Turning Your Business Into A Family Business

#79. Starting with the story of today's spotlight entrepreneur Franklin Clarence Mars, founder of the chocolate candy company Mars Incorporated, Sevana and Tiffany talk about the complicated dynamics of doing business with family.

Topics in today's episode includes:

- How to get your kids involved in the business and when

- How to pay our kids through your business

- What are proven ways to work with family, especially if you plan to have your kids inherit your business

CORRECTION NOTICE:

In this episode, we mistakenly believed that "smarties" are the chalky tablet-like candy in the those tubular clear wrapping that we grew up eating in the US. Well, on the other side of the river, in the UK, "smarties" are a type of candy that closely resembles M&Ms, which is what Franklin Mars saw in our story and was inspired by to create M&Ms in the US.

Same name, different candy. Our bad.

References:

Gary Vee: Should you go into your family business?

https://www.youtube.com/watch?v=QkHKxyvVqsg

BuildWitt/Jocko Willink:  How to take over the family business - https://youtu.be/PysHDg935zM?si=5dMP00Ka1E3UUxqq

For more on the Mars' family business:

https://www.madeinchicagomuseum.com/single-post/mars-inc/

https://www.mars.com/about/history

https://en.wikipedia.org/wiki/Franklin_Clarence_Mars

"Keeping the Family Business Healthy: How to Plan for Continuing Growth, Profitability, and Family Leadership" by John L. Ward:

• This book offers strategies for ensuring the long-term success and continuity of family businesses.

"Family Business Succession: The Final Test of Greatness" by Craig E. Aronoff, Stephen L. McClure, and John L. Ward:

• Focuses on the challenges and best practices in family business succession planning.

"Succession: Are You Ready?" by Marshall Goldsmith:

• Provides practical advice on preparing for and managing the succession process.
  

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Got questions or have a topic you want Sevana and Tiffany to cover? Email us at thebusinessbehindsmallbusiness@gmail.com and see your question answers or topic of interest discussed on a future episode!

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Disclaimer - Details of today’s story was inspired by true events but are not based on proven facts. Also, we are NOT licensed financial experts, nor do we give financial advice. Anything we share with you here on our podcast, whether it be a personal experience or submission, or advice/tips that have worked for us, or that we believe would work for you should not be viewed as either financial, business, or tax advice. We ask for you to do your research, have open and honest conversations with your company’s own support providers and make decisions based upon that. Throughout this broadcast we will share our knowledge and give suggestions and hope you will receive them as part of your overall research to better your own company.

#smallbusinessadvice #entrepreneurship #familybusiness #businesspodcast

Alternative Titles:

How to run a business with family

Do's and Don'ts of a family business

Keeping the peace in a family business

Transcript

SPEAKER_01 0:00

When you work in a business as sweet as today's guest of honor, it's hard to believe anything could ever go sour, but sour it did. This successful father showed his even more entrepreneurial son some tough love. And when his son came back from having learned his lesson, the message was clear. Things were not fair in love nor in war, especially when what's at stake melts in the mouth and not in the hand. Dun dun dun Welcome you welcome to our show, The Business Behind Small Business. Whether you're selling or staying, we're here to remind you that just because you own a business does not mean you are a business owner. We are your hosts, Savannah Stone, and Nikao, sharing the more finite details of entrepreneurship, revealing the dots between startup and success. No one gets to a million without getting a little dirty. There's a lot of business behind small business, so let's get to it. Before we begin, please note our disclaimer. This is available in both our show notes and on our website and should be referred to before and or after this podcast. All right, Franklin Clarence Mars was born on September 24, 1883, in a small Minnesota town called Glenwood. He was the son of a gristmill worker, Luther Mars, and homemaker Elva. As a small child, he contracted a mild case of polio and he was unable to walk to school for a while. His mother, looking for ways to keep her son busy, began to teach him the ways of the kitchen. One of those lessons was in how to make hand dipped chocolate. Franklin marveled at the malleability of chocolate, and of course of how delicious it was. After recovering from polio, Frank returned to school, eventually attending high school at the Breck School, a boarding school then located in Wilder, Minnesota. After graduation, at the age of 19, his candy passion extended to molasses and he sold molasses chips. He knew that there was a great success to be had in candy, but at this point he wasn't completely sure as to what his vision would be. By the age of twenty two, Franklin met Ethel Kisak, a school teacher. Very little is known of their relationship, however, we do know that they were married in 1902. Franklin struggled as a chip salesman and looked for bigger money-making opportunities. By now, Frank and Ethel had welcomed a baby boy and looked for it looked forward to success in Tacoma, Washington. Frank started the Mars Candy Factory and he hoped to hit it big. What happened instead was a lot of struggle and hardship. Ethel had enough of Frank's pie in the sky dreams eventually, and she got a divorce based on his inability to provide for his family. After leaving him, her life only got harder, and so when little Forrest was six years old, Ethel sent him to her very strict Episcopalian parents in Saskett, Saskatchewan, Canada. Frank was never meant to be a parent, and it showed in his cold and isolated relationship in both care and lack of child support with his son. Although Forrest was quite close to his mother, Frank's clear disdain for his son made Forrest's heart turn black towards his father. Frank was so laser focused on becoming a success, he didn't realize what he was doing to his son's opinion of him. Frank continued on, completely unaware, knowing something was going to be the spark that he needed. In 1911, he invested all he had left into a DIY candy business. By now he'd remarried to another Ethel, Ethel Jr., Ethel No. 2, Ethel 2.0. That must have been very popular. Very popular name at that time. She stood by him even after failure after failure ruined them. Together they developed an original line of buttercream candies that gained a small following. After World War I, Ethel agreed to move to Minnesota with Frank. They had a baby girl, and Ethel thought it would be good for them to share their small success closer to where Frank called home. After a few successes, Frank felt he had a firm enough footing in the industry to launch the Marlow Bar Company. The spark he was looking for was lit. Wait, did you say Mar Mar O Bar? Mar O Bar.

SPEAKER_00 4:35

That's what it used to be called? Wow.

SPEAKER_01 4:37

Okay. That's what it used to be called. And I'm pretty certain there used to be Marlbars.

SPEAKER_00 4:41

Really? Okay. I doesn't sound like a very catchy name, but it's obviously this is the this is what lit the whole success path for him.

SPEAKER_01 4:49

Sure did. It lit the it forged the way. The Milky Way. Anyway, um by 1922, Frank had had a lot of success and invited his 18-year-old son, who was now at university, to learn more about the family business and consider being a part of it. After Farr Forrest graduated from Yale, he did join his father, but it was not a warm and cozy relationship. It soon became clear that Frank and Forrest Mars wouldn't be able to peacefully coexist, and that the heir to the Mars throne might not be destined for the role. After challenging his father relentlessly about the best way to run the business and demanding ownership of one-third of Mars Inc. for himself, Forrest finally pushed one button too many in 1932. Frank supposedly had had enough of his son and said, This company isn't big enough for the both of us. Go to some other country and start your own business. It's very dramatic. Quite. Thank you. Joan Collins in I can't remember her character's name and Crystal together fighting each other and then falling into the pool during Dynasty. It just it looks like that in my head. Who was curmudgeonly on his best day? And I say that um from I guess curmudgeonly. This is this is a a quote from someone who worked with him. Who was curmudgingly? Yes. He agreed and he shipped off to England with one plan in mind to bury his father with his own even more successful business. Frank wasn't completely heartless, though. He did give Forrest fifty thousand dollars in cash and the patent rights to sell the Milky Way bar formula in Great Britain.

SPEAKER_00 6:50

It's a lot of money back then.

SPEAKