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A longstanding and valued client of mine died six months ago. He was a highly spirited, independent, intelligent, intense risk-taker, who pioneered the development of certain technological improvements in the construction industry through a family business started by him.

An accountant by training and practice, he learned early on in his career that he had no patience for, and felt constricted by, the field of accounting. More importantly, he learned that he had little patience for being “managed” by others.

The lack of tolerance for being “managed” evolved out of his strained and combative relationship with a tough, stern and successful immigrant father. These strains would lead him into and away from a career with larger business institutions and, ultimately, to the formation of his own family business.

The above profile of the founding entrepreneur of a successful family business is by no means unique. Furthermore, the successes, challenges and complications of any family business are a direct outgrowth of the unique personality characteristics of the founding entrepreneur (see “Family Business on the Couch: A Psychological Perspective,” by Manfred F.R. Kets deVries and Randel S. Carlock, John Wiley & Sons Ltd., 2007 and “Conflicts That Plague Family Businesses” by Harry Levinson, Harvard Business Review, March 1971).

Research supports the notion that founders of family businesses share unique combinations of personality characteristics. Broadly speaking, successful founders often share some or all of the following personality characteristics (see again “Family Business on the Couch: A Psychological Perspective” and “Conflicts that Plague Family Businesses”):

    1.  High achievement motivation. 
 
    2.  Ability to transform a simple idea into something real and viable, manage the accompanying risks, secure the resources/financing necessary to move forward and create real value in the form of products and/or services.  

    3.  Absolute need to be in control/zero tolerance for being “managed.”

    4.  High levels of energy and perseverance.

    5.  Ability to instill enthusiasm and a sense of purpose in others.

    6.  Ability to build an organization and give it momentum.

Along with the above characteristics, founders of family businesses often have some or all of the following personality quirks, usually derived from their personal, developmental histories with key members of their “families of origin” (e.g., father, mother and siblings - - - see “Family Business on the Couch: A Psychological Perspective”):

    1.  Can be difficult to work with (i.e., “my way or the highway”).

    2.  Want to take charge of everything, themselves, and do not like to be subject to control, strictures or structure imposed by others.

    3.  Difficulty letting go, delegating and appointing competent managers.

    4.  Confidence and self-assuredness sometimes overshadows a shaky sense of self-esteem and identity, and an accompanying great fear of losing control.

    5.  Bias toward taking action rapidly, rather than thoughtfully, thereby periodically creating difficult challenges for the organization.

    6.  Skills often well suited to the start-up and operational phases of the business, up to a point, but not necessarily the ones required to run a stable, growing company on a professional basis.

The above-described personality characteristics of a founder of a successful family business, as well as the limitations that become more apparent as the business grows and faces the accompanying challenges, create certain tensions within the business and the family. If ignored or not properly and timely dealt with, they can limit the options for the family business and those associated with it.

In the case of my deceased client’s family business, the client-founder’s extreme need to stay in control (and corresponding fear of losing control) led to a lack of thoughtful planning and vision for the future, including in the area of succession planning.  As a result, most of the “best and brightest” of his children have left the family business to pursue careers elsewhere (…in some cases, in competitive business endeavors).

The best method for achieving business “success” during, and beyond, the active involvement of the founding entrepreneur is to facilitate the earliest possible discussion of the future among those members of the family who are interested. The failure to do so does not necessarily spell the end of the business upon the disengagement of the founder.  But the challenges are much more difficult when addressed “late in the game” or, for that matter, after the founder is no longer a presence in the business.

Joel Fishman has worked almost four decades as a business lawyer and mediator of business disputes. Representing large, middle market, and entrepreneurial businesses in a broad range of industries including entertainment, communications, new media, and technology, Fishman represents clients in the formation, financing, operation, and expansion of businesses, as well as with the leasing, purchase, development, financing, and sale of all types of real estate. Fishman is active in the Southern California community, and he frequently writes for the Los Angeles Daily Journal on mediation as well as corporate and real estate legal topics.