When choosing a doctor, an auto mechanic, or a spouse, a business owner would not settle for second best. Yet, when it comes to outside advisors accountants, lawyers, bankers, insurance people owner-managers too often surround themselves with second-raters.
The owner may listen to fawning and useless advice for years, while constantly griping about the cost. Why? Why does a successful businessperson, when seeking advice from professionals, remain in the back of the bus?
Partly out of loyalty no doubt the advisors are often buddies from the old pick-and-shovel days. Or perhaps the owner doesn't think he needs good advice, until all that he has patiently built caves in on him. But many business owners, surprisingly, feel undeserving. "I'm just a little guy," they say. "My problems are too small for the best to handle."
Assuming the business owner decides to move to the front of the bus, how can he judge the quality of advice he is getting? Just check the assessment of the advisor's peers. In any town or city, the best tend to know the best. Nowadays, you don't have to go to New York or Los Angeles to hire top professional talent. If you live in Minneapolis, St. Louis, or Peoria, you'll have no trouble finding first-rate advice in those cities. All you have to do is ask people who advise business owners in your locale who among their peers does good work.
I urge my clients to deal with their advisors as a group, to discuss major issues confronting the business in an Advisors Council. That way, each specialist is forced to look at the work in his or her discipline against the background of the issues facing the company as a whole. Also, it's a good way to keep them honest, to make sure, as my grandmother always urged me to do, that they "keep their hands where the angels can see them."
Now, some advisors will not want to show off their relative incompetence in a group of their peers; they will prefer to work one-on-one with the business owner and, indeed, may attempt to use their influence to undercut the advice of other members of a council. The business owner himself may be afraid of such a council, fearing his advisors may gang up on him.
I maintain that professionals who are confident of their own value are not afraid to discuss their views before other professionals. This review by peers is one of the business owner's best assurances that he is getting good advice from any individual. When he isn't, the others in the group will know it the best invariably spot one who is not in their league, even one in a different specialty--and that person should be weeded out.
Raising the quality of advisors is part of what I do as a consultant to family businesses. When I go into a company, I explain my mission and values to the advisors and ask their help. Unfortunately, I am often forced to recommend that the owner get rid of some second-raters.
My aim as a consultant is not to help solve just an immediate problem by making up for some one else's inadequacies, but to leave behind a group of committed advisors who are both tough-minded and tender, and who can supply technical competence but also share the vision and values of the family.
Collaboration between advisors is particularly critical for succession planning. In estate planning, they provide essential advice on wills, taxes, trusts, insurance, and other technical issues. In too many families these issues are shrouded in secrecy. An Advisors Council is one forum though by no means the only forum where these issues should be openly discussed so that the work that has to be done can take place in a coordinated fashion.
Outside advisors to family companies should also have an opinion on the larger and more delicate questions of management development and ownership succession. For that, they have to get to know the family; they must be taken into the family circle.
Experienced advisors who have counseled many family companies can usually size up the competencies of potential successors fairly objectively and provide the owner with valuable perspective. Surprisingly, a consensus usually emerges quite easily among advisors and board members on the best leaders for the future.
Advisors provide important continuity in succession. They may become mentors to sons and daughters who are candidates to take over the company. Upon the owner's death, they can continue to be called upon to counsel the widow as well as the successors on a wide range of business needs.
Of course, the sons or daughters may want to choose their own people. The 35-year-old may feel he has always been patronized by his father's advisors and might not want advice from professionals twice his age who say, "Sonny, we did it differently with your father."
The parent who really wants to turn the show over to the next generation should strive to pick advisors that the heirs feel comfortable with, can respect and work with--especially in the aftermath of the owner's death. Advisors must work hard to continue to deserve the trust of the whole family.
Advisors should thus not be viewed as simple purveyors of special skills, of accounting, legal, and banking advice. They should give their advice in a larger context, in a perspective that addresses the business owner's overall needs, in a way that makes him say, "You understand."
Léon Danco is the founder of The Center for Family Business in Cleveland and the author of four books on family business.
How to travel first class when seeking advice
Besides the requisite technical skills, advisors should display the following qualities: