Family Business Longevity, with Rob Ferguson

Family businesses have a shrinking lifespan. Families in business together face conflicts and challenges that have made it increasingly difficult to build a business that lasts generations.

Yet Rob Ferguson, founder of Ferguson Alliance, says that family businesses can live to infinity with the right systems and tools. Today, we’re discussing how the key components of communication, shared vision, and financials drive family business health. 

So, whether your family business goals are solving family conflict and disruption, 10X growth, or acquisitions, tune in today to learn how to increase the strength and longevity of your family business.

This episode peels back the layers on how to foster generational wealth and maintain harmony within family-run companies. The conversation homes in on the essential strategies for early and intentional planning for business succession, highlighting the common pitfalls and conflicts that can derail even the strongest family enterprises. With a wealth of experience, Rob guides us through the complexities of steering companies toward sustainable growth, ensuring they can withstand the test of time and the changing tides of business culture.

Join us as we reflect on the shifts in family dynamics and their influence on the longevity of family businesses from the 1950s to our current global market. We weigh the tough decisions family businesses confront when choosing to prioritize the business or the family unit. Rob’s expert perspective shines a light on how those who focus on the business side often enjoy greater longevity. Yet, he also emphasizes the unique strength that comes from integrating core family values into the business ethos, which can be a potent strategy for success across generations.

The crescendo of our discussion centers on the art of succession planning. It’s a delicate balance that requires giving the next generation both guidance and the freedom to choose their path while ensuring a clear separation of wealth transition, ownership transition, and leadership transition. We explore the profound impact of involving multiple generations in business conversations and the establishment of family constitutions and mission statements. With the wisdom shared by Rob, families are empowered to craft legacies that not only survive but flourish for generations to come.

Podcast: Play in new window | Download (Duration: 49:10 — 56.3MB)

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The Beginning of a Passion

Fifteen to sixteen years ago, Rob Ferguson was the CEO of a 5th generation industrial packaging company, with about 17 cousins involved in the business. Rob was brought in as the first non-family executive to get the business back into shape and sell it. While that was all in the works, Rob recognized that there had to be a way to prevent family businesses from getting to that point of “destruction,” in order to help more families keep their legacy alive and in the family.

[08:20] “Family businesses in America as we know generate—I think it was right after the pandemic—they generated 78% of all the new jobs. 60% of GDP comes from family business. Almost all of our philanthropy donations come from family businesses. And then if you think about all of the innovation that we’ve seen and experienced, again, they started off as family businesses.”

Ferguson Alliance was built from Rob’s passion for helping family businesses stay in business and keep the legacy alive. 

Creating Family Business Longevity

So what’s changing, and why is it important to keep fighting for family businesses in 2024 and beyond? So what is the major obstacle for family businesses? It’s getting families oriented around their “north star.” 

When Ferguson Alliance works with a new family business, the first thing they do is ask a very simple question with a very challenging, yet personal, answer. The first question is: Do you want to be a family-first business or do you want to be a business-first family? You can probably see why this is a difficult question, but there’s truly no right or wrong answer. There’s just an answer that works for your goals and your family dynamic.

Once a family business has that answer, they’ve got to commit to it, so that it becomes the center pull for all decisions made thereafter. This will help families stick to their guns more easily, rather than being swayed by temporary obstacles or opinions. 

What Rob can share is that business-first families tend to have a much longer longevity. The business Rob was initially brought on to help fix and flip 16 years ago was a family-first business. This isn’t to say one is a better choice than another, yet it’s critical to think about the implications of each model. And when you put the business first, you have a business that has a greater potential to help the family for generations to come. 

Family Values

How do you create a lasting family business? The secret, as Rob sees it, is that if you haven’t started planning your succession yet, you’re already late. In other words, you can never start too soon, and the next best time to start is now. You may not think you’re going to pass the business on to the next generation for some time to come, and yet life has a way of throwing curveballs. The more planning you can do around your business succession now, the better chance of success you have. 

In fact, like a generational wealth strategy with life insurance, much of the “generational” planning takes the form of family education. What values are you teaching your children? How are you getting them involved in the family business, and what skills are they building? Are you helping them to find their own place in the business structure, and teaching them the value of their work? Even if your children are very young, there are ways that you can instill the daily values in them so that they are primed to have an interest in the family business and to keep it going. Without this preparation, in addition to legal preparation, a generational family business is just a wish. 

Navigating Conflict When Transitioning the Business

In business and within families, conflict is sure to arise sooner or later. This can be especially true when transferring a family business from one generation to the next. Sometimes, that conflict is about compatibility—for example, an adult child wanting to be involved, but not having the right skill set. Sometimes, the adult children may not want to be involved at all, or not in the capacity the parents envisioned. If there’s multiple children, there may be competition for the same positions. 

[33:43] “What we believe will help in this, is going back to my first two questions. You have to decide, are you a business-first family, or a family-first business?”

There was a particular family business Rob worked with that took three months to answer this question. The patriarch of the family had a terminal condition and called in his two sons to see him. They had no ownership in the business but had experience. He told them that he was giving them each 50% of the business, and then said, “You’ll be bankrupt before the year’s end.” Then he died. That was his whole succession plan. 

So the two brothers took over this business, which was actually quite successful, and made a pact. They agreed that they would always do what was best for the family, and they would always make decisions together. But three years later, they called Rob to get his company’s help to keep their business running. What they realized is that one of the sons didn’t want to be CEO, but had felt obligated to step into this role. He realized that it was the other son who was best suited to the position, and who wanted to be in that position. So for their family, what’s best for the family wasn’t best for the business. By choosing to prioritize the business, they weren’t neglecting the family, simply taking a different approach. And it changed everything for the better.

[37:25] “What we did do is we just helped the family discover what they truly were up to, and help them get aligned. That’s all we do.”

About Rob Ferguson

Rob Ferguson grew up in a family of “business guys”—both of his grandfathers owned businesses and his father was an executive. You can say he caught the business bug early, and Rob spent most of his career in leadership roles at both public and private companies.

When he started working for some large family businesses, he realized that these businesses had something uniquely different. They had an affinity towards their legacy and their businesses were deeply steeped in their family values—which translated into their business culture. This was intriguing to him, so he began to research, and he discovered that while family businesses tend to last longer than non-family businesses, over the past 100 years they had declined in lifespan by over 30 years! Rob recognized that the same family values and culture that made some family businesses great were getting in the way of other businesses’ survival.

Rob saw that he had the experience and expertise to help these businesses overcome these issues so they could survive from one generation to the next, to the next, and so on in perpetuity. His aspirational mission is to change the statistics so that family businesses live longer. In fact, it’s his contention that with the right foundation in place, family businesses can achieve an Infinite Legacy.

Connect with Rob Ferguson

• Ferguson Alliance
• The Prosperity Plan, get Rob’s free ebook
• hello@ferguson-alliance.com

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