Meat+Poultry - February 2021 - 56

FA M I LY B U S I N E S S F O C U S

" It's very
important
for family
businesses to
codify their
values into
their strategic
plan. "
- JONATHON FLACK

56

more, " Aronoff said. " That single entrepreneur
who is the owner of the business thinks, 'I'm
chairman; I'm CEO; I'm chief cook and bottle
washer; I'm the owner; and I'm the dad.' When
you have it all, for better or worse, you have a
lot of power and a lot of freedom. "
All that changes if the first generation of the
business is led by multiple family members and
the topic of bringing on other family members
is broached.
" If there are two [owners] there, you're
already sharing power and freedom. So, it's a
very different dynamic. "
Bringing on additional family members
who are also owners means surrendering
independence for the single owner, and
for the incoming family members there
must be a systemic process for how
control is established and how agreements
are made. That transition also needs to
make accountability a structural part of
the business, whether the accountability
is to the other owners or to a board of
directors. Leadership is another part of the
transition when bringing on next-generation
family members.
" You have to be a credible leader. You've
got to show that you know what you're doing
and how you're doing it, " Aronoff said.
Part of effective leading means developing
a strategic business plan and accepting that
figuring out the next move based on gut
feelings isn't a viable strategy as the company
grows, a board of directors is developed, and
additional owners are joining the ranks. The
acceptable level of risk for the first generation
of a business is often higher than subsequent
generations are willing to take.
" By the time you get to the next generation,
there's got to be a lot more structure; there's
got to be a lot more planning; there's got to be
a lot more predictability, " Aronoff said. " You're
asking people to invest in your company or
you're joining your siblings or your cousins
in owning a company and you can't just say
to them, 'Well, I did good last time so trust
me to do it good again.' That's certainly not
the way more established, more mature
organizations work. "
Projecting realistic growth is another
aspect of transitioning from a company's
founders to next-generation operators/owners.
A well-planned, more modest approach

MEAT+ POULTRY | 02.21 | www.meatpoultry.com

to scaling the business might make more
aggressive entrepreneurs who founded a
company bristle at the next generations'
pensive projections.
" Although groups, that is to say siblings
or cousins, certainly are interested in growth
as well, but they're much more interested in
measured growth, " and taking measured and
planned risks, Aronoff said.
Goals of next-generation owners tend to be
based on taking calculated risks and include
a strategy of liquidity and paying dividends
versus being solely focused on reinvesting
profit back into the business.
When developing a family business,
Aronoff recommends thinking about
development in four different spheres:
family involvement; ownership structure;
management; and governance. Having a vision
for the future of the company and the family
involvement in the future helps guide those
developmental decisions.
Aronoff proposes rhetorical questions for
transitioning companies to consider, especially
if some of the next generation will be working
in the business and others may not: " Do you
want to sustain the capital of your business
to continue to grow it or do you want to take
chunks of it out and provide it to your other
children who are not in the business? "
He said he works with many family
business founders who bring on family
members, and while they say they're operating
a family business, they act entirely like it's
solely their business alone.
" Even if kids come to be employed there,
when it's still owned and run and governed
by the founder it may not really be a family
business at that point, " Aronoff said.
" I've heard of families where the
entrepreneur just up and sold the business out
from under the next generation who'd already
spent 20 years developing careers, thinking
it was going to be their business, but lo and
behold, it wasn't.
" So, you really need to think through
whether you're doing this to build wealth
for yourself, " he said, " or if you're doing this
because you want to create a family business,
which means trying to develop a business that
will last for generations, that will continue
to prosper and will spread wealth among the
family that will give family opportunities. "


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Meat+Poultry - February 2021

Table of Contents for the Digital Edition of Meat+Poultry - February 2021

Meat+Poultry - February 2021 - 1
Meat+Poultry - February 2021 - 1
Meat+Poultry - February 2021 - 2
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Meat+Poultry - February 2021 - vdg - 1
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http://digital.meatpoultry.com/sosland/mp/2021_02_01
http://digital.meatpoultry.com/sosland/mp/2021_01_01
http://digital.meatpoultry.com/sosland/mp/2020_12_01
http://digital.meatpoultry.com/sosland/mp/2020_11_01
http://digital.meatpoultry.com/sosland/mp/2020_10_01
http://digital.meatpoultry.com/sosland/mp/2020_09_01
http://digital.meatpoultry.com/sosland/mp/2020_08_01
http://digital.meatpoultry.com/sosland/mp/2020_07_01
http://digital.meatpoultry.com/sosland/mp/2020_06_01
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