What’s family got to do with it?


Does value grow on your family tree?

by Chia-Li Chien | Apr. 22, 2013

Many moons ago, when my husband T.C. and I were dating, we visited Longwood Gardens in Kennett Square, Pennsylvania for the first time. Fast forward several years later, and we decided it would be an excellent educational trip for my daughter, who was taking an advanced horticulture class in high school at the time.

 

On the day of our visit, we arrived at the gardens before noon, coming from DC, and it was already packed with people, even on a Tuesday.

 

Longwood Gardens were created and are mostly supported to this day by founder Pierre du Pont’s family fortune, mainly amassed from the DuPont Company. With the right capital funding through a legacy foundation and the right second-generation team in place, Longwood Gardens continues to thrive horticulturally and as a business. It says on the gardens’ website that “enormous effort and funds have since been expended to convert Longwood into a garden with maximum public appeal while retaining the dramatic charm of Mr. du Pont's creation.” (Find more about Longwood’s family history at
http://www.longwoodgardens.org)

 

But do you, a middle market or even large family business have such capital resources, or just as importantly, the time, to build your good business into one that is valuable? After all, du Pont started his life’s work—and beyond—in 1914. The future can seem to come at us too fast as we strive to grow and build our businesses into something that can be sustained generation to generation.

 

You must start by building the right foundation. I call this foundation the Triple Bottom Line or TBL. You see, when you build your business with the right foundation, you gain the influence you need over the most important aspects of your business. The elements of your Triple Bottom Line represents the elements you may actually not have much control over. Perhaps you have influence, but not control.

Let’s take a look at Longwood Gardens as an example.

Triple Bottom Line Goal #1: Be the customer’s first choice: Longwood Gardens attracted nearly 900,000 visitors during 2009. It ranks among horticulture enthusiasts as a top choice to visit due the to the garden’s ongoing continuing education curriculum.

 

Triple Bottom Line Goal #2: Be the employee’s top choice in job satisfaction in your industry: Not only do their employees love to work at Longwood Gardens, but we found Longwood Gardens commits to their employees to be, according to their website, “an exciting place to work, with a unique and vibrant internal culture based on organization-wide leadership, participation, responsibility, and staff development. Longwood commits resources to support the growth and development of each staff member's skill, talent, and experience in order to promote the highest level of professional ethics and conduct.”

(http://www.longwoodgardens.org/JobsVolunteering_1_2_6.html)

 

There is also an army of volunteers who each gladly agree to contribute at least 30 hours every year simply for the love of what they do there.

 

Triple Bottom Line Goal #3: Be an Investor’s top choice: As a leader in the non-profit sector, private foundations or public grants continue to support the Longwood Gardens organization. As a top destination and a stand out in public gardens, it’s likely the organization also enjoys investments made toward improvements and other plans for the near and not-so-near future.

Even if you’re not in business to build a long-lasting legacy such as Longwood Gardens, how long do you think it would take you to reach all three goals of the Triple Bottom Line?

Mr. Pierre du Pont bought the property in 1914, and in 1946 began officially operating Longwood Gardens as a non-profit organization open to the public. By 1955, the gardens were professionally managed and today demonstrate solid revenue streams including:


• Memberships in the Gardens, which allow patrons to enjoy the gardens and many of the some 800 annual performances, events and horticultural programs.
• The American Horticulture Educational Programs in which as many as 5,000 students a year attend continuing education classes designed for both amateur and professional gardeners and nurserymen.
• Extensive performing arts programs and special events with paid admission for attendees.

In both the for-profit or not-for-profit business worlds, I’ve observed that often it takes at least a good five to ten years to get the business to certain value level. In the case of Longwood Gardens, it was more than forty years from the inception of one simple vision —conservation —to get to that optimum level of value.

 

Many business owners with second-generation family involved understand that not everyone, even if they are family, is an entrepreneur or meant to run a business. Frankly, I’ve seen many businesses overlap into the second generation before the business is valuable. Sometimes, it might take twenty or thirty years to get there if the second generation, meaning either children or children of other relatives, have yet to mature enough to operate the business. (Mature is the operative word here.)

 

Before you get to the Triple Bottom Line goals, you must take a realistic bottom line look at your family business. Is the next generation equipped with the maturity, experience, skills and knowledge needed to continue to grow the business? Have they inherited that special something you probably have that is inexplicably in your family DNA?



Family history is important to the healthy and ability to thrive in your business. Pierre du Pont had the good luck to be backed by his family’s fortune, but it was he who had the wherewithal to not squander it—and to instead create something that has been enjoyed by millions across generations.

 

So take a good, long, honest look at your family history before you assume you will hand off your business to the next generation. Would a better answer be to cash out of the business, someday leaving a capital gift to your loved ones? What about creating a lasting foundation from the value of your business—something precious and sustainable for not only your family, but for others?



The possibilities are endless, but they start with a vision for what you can accomplish with your business and the value it creates, and a good, honest assessment of the next generation in the business is the best place to start.

 

About Chia-Li Chien

Chia-Li Chien

Chia-Li Chien, CFP®, CRPC, PMP; Chia-Li “like JOLLY,” Succession Strategist of Value Growth Institute, dedicated to helping private business owners increase their company equity value. She is the award-winning author of the books Show Me The Money and Work toward Reward and a faculty of the American Management Association. Her blog and newsletter was named a Top Small Business Resource by the New York Times You’re the Boss blog. Contact her at jolly@chialichien.com or (704) 268-9378 .

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