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Episode 87 of 133

Steve Legler on Transitioning your Legacy on to Future Generations: The ROI Online Podcast Ep. 87

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The ROI Online Podcast
Duration: 42:47
Working in or dealing with a family business can get rough and messy. In this episode of the ROI Online Podcast, author of Shift Your Family Business Steve Legler talks about the importance of creating the harmony you need to support the legacy you want.Steve Legler was born into a family business a
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Working in or dealing with a family business can get rough and messy. In this episode of the ROI Online Podcast, author of Shift Your Family Business Steve Legler talks about the importance of creating the harmony you need to support the legacy you want.Steve Legler was born into a family business and also married into one. He learned along the way how important good communication is for families who want their legacy to continue as the business is transferred to future generations. Now, he’s a coach and advisor who works with business families and their members to ensure a successful transition.People work really hard their whole life to build a business and a legacy for their families. They dream about working together but forget how messy it is to mix family relationships with business. If you want your family business to succeed, Steve can help. Among other things, Steve Brown and Steve Legler discussed:The reason behind Steve L’s affinity for coaching familiesThe Shift Process and why can it help you excel as an entrepreneurThe importance of all family members working together as a team What a family constitution is, its myths and truthsThe Family Systems Theory Why it’s so important to plan a transition in advanceHow Steve L can help your family business succeed You can learn more about Steve here:Follow Steve on LinkedIn Send Steve an EmailLearn more about Shift Your Family Business here:https://shiftyourfamilybusiness.com/Read the books mentioned in this podcast:The Golden Toilet by Steve BrownShift Your Family Business by Steve LeglerInterdependent Wealth by Steve LeglerEnroll in the QuickStart Academy today to learn how to develop and implement a proven growth strategy that grows your ROI, your business, and your confidence. Learn more HERE.Thinking of starting your own podcast? Buzzsprout’s secure and reliable posting allows you to publish podcasts online. Buzzsprout also includes full iTunes support, HTML5 players, show statistics, and WordPress plugins. Get started using this link to receive a $20 Amazon gift card and to help support our show!Support the show (https://cash.app/$stevemfbrown)
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So you know when you're navigating, So a lot of folks, you're not the only one that navigates a very dangerous waters. I mean, being in your position is almost like being a an executive director of a nonprofit. You could be fired. And you know, the decision makers change often, or maybe flow and you can be fired on on a whim of someone who wasn't in the conversation at the beginning, came along later, didn't understand where you're going and is not clued in. But I think one of the things that enlightened about the way that you're approaching this is you have a framework that you've identified and codified called Shift. So I think that affords you or brings you authority. It brings you respect. It shows that you have a process, and it takes you a lot of just you and what your whims are that day out of the conversation, when you're focusing on a process with steps, you know you're bringing up an interesting thing about that. What I call the difference between art and science. That's two different extremes of one continuum of what this work is, and I almost prefer to think of myself more as an artist of that, I I do this very intuitively and flying by the seat of my pants, and I'm not sure I could train someone to do it. But the difficulty with that is, you know, it's very hard to define what the delivery bill is when I meet with the family like my delivery ble is that on Christmas Day, when Uncle Bob pulls up the grandpas house, if he sees and sues car in the driveway and says, You know what, let's let's come back a bit later because I don't want to. You know, that's what I'm trying to deliver. Family harmony. How do you put undeliverable on that? That's that's the difficult part. There are more and more now structured ways that people are coming up with to sort of say, this is what you need to do, but it can be a little bit dangerous. There's a whole area of what people call a family constitution. That sounds like a really sexy thing for a multi generation family to have. And so some consulting firms have decided that you know what? If family businesses want a constitution, will will sell them a family constitution, and they'll hire people to write up this big document and they do it and they have the consultants and the professionals do it, and the family has very little input. And you can guess what the value of that document to the family will be afterwards. If they've had no input into it, it's zero or less, right? It's like, Yeah, but I never signed that Bs that that piece of paper, right? So, yes, family Constitution makes sense for a family that's been in business for a few generations, and they need to sort of, you know, codify all their guidelines of how they've agreed to work together. But any family who says, Oh, let's start with the Constitution. My God, no, I I just wrote a blog recently that talked about a family's declaration of interdependence. So the family needs to come together and declare that they are interdependent and that they want to work together. And then what was how many years between the Declaration of Independence in the U. S. 17 76? The Constitution was until more than 10 years later, so, yeah, you can have a constitution, but that's not where you start. You start with figuring out how you're going to work together and start to figure out your family governance, which is a kind of an ugly word that people don't like the word governance. I've learned to start to like it, but I've kind of defined it in ways that are easier to grasp about how you make decisions together and how you communicate.
