ELITE ADVISOR BEST PRACTICES
Advising Business Owners: Do You Know Who You’re Dealing With?
Second generation business owners are often very different from founders. Smart advisors heed the differences.
By Josh Patrick
- There is a major difference between founding business owners and their children as clients.
- Founders will appreciate your being direct and offering simple solutions.
- Founders’ children will require that you be aware of their feelings and have more sophisticated solutions.
- Choosing which group you would rather work with is a key to successful relationships with business owners.
I’ve noticed there are two schools that business owners fall into—first generation or second generation.
When you work with business owners, you always want to keep in mind whether they’re the founder of the business or the children of the founder. If you don’t pay attention to this distinction, you might find that your advice is falling on deaf ears, your ideas aren’t being implemented or, even worse, you get fired.
What it takes to start a business
Starting a business is hard work. Many founders work for years—and against all odds—to create a business that succeeds. Business owners who are still around 20 years after they started their enterprises have experienced lots of ups and downs. Often the downs have put the owners on the brink of losing their business. But they never give up.
To make it through challenging (and this is an understatement) times, entrepreneurs have to be very tough. They will tell you exactly what they think, and although it’s tough to do, you’ll want to return the favor.
First-generation business owners don’t look for fancy frills. If bells and whistles are part of your style as an advisor, then you may have a hard time being successful with this group. If instead you tell it like you see it, you’ll have a much higher rate of success.
You can say almost anything to first-generation business owners
The good part about working with first-generation business owners is that you can say almost anything to them as long as you do it with respect. But you’d better be direct and to the point and avoid using fancy words or terms when speaking with them. If you aren’t and don’t, you’re putting yourself at risk of not being taken seriously.
Advisors often make the mistake of thinking that founders will take their advice and implement it without knowing how the advice fits in with the clients’ long-term or even short-term goals. If you don’t spend time understanding what drives founder clients, there’s a good chance they’ll just ignore whatever it is you say... if you ever get the chance to finish your sentence, that is.
Founders are often gruff. Many people assume you have to walk on eggshells with founder clients. I’ve learned this is actually the wrong way to deal with founders. To gain the trust of founder clients, you must be clear and straightforward and get to the point. If you’re able to do this, it becomes easy to work with founders.
First generation owners aren’t only tough at the workplace
The personality that it takes to start and build a business is one of brutal honesty. If you’re not brutally honest with yourself, it’s too easy to find reasons and excuses if things don’t work out.
In my experience, first-generation business owners aren’t tough only at work; they’re very tough at home. First-generation owners tend to be tough on their children. Tough love rather than unconditional love is more often their style. The children of business founders often feel they are under the thumb of their parents. This is especially true if children of founders decide to join their parents in the family business.
Second-generation owners are a different story
For their first 25 to 30 years of life, children of founders feel they hear nothing but criticism for their mistakes and how they don’t know what they’re doing. Founders’ children typically feel their parents have no patience for mistakes and no patience for excuses.
This often leaves founders’ children feeling inadequate, with a strong need to prove themselves. This means that when you work with second-generation owners, you often have to build up their ego and bite your tongue a great deal.
When founders’ children finally get a chance to run the family business, they often have no patience for advisors telling them where they’re wrong (isn’t that the parents’ job?). Instead, they expect their advisors to tell them how wonderful they are and how brilliant their ideas are.
A successful relationship with second-generation owners often means being a cheerleader more often than being a true thinking partner. Although second-generation owners start their business careers with a huge advantage over where their parents started, they often fail to take the business as far as it could potentially go. Without accepting honest feedback, it’s just too easy for second-generation owners to take the company in directions that hurt more than help.
The conundrum of second-generation owners
On the flip side, working with second-generation owners can be fun if they’re willing to be coached. Working with this group requires that I feed them ideas in the form of questions and let them co-opt my ideas as their own.
You’ll often find that second-generation owners will want to use advisors and consultants who have prestigious academic degrees to “prove” how both they and their advisor know. As a result, they will often put too much complexity in the business, and although they think they know what’s going on—they don’t.
Being blunt with founders’ children is just not going to work. If you’re going to be successful with this group, you must remember where they came from and be the opposite of their parents. If you don’t, you’ll likely lose them as clients.
Know your preference
I find that advisors have a difficult time working with both founders and their children. If you’re like me and openly blunt and honest, founders will be the group you’ll have the most success with. If you’ve been to graduate school and have learned complicated strategies that businesses can implement, you’ll likely have more success with founders’ children. You can be sure that your clients are going to know which group you prefer working with, and you’ll find that one group or the other will gravitate toward working with you.
One final caveat—all generalizations are wrong. I’ve found more than a few (first-generation) founders who behave like second-generation owners, and I’ve found many children of founders who act like first-generation founders. Be aware of generational predispositions, and test to see whether your assumptions are correct. It’ll make your engagement more successful.