How to Take Over a Family Business Without Destroying Relationships

What if the very business your parents built is the reason you feel like you'll never live up to them? Most next gen leaders in family companies feel trapped, expected to take over, keep everyone happy, and somehow grow the business without burning bridges at home. But there is a proven way to take the reins, earn respect, and build your own legacy without losing the family along the way. My guest today, Jonathan Goldhill, has coached over a thousand family business successes to do exactly that. He's the author of Disruptive Successor and host of the Disruptive Successor show. So if you've ever felt torn between honoring the past and leading the future, stay tuned. You're about to discover how to become the kind of leader your family and importantly, your business actually needs. I'm Jason Esprezurel and this is Chats with Jason. Jonathan, welcome to the show.

Thanks for having me on the show today, Jason.

Yeah, really appreciate, yeah, really appreciate it. Can't wait to dive into it now. Jonathan, let's take us back. What did it feel like when your family business closed and how did that moment ignite this mission you're on today?

So you know, it, it evolved over a long period of time. And one thing about family businesses, Jason, is that things can move pretty slowly. These are not the hyper growth, you know, tech, AI software type companies. These are more oftentimes real estate than they become real estate, family holding businesses. In my family's business, what happened was my grandfather and his two brothers, they founded the business with their father, my great grandfather, and when they hit their 60s, and I didn't know this at all because I was just a very young child at that point, they apparently sold the business and maintained lifetime employment contracts as the CEO and cao. Now this, by the way, is fairly unheard of, at least in modern day, that they would have lifetime employment contracts. But I used to go visit their offices and they had showroom, which was in New York City in the garment, you know, fashion district of New York. And you would see men's suits and all those types of things. But it seemed like my grandfather was very involved more in philanthropy, doing some sales, going out to lunches, having a two or three martini lunch or something. So by the time I was 20 and really might have had an opportunity to go into the family business, that family business was long since sold. But my grandfather and his brothers were continuing to go to work, although my grandfather was having a series of strokes at that point in time and that made him really unable to communicate very well. So what I experienced, my client the other day said you know, John, the reason why we hired you as a family business is because not only did you like have family business experience and you had all this knowledge from consulting founders and owners and, and businesses over many years, but you had family business fomo. And I said, Robert, what do you mean by family business fomo? I know FOMO is an acronym that stands for fear of missing out. But he said like you wanted to be part of that family business but it wasn't like available to you as an opportunity. And so because of that I thought he's going to care a lot more about our family business. And Jason, that really struck me. I've never heard this kind of feedback. It would have been in the 1980s when the business was basically winding down and wound down in 1986. And at that point I was off in college and studying and trying to do things that I thought were outside of business altogether, like organizing the community and trying to improve the affordability of housing. And it wasn't until I went back to school, specifically entrepreneurship program to get an MBA after I had had an art and clothing business following very much in my grandfather's footsteps. He was an artist and a clothing executive. After that business failed due to a poor partnership, I went and got an entrepreneur MBA and started consulting small and family owned businesses. And then over the years I just realized so many of my clients were family owned. Not many. Multi generational, 3, 4, 5. Those are real rare to find I think. But there are many mom and pop and the kids, a few brothers, siblings, you know, the family, sort of the immediate family. And so that's my story, that's what I wrote my book around. It was geared towards that second gen, basically trying to really take the vision of the business and make it much larger. And so what I teach in my book is strategies to 2 to 10x more like NX your business.

So people often assume that family businesses fail because of profits or perhaps even market conditions and certainly a lot of disruption in the markets these days with AI and all the hype around that. But you've said that it's not profits or markets, but it's something deeper that causes family businesses to fail and a hidden reason most successions don't work. What is the reason?

