Intentional Growth #196: Solving Problems Through Payroll: How to Separate Your Management Role from Ownership in a Family Business
Today, Sara Stern is talking with me today about the family business circle, her experience in family businesses, The Sage Pages, the Matilda Impact, family business statistics and what that means for your business, how ‘fair is not always equal,’ and what successful family businesses have in common.
So many businesses (family-owned or not) hit their ceiling because the owner/founder cannot separate their ownership role from their management role. Because so many owners don’t truly understand business valuations and how to identify what their biggest asset is worth, they try and solve interpersonal problems with what is tangible, and they understand… payroll. Salaries become the default mechanism to “treat everyone fairly” or keep the peace. When in reality this can be one of the most toxic mistakes to make.
I truly believe conflict can disappear once a business owner understands how companies are valued and have boundaries which clearly define value management roles should be bringing along with the correct pay. This DOES NOT mean that hard conversations will disappear, it just means that the chances of growing a valuable business that lasts generations will increase along with family harmony.
What will you learn in today’s episode:
- Sara’s background and her experience with business
- What Sara got from working at Target
- The three-circle model of family business are:
- Ownership
- Business
- Family
- What the Matilda impact is and how to use it to address the family freeloader
- Why 90% of first-generation business owners are in all three circles
- The excuses first-generation owners
- Why fair is not always equal
- What the successful family businesses to make it in the 3% of companies that beat the odds and survive three generations
- How to shift your mindset and reinvent the family business if you are sick of waking up for grandma’s legacy
- How to work through family conflict and lean into
- How to break through false assumptions you have about your family and the business
- How to create a family purpose statement
- How to review, hire and work with a solid team of advisors and deselect the ones that don’t get it
Main takeaway:
Education can solve a lot of problems. There are two ways we hope to help you get clear, get intentional and get going:
1.) Mastering Your Cash Flow – Video Series
- How To Build A 13-Week Cash Flow Statement
Get clarity on where and how your cash is coming from and being used and then build a plan to manage it wisely. Learn how to build a 13-week cash flow statement from the top CFOs in the marketplace.
- How to Build And Revise Your 2020/21 Budget And Forecast
2020 and 2021 are most likely not going to look like you thought they did back when you built your budget and forecast. Learn how to model out different scenarios using forecasting best practices.
- c. Create A Strategic Plan to Grow Company Value
Increase the chances you come out of the gates and capitalize on the future opportunities when our new "normal" sets in. Start thinking about how you can create a strategic plan to grow a valuable business that gives you choices.
2.) Intentional Growth™ Digital Course
Because of the current situation, Pat and I are working on a digital video course on the Intentional Growth™ 5 Principles. It will be the best of our material that we have in our 2-day Boot Camps that normally costs 5k for $295. Text the word Intentional to 66866 to get on the waiting list of the digital course.
We’ll teach you how to build a valuable company with the end in mind using our 5 Intentional Growth™.
- In principle #2 - You’ll learn everything about how companies are valued, deal structures and how to calculate net proceeds (this helps if you want to know how much your company is worth, looking to buy a company or eventually want to sell)
- In principle #3 - You’ll learn how the 5 major exit options (Internal, ESOPs, PE and more) work & the implications of each
- Principle #4 - you’ll learn how to increase your multiple by derisking your company and building value for the long term build a financial model that ties to your strategic plan and what it takes to grow value for the long term.
About Sara
Sara grew up in a family business. She had a short run in corporate America before she decided to dive headfirst into working with family businesses on a daily basis. She started as the director of the Family Business Center at the University of St. Thomas (when she started it has around 20 members and now it has hundreds of members and is an extremely reputable organization here in MN).
Sara wanted to take her years of experience helping hundreds of family businesses to the next level so she got her EOS certification, became a trained coach and EOS Implementer™ she has a unique ability to help family businesses. She works exclusively with a limited number of family business leaders who want to maximize the impact they have on their companies, families, and communities.
Sara is a fan of time with family, being silly, making the most out of life, and genuinely getting a kick out of the ridiculous. The worst moment in her work life was making french fries so badly at McDonald's that someone drove 20 miles out of their way to return them. The best moments in her career are watching families get what they want from their businesses.
Quotes:
“The leader of the business is there to run a great business that meets the needs and expectations of the owner(s).” – Sara Stern
“Where the issue comes up is with ‘not-clear leadership’ and ‘not-clear visions’.” – Sara Stern
“Fair is not always equal; fair and equal have different definitions depending on what circle you’re in.” – Sara Stern
“Fair is NOT equal and it is not equal or healthy inside of the business. You should get paid for the work you do and what the market says you should get paid.” – Sara Stern
“Smart owners hire the right people to run a business and that’s not always a family member.” – Sara Stern
“If you own a family business, I URGE you to stop solving problems with payroll.” – Ryan Tansom
“I’m a raging visionary.” – Ryan Tansom
Resources/Links:
Traction: Get a Grip on Your Business by Gino Wickman
Mastering Your Cash Flow Digital Course
Reach out to me if you have questions about the boot camp!
You can also reach out to me via email at rtansom@arkona.io, on my LinkedIn, or you can call me at 612-720-6530.