okay, You know, so many hurdles that businesses face just to stay in business. And then you add this additional layer of complexity on top of it. There's a lot of things against a business. And then to have the family component on top of that seems like a big minefield that you have to navigate. So help us envision what would like the first of all, who is it that finally says, Calf rope? That's a Texas term. Okay, finally says, Hey, we really need to address this. We've been avoiding it for a long time, you know the elephants in the room. So we need to address it. Who is it? Is it the mom? Is it the kids? Is it the dad? Who is it? That usually brings it up? It can be anyone. Uh, I like the fact that your first one was the mom because I still remember one of my first meetings with my first major client. Um, it was supposed to be with the mom and the dad and the accountant and I showed up and the dad didn't show up because he had to put out a fire at work or whatever So there I am with the mother and their trusted advisor, and the mother says, I've been thinking about this for 10 years, and I've been talking to my husband about it for five years, and now we're finally doing something. And so often the mother will have that CEO role as a chief emotional officer. And this was a particular case where the mother had seen how having this business in their family had adversely affected her husband's relationship with his siblings. And she had basically said, Damned if I'm gonna let that happen and let this business screw up my kids and their relationship amongst themselves. And so they got out in front of it and hired someone me to work with their sibling groups. So there was two brothers and two sisters in their late twenties, early thirties, and I just worked for them for four years, helping them to learn to work together, because that's what it is like. People don't think they think of the business itself and how the business will survive, and I'm I I always try to gear them towards Well, don't forget the family along the way, and so this particular business had three of the four kids worked in the business and one didn't. And so you have that one outsider, and there's this whole imbalance information asymmetry, I call it, and you've got to work on that. You can't have somebody feeling left out. So we worked on. I coached them and and facilitated with them that they took for them to learn to work together as a team because, as I explained it to them, look fast forward a few decades. Your parents are no longer in the picture who's looking after this. It's not him or her, it's all of you. And if you only start to work together after a funeral or after something happens, you're not going to be able to figure out how to how to work together as a team and learn who can play, what role well and how to relate to each other to keep this whole big train on the track. Because there are a lot of obstacles, and you really don't want the family relationships to become the obstacle that derails the train
Well, the give us some backstory because, all right, you grew up in a family business. Was it that bad that you thought I got to go and change the world? No. Oh, no. So my dad was an immigrant entrepreneur who had arrived in Canada in the early fifties and about 10 years later decided to start his own business. After working for somebody else. He became their biggest competitor. So that was the early 60 63. I was born in 60 for business, was a year old. I have two older siblings, but they're both sisters. And this was a steel business steel fabrication. So it was a dirty business. It was the 19 sixties, so I was immediately viewed as the heir apparent my father finally had, you know, the person who's going to take over his business and guess what his name was Steve. His name was Steve. So I went through most of my life is Steve Jr um And so from my earliest memory, the expectation was clearly drawn out for me that you will come and work for me and you will join the business. And so, in high school every summer, and, you know, right through through college every summer. What did I study in in college business? Because, hey, Well, I was basically told this is what you're going to do. And it was like the path of least resistance for me. So I did that went to work for the company for three years, Uh, right out of right after getting my bachelor's degree, and then it was time to go do my MBA. So I went off to do my MBA and came back. And an interesting thing happened on my first day back when I walked by my dad's office and he said, Steven, come here, sit down. Close the door. And I was I had no idea what was coming. And he said, You know, the last two years you've been gone, the business has been going downhill. We've been losing markets here and there, so we're probably gonna have to close or sell or merge or do something. And I was like, Okay, um, look, if that's what you gotta do I've been planning to come back here, but it's certainly not. My heart hasn't been set on it. And so long. Story short. Six months later, we've gone from 250 employees down to four, and two of us were named Steve Legler, and I ended up, as we might call it now managing a small family office. But nobody knew what a family office was in 1991 least of all me. And I mean, even today, most people don't know what it is, but it's basically I was managing the affairs of the family owned because we still had some real estate. We had some patented products that were licensed, that we had some money from the sale of the operations to invest. And so that became my job totally unexpected and not what I was. You know what I really wanted to do, but there it was too much to walk away from and not enough to get excited about. You know, the the typical image of the sun who's going to take over or the family who's going to take over is like they don't