Two couples were sitting next to us, and they were just about the saddest looking folks I’d ever seen. They were all decked out in blue and white, obviously University of Kentucky fans, and their team had just been trounced.

We overheard, and eventually joined in, their animated conversation, which at that moment focused on whether or not they should all just get back in their blue and white van and head on home. After a while, the group seemed to be regaining its spirits, and we continued to talk. Eventually, this led to that inevitable question:

“So, what do you do?”

When I told them that I worked with family businesses, everyone looked at everyone else. One of the couples asked for my card, and a few weeks later, we spoke on the phone.

There had been a few reasons why this couple, Steve and Ellen, had gone to New Orleans with their friends to watch the basketball game. First, they were University of Kentucky alumni, but also because their daughter and son-in-law lived there.

Steve and Ellen had three children: the daughter in New Orleans, another daughter in California, and a son who had stayed around to work in the family company.

The couple ran a manufacturing company started by the husband’s grandfather. Although he was in his nineties, the grandfather still came to the office every day (during the parts of the year when he wasn’t in Florida).

Like so many family businesses, there were three generations involved simultaneously.

The problem? The successor: Steve and Ellen’s son. He had taken the attitude that since his sisters had moved away, and since he had stayed in their home town and worked for the company, it was natural that he take over the business, and it didn’t matter to him if he worked hard or not, because someday, it was all going to be his, anyhow. It was his birthright.

This profile allows me to comment on a couple of irksome family business issues that generate more than their share of lost profits as well as heartaches.

The first issue arising in this profile is the obvious lack of a shared understanding about the fundamental “purpose” of the business across the generations. While this is a very natural, common occurrence, it is also one that could be much better managed.

1. First, has grandfather talked to or with Steve and Ellen specifically about the purpose of the business (a family/business statement)? What is (are) the goal(s) that the owners are pursuing through the business?

   Retirement funding for grandfather – or grandfather, Steve and Ellen? Is the business designed for generating wealth for family members?

   Is the founder (or the owners) committed to sustaining a business that primarily serves its business purposes and then generates profits for the family as a by-product of doing that well?

   Of course, the family may want it to do all of those things, but in what order? The order of those priorities presages everything else.

2. Once a clear family/business statement is articulated it serves as a benchmark against which priorities can be referenced, options can be considered, and decisions can be made.

   Having a family/business statement puts some starch into the business idea; it allows such issues to be addressed in a professional manner rather than an emotional one.

   Without such a clear statement of purpose every family need has to be handled in a very personal way, which creates unnecessary strain on both the business and the family, no matter how the owner(s) decide the issue.

3. Once a family/business statement is specified the owners can and should develop a marketing plan to communicate it, explain it, and to demonstrate the value that ensues from the position. This marketing campaign can then be used to help to shape the expectations (and values) of family members, stakeholders and advisors over time.

As you’ll see, however, the people involved in this profile seem to believe that the purpose is patently obvious, and doesn’t need to be discussed.

As a result, members of three generations of the family have quite individual interpretations of what is obvious about the purpose.

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