to have a successful exit, then chances are you're going to fall into this other really sad statistic, which is 70% of businesses that try to sell don't. They just go out of business. Maybe they get chopped up for parts, but certainly not the value of the enterprise that could exist if they had just taken some deliberate steps earlier in the process to build enterprise value by removing some of that owner dependency, by documenting some of the processes, by building out sort of a team, by having clarity on where they're going and sort of that communication dynamic, by doing those things along the way, not only do you then save yourself from having a non-transferable, non-sellable business, but it actually becomes just a better business to run. Like, you enjoy running it better. It solves some of those communication and collaboration issues that exist when you are guessing at, well, where are we going and what vision do they have in mind? Just kind of getting some of those things out really makes it for a better operating business.

It's sometimes frustrating to us professionals and frustrating to business owners who are— I'll use the metaphor of the forest and the trees. We see the forest through the trees. They're living in the trees and they have difficulty seeing the forest. And so what I mean by that in other terms is we see, because we can look at it from outside objectively and say, these are the things you need to do. That will really build value into your company.

Right.

And what frustrates, I think, the business owner with consultants and professionals is they've built so much value into their business and they've worked so hard. And now we're picking it apart and telling them that there's something that's missing that they didn't see. You know, that's like telling them their baby is ugly.

That's right.

Or their baby could be smarter. Or if you really want your baby to go to Harvard, like, you know, this is what you need to do. And so, I think that there's some mutual distrust between professionals and owners because the owners have worked really hard to build that value. And as professionals, we've worked really hard to understand what builds value. And there's a clash.

Yeah.

Between, like, what, what needs to happen and what, what did happen that makes it difficult for them to come together and say, we can, we can do this. We can work on this. And it, it takes a really, it takes an entrepreneur, not a, not a business owner, but an entrepreneur with a really elevated sense of consciousness around what's possible to really build tremendous value in a business. And it takes a, it takes a great business person who wants to pass it to their next generation that, you know, that they instilled in that next generation a tremendous sense of values, right? family and business values. And they built a great set of products or processes that can withstand the test of time. So like some of the examples we were talking about before we got on the show.

Yeah. So Jonathan, you're obviously an expert in a lot of really interesting topics that we could talk about all day, but I gotta be sort of mindful of your time. But Before I let you go, like, tell our audience, like, who do you work with specifically? Like, who should reach out? What are the types of results you help folks achieve?

Yeah, yeah. So, a lot of companies that come to me are small businesses and they're at the stage where they are typically anywhere from 11 to 50 employees if I had to give it a, like, so that's quite small. And yet they're at the stage where they're trying to professionalize the business, and they have a vision that they want to 2 to 5 or 10x the business over 2 to 5 to 10 years, and they want to put a set of best practices in place. So, so these are either founder-led or could be next-generation-led companies. They oftentimes are in construction or manufacturing. Sometimes they're in SaaS or technology businesses and they're faster growing. But I'm dealing more and more with these family businesses that are of this smaller size. And so some of my clients have had as many as 500 employees, some as many as 150 employees. And they're, they're wanting to coach other leaders in some of these best practices that have been put in place so that they're building really strong team of leaders in the business. And, and then the ones that the businesses that really have a particular interest for me at this time are those that are going through some kind of transition or succession. And so it's really about building that next generation of leaders. And it's because where I'm at, which is almost like, you know, semi-retiring in terms of age and years, is mentoring that next generation to really build the confidence, build their leadership skills, put these best practices in place, create alignment of owners and leaders, and start having conversations around fairness, equity, tax planning, estate planning. I'm not the guy who's going to facilitate that. Just start the conversations so that they can go and start creating a BOAT, a business owner advisory team, you know, the lawyer, the accountant, the wealth manager, and start to create a set of disciplines that are really going to allow the company to go through a full-on succession. So that's, that's where I'm at.

And for folks that see themselves within that description, what's the best way to get in touch?

Yeah. So, go to my website, thegoldhillgroup.com, and look for some resources there. Book a meeting with me there. You can find me on LinkedIn at Jonathan Goldhill. And those are probably the best places to get a hold and find me, Marc.

Awesome. Well, Jonathan, thank you so much for taking the time to join us today. I really enjoyed our conversation. I'm sure our audience got a lot out of it.

Thank you very much for having me on the show.

Talk to you soon. Thank you for joining this episode of the B2B Growth Blueprint podcast. We hope you've gained insights to grow your business. If you enjoyed this discussion, please rate, comment, like on your favorite platform, and share to others who will find it useful. Do you know a CEO, founder, or leader at an early-stage B2B services, tech or SaaS company who would like to be a guest and share their story, send us a note. Let's schedule a conversation.