deserve it. They haven't worked hard. They're they're not bought in. I think of the Caddyshack movie where the Lazy Son What? I don't know if it's Danny boy or I'm trying to remember his name. But that's usually the image of who's going to take over. And often there is some version of that going on where the energy of the original drive doesn't exist. But yet the the father or maybe the starting one, like you, said to add the lightning in a bottle, they feel somewhat obligated to pass it down, even though that may be the horsepower doesn't exist in the next heir. Exactly. And in fact, for me it was probably a blessing in disguise. Um, because I really didn't have the entrepreneurial spirit that my father had and you know he had. By that time he had already sort of moved himself up to like chairman and CEO and then hired a professional president because I was coming back and I was 27. Even if the business had stayed really viable on its own, he had already hired someone to be the president. My role was to shadow him and be the assistant to the president for a few years until I was old enough to take over. But, you know, many families don't have that all figured out that way, right? And so just helping. What I do now is I help families look at that whole process on a much longer term basis than they probably are. So a proper transition from one generation to the next take should be like a minimum of five years, if not 10 years in the planning. But often families don't get out in front of it soon enough for early enough. And then they end up doing a transition in a crisis when someone has a health event or someone gets divorced, and now there's new ownership structures and new things come into play. So I always try to help people get a longer term perspective on things and be objective and sort of look at it and planet on a longer term basis to make sure you get. And you alluded to it earlier, you talked about transitioning the leadership and the ownership, and those are two different things, and they don't always happen at the same time. And that's another thing. People don't always realize
Yeah. You know, the folks that listen to this podcast there, Obviously, it's just part of the deal that they're wondering why they should invest in this episode. Here's something really struck me. I wasn't aware that 90% of the businesses in the U. S. Specifically are family owned, and I didn't realize that there are about 5.5 million family owned businesses. And that's crazy. When you think about the perception that most people have a business is like these big, giant, evil, faceless, greedy organizations, right? And the truth is, no. It's a bunch of families doing the best they can, and yet you deal with Probably. The thing that I would want to avoid the most is how do you transition ownership or leadership in an organization that's family? Family ran to be like Dad, Come on, let's put me in charge. Please know Steve, we've known you since you were like a little kid, and this is what I can't imagine what it's like. Why in the world would you choose to plant your flag in the middle of that chaos? Steve, you brought up so many points that I could riff off of But, um, yeah, I have chosen to plant my flag into what we call some people call the family circle. So there's There's this model of family business that came out of Harvard from the back in the 19 eighties. John Davis came up the three Circle model, and it's basically there's the business. There's the family and there's the ownership and they overlap. And some people are owners and they work in the business. But they're not family. Some people are family that you know. So there's seven different places in those three circles, and that's what makes everything interesting. And when I got into this gig of working with families, I actually decided consciously to plunge directly into the family side of things in the family circle because I realized that it is the most important circle in many, especially when there's upcoming transitions from one generation to the next. And also it's the most neglected side, like every business will have their lawyer, their account and other people that outside advisers to help move that, and they don't often think that they want help or know where to find help on some of the more family stuff And so I've gotten into the whole coaching and mediating game on that score because because I grew up in a family business. So I have the lived experience, and that was a perfect connection from the early part of my career to this later part. And you wrote the book on this? Yeah, well, I did write a book called Shift Your Family Business Back in 2014. This was geared to people like my father, who was an entrepreneur who had started a business and also my father in law, who had started a business. And I often find basically something. You were just starting to hint that is, like sometimes people say, Hey, Dad, give the business to me or whatever is that Transitioning from the first generation to the second is really tough and often the wealth creator, the entrepreneur, the one who caught lightning in a bottle, is very reluctant to want to leave. And so the shift, your family business, the letters in the word shift are actually an acronym for a process that I was laying out there. So the S stands for start H stands for help as and get help, get a guide to come and help you. I is for invest. Invest the time and some money in it. F is for flexible. You've got to remain flexible and not think you're going to put this plan together. And it's going to work exactly as planned and T is for talk. It's actually could have been C for communicate. But shift doesn't make a very nice word. And most of the important communication in families is talking. So that's what that's what it ended up being.
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