Well, there's a certain, I want to use the French phrase, je ne sais quoi, but there's a certain communication that happens in families at the kitchen table, at the dining room table that kind of teaches the young children at the table that like this is what we do, this is how we do it, this is the business that is going to be yours someday. And those conversations happen at young ages. Now we know that most times the people that come into family businesses, they're already adults and if the family business is really established, like multi generational, then they probably have some ethos around. Look, you should go out and go get a good corporate job or go work in industry or go do something else for a few years, learn on someone else's dime and then come into our business and maybe you're going to even work for a competitive type of a business or but just go get some good experience. So I think that's the hidden secret is that they don't really talk about the importance of the business as part of like the whole economic unit of this family and that you're part of that unit and no pressure, we would love to have you be in that business, but should you choose to do something else, then that's fine. So the families that don't have those types of conversations and they send their kids off to college and they say, you know, maybe they'll come into the family business, but I don't expect it. They probably are thinking about other types of things that look less stressful, you know, easier, maybe better lifestyle. And they don't come into the family business until maybe they realize this is kind of a dead end. And the family business, what a platform. My family is giving me a, you know, there's a 5 or 10 or $50 million company here. I could really do something here. I could learn, I could grow, I could make a great living. So I think that answered the question.

Yeah, it makes a lot of sense. So we're going to shift gears just a little bit. You're sitting with a nine year old at lunch and in their backpack there's a sandwich, a toy and a math workbook using only what's in the bag, the lunch, the sandwich, the toy and the maths workbook. How would you explain what you do for family businesses?

Me as a coach?

Yeah. Right.

Okay. Not as a family business owner, but as a coach.

Yeah.

So, wow, a sandwich, a toy and the backpack.

Yeah.

So the backpack I would explain is think of this as the holder of all the contents, all the people you love and want to have part of this community of yours, all the things that you're interested in. And inside of the backpack there's some incredible focus around what is really like what really matters, what are you really interested in and what are you going to prioritize. Big word for a Nine year old. But what are you going to put first over the other things? The toy is a reminder that you need to take time out to have fun and you need to enjoy what life can bring you. It shouldn't just be all work, there should be fun and games. And the toy represents playing games and even maybe collecting a few other toys in the process. Whatever those things are. Older adult, they like motorcycles or young adults, like motorcycles or snowboards or four wheelers quads. The sandwich. The sandwich represents the sustenance that you will need to carry you through every single day and know that you always have what you need to get through the problems that show up that you're going to solve.

Yeah, great. Fantastic. I think that happened.

Fun question.

Yeah, yeah, it always mixes things up a little bit. Thinking of disruptive successor, what does that look like in practice? How does someone lead differently without alienating the generations before them?

Yeah. So you've got to balance the future and the past. Right. The legacy and the vision. And if you're going to be a successful disruptor, you've got to have a vision for where you think the business can go. And you need to be not selflessly promoting or pushing that, but you want to invite that into the conversations with probably would be your parents, maybe your grandparents, maybe your cousins and uncles or nephews or whoever's involved in the business, but where you see the potential of this business and how it could get there and kind of present a bit of a roadmap maybe and then show them that there are tools that are available that can make this happen. There are, there are business system tools that will help us operate the business better. There are customer management tools that'll help us to stay better in touch with our customer. There are tools that will help us to manage and mind the culture and the employee experience. And then there are tools, if we're a multi generational business, to manage the governance of this business. If we have many family members from cousins and some are involved, some not involved. So there are great tools that we can use and we have to adopt things that are not things that you used to use. AI. You know, look, the last decade it was social media, it was web, it was the Internet, it was technology type tools that would allow you to do pricing and bidding and estimating and quoting and customer service. And I mean, now there's just so much available to us, Jason, with AI and technology and digital, that mostly what I was talking about in my book was the kind of disruption that comes from bringing in new tools, new Systems, new processes. Not just, hey, dad's going to make the decision when he goes, you know, and he's going to come back and this is the way it's going to be. It's more. We're going to build some consensus, we're going to have a meeting, set of meetings and a rhythm around those meetings, and we're going to use technology a lot more than you've ever even conceived of using. So those were some of the ideas.

Yeah, makes sense. Most next gen leaders, I think, carry guilt for doing things their own way. What, what emotional shift have you seen them needing to take that lets them step into the confidence that they need to be the new leader.

So, you know, emotional intelligence is such a key part of this transition because think of a baton that is being used in a relay race and one person might be holding that baton too tightly and so it becomes sticky in their hands. And so what's really required is to utilize all the emotional intelligence that's available to you, including that which you have not learned, to ask questions and understand perspectives of the other people, to really engage in communication. Because when you asked me the earlier question, sort of like, what, what breaks down in family businesses, and I think if I could sum it up in one word, it's communication. It's the lack of having communication, even structured communication and structured meaning. Like in management meetings, you talk about management issues. In leadership meetings you talk about leadership issues. Family meetings, you talk about family issues. In ownership meetings, you talk about ownership issues. So communication, so important to be an effective communicator, you've got to be an amazing listener. To be an amazing listener, you have to have a lot of emotional intelligence. And like that is the key is figure out how to increase your eq because your IQ is, doesn't matter so much anymore. It's your eq. Especially with millennials and Gen Z, if you want to understand what's making them tick, you gotta ask smart questions, good questions, empathetic questions. So empathy, that's the keyword.

So in your seven P's playbook, which P should every leader, family or not, master first?

You know, that's a tough one because like a puzzle, it could start from any particular P. And as a matter of fact, I'm now sharpening my seven Ps and I may be expanding it to 12Ps that focus on things like that weren't in my original focus on things like preservation and progression. And you know, the standard P in any marketing is like positioning and promotion. So I began my 7Ps with purpose. That was at the top of the list. I think you need to know your why and what it is that you're doing, why you're doing it, because that's ultimately what gets you and the people that work for you up out of bed every day, excited about what we're doing here. Because, you know, think of a nonprofit. A nonprofit oftentimes has a strong mission. Think of a church or any kind of religious organization. It's very mission driven. So I think entrepreneurs and business owners need to be mission driven. But having said that, Jason, sometimes they come to the purpose, the why are we doing this last? And they then focus on something more like priorities. What are our priorities? What do we need to get done in the next 90 days? What's the most important thing, and how are we going to measure that? So, you know, it's. It's like a Rubik's cube, I guess, because I love processes also, because sometimes it's just so clear that things are breaking down in a business because they don't have good standard operating practices and they need to put processes into place. And I see this when I dig into a company like one I've recently been digging into and realizing that they've not been reporting all their taxes and sales taxes and they miscommunicated about employee classification. Is this person exempt from overtime or not? Are they salaried? And it's created a whole lot of people problems. But, you know, and then for some companies that are running basically a pretty healthy company, I'd say make sure you got your people right. To quote Patrick Lencioni from his book the Five Dysfunctions of a Team, it's not finance, it's not strategy, it's not the products, it's the people that builds your absolute competitive advantage. So I know I didn't give you the single right answer, but it's a. It's a mix. It's all of them. And take it. I do. I put people through a scorecard of the seven P's, and then we figure out what are the things we need to prioritize, what's first, what's second, what's third. We can't do them all at the same time.

Yeah, I think that makes a lot of sense. And if it was as simple as just choosing one, I think everyone would be doing that right now. But I do like that you started with purpose and people understanding their why. Because I think from that it can lead into how we do processes, how we hire, how we treat our people. So fantastic reminder to us that it's not just about getting a checklist and starting at the top, but getting a checklist and understanding where the priority should be in terms of the 7Ps so that you work on what's going to deliver the best outcomes for the business that are most needed. Today. You've worked with companies scaling from 5 million to 50 million plus. What can modern founders or executives learn from a family business about scaling without losing their soul?

That's a great question. So what's different about family businesses from non family businesses? Is that because they're all blood related and because they have so much history with each other, the soul is there in the family business. In a non family business, if growth for growth sakes is the only mantra, then you might be stepping over people, you might be not treating people with the kind of loyalty that happens in a family business. So I think the difference as a service provider, what I found the difference between family business and non family businesses is the amount of loyalty that I find with clients in family businesses. So founders, entrepreneurs, senior managers, executives at corporations, think about that. The people that you work with are so important. Building the right team, having the the right people and having them in the right seats and having them do the right things and then helping them do those right things like faster, better, smarter, like that's what's so important. And you have to do it with emotional intelligence at the same time because nobody wants to be browbeated and nobody wants to be told what to do. They want to be involved in the decision making. So family businesses take more time to understand where their family members would like to sit, you know, what seat activities they would like to do. Take some time to get to know the people that work for you. Take some time to understand what makes them tick, what are their goals, what's their dream. Because if you have a vision of where you want to take your department or your company, they'll buy into your vision once you buy into their vision. So loyalty.

Thanks. You think back and just remember how important it is not to lose the human factor in business. And that whether you're one of many in a corporate machine or whether you're in that family business, ultimately it comes down to humans starting at that very simple place of connection and, and being together. You've watched generations try and unfortunately sometimes fail to pass the torch. What separates those who thrive for decades from those who don't survive the handoff?

So great questions you ask, by the way. And this one, the first thing that comes to my mind is that the Next generation has got to have hunger. There's an old adage in family businesses, and it's spoken very confidently or, or very frequently amongst wealth managers, that it takes three generations to go from shirt sleeves to shirt sleeves, meaning that the first generation works really hard, they roll up their shirt sleeves, they work really hard, and they're working all the time. And the second generation starts to really enjoy the benefits of the first generations working so hard that they want not to work so many hours. They know they need to work hard. They want to provide for their children and make sure their children are really well taken care of. And so by the time that third generation comes along, they've been so well taken care of that they almost seem like they're the entitled generation. And then they don't really want to work that hard because everything was kind of given to them. And they're the generation of credit cards and just buy things on credit. And so the thing that you have to do is you've got to keep hunger in your kids and in your grandkids. You've got to make them learn that character counts and comes from the hard things that we have to do in life. It doesn't mean that you have to make it all hard for them and it's not good enough to just allow them to appreciate what they've been given so they're not spoiled. I mean, that. That's significant, by the way. But you've got to leave them and you've got to foster some hunger. The businesses that I see that don't make it to the next generation or kind of fail in the next generation, there wasn't the hunger, there wasn't the drive. They were full of entitlement.

Makes a lot of sense. Just reminding everyone listening along with us today that Jonathan Gold Tilt's book Disruptive Successor is available everywhere. Great books are sold and there is a link in the description so you can pick up your very own copy of Jonathan. As we come to the top of the show, we're into the rapid fire round, where I have just three quick questions for you. So let's kick off with the first one. One word that defines a healthy family. Business growth. One system every business should install this year.

A business operating system, and one lesson.

You wish your grandfather could see you teaching today.

Whoa. I don't know why the word love came to my mind, but hi.

That's beautiful.

Love, passion.

Fantastic. Jonathan, is there anything that you'd like to leave our audience with today?

I just, you know, I love having the opportunity to have a conversation about these types of topics. They really interest me. I think if you're interested in having your business either be a legacy business, or even if you're interested in exiting the business, or even if you're an executive or a manager and you want to be a better leader, a better manager growth is going to be so important. Leaders are learners. You've got to engage in these conversations, in these topics. You can't just sit and, you know, not discuss this with your family members, with your co workers, with your subordinates, with your friends. You've got to stay alive and you've got to grow and you've got to learn. It's not all in books and it's not all in people and conversations. You've got to mix them. You got to. You got to look around and grab it from a lot of places.

Couldn't agree more. So whether your last name is on the building or not, we all inherit something. Old habits, old expectations, old ways of leading. But the true successor isn't the one who repeats the past. It's the one who dares to reimagine it. And when we do that, when we transform the experience, we transform the business and the world around us. If you found something in this episode that's hit a chord, be sure to share it. Give us a like and be sure to subscribe so you don't miss any future episodes. I'm Jason S. Bradshaw and this has been another episode of Chats with Jason. Hey, just quickly I wanted to reach out and say thank you for taking the time to listen to this episode of Chats with Jason. I'd really appreciate a five star review on your favorite podcasting app. Or if you're watching along on YouTube, give me a thumbs up and show that you like this video. And be sure to subscribe so that you don't miss out on the awesome content and the great guests that we've got coming up for you.