The Harrisons formalized their communication long ago. For them, harmony at the shop and in the family means that ultimately, decisions come down to one man. "It can be sort of hard sometimes to work all day with your family and then come over to the house for Christmas, but basically everyone understands that I run things now," say Rick. "We'll discuss everything, and we try to come to an agreement, but if there's not an agreement, it's going to go my way."
That's a good move because otherwise, Schwerzler says, family members start playing telephone. "Let's say Dad is more concerned with the business side and Mom is the chief emotional officer, so she often is the peacemaker. And when the kids are having a problem with Dad, they go to her, and Dad tells her what to tell them. There's a triangulation of communication that goes on that is very hurtful for family businesses."
Plan for the future
One of the cornerstones of the ongoing drama in Pawn Stars is Corey's, aka Big Hoss's, desire to be made the third partner with his father and grandfather and then eventually succeed them all together. "Me and my dad are partners 50-50 here, and we're going to start slowly giving Corey pieces of it over the next few years," says Rick. "We have trusts set up and paid all the money to the lawyers to make sure everything should be seamless."
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As Schwerzler knows, there are solid strategies for ensuring the transition is seamless. Typically, the Family Business Institute coaches owners between ages 57 and 60 who are looking at passing on their businesses to their children. Developing and implementing the succession plan takes an average of five to seven years depending on the ages of the kids in line to take over. "If the kids are too young or don't have the maturity, you may want to look at getting an interim manager to run the business and train the kids because one trip to the oncologist can accelerate the timetable," he says.
In addition, all succession plans need to focus on the business's operations, not just the finances. "A lot of people say, 'I've done my succession plan: I bought life insurance, so I can pay the estate taxes,' but they haven't done anything for the operational or strategic elements," says Schwerzler. He says you need to draw up shareholder agreements and buy-sell agreements with the kids.
He also recommends implementing an advisory board with its own mission statement, composed of people outside of the family, to help guide the business toward a smooth succession. He cautions that any outstanding family issues need to be repaired before moving forward. "Not dealing with these family issues will stall, even wreck, the succession management process. To be effective, the advisory board needs some infrastructure in place including a formal business plan, a written succession plan and buy-sell agreements."
Last advice
The path of least resistance is to partner with someone, such as an accountant or a lawyer, who knows how to run a business so that you can take care of the talent and they can work on implementing your business and succession plans. If this is your first time starting a business with your family, develop an exit strategy. "Ask yourself how long you plan to stay in business, what do you want from the business, when do you plan to leave it, how can you best apply your expertise to it and how can you start planning it?" says Schwerzler.
For Rick, his family is both the best and worst part of his business and working with them effectively comes down to three things: "Make sure you get along with your family, have ground rules before you start and stick with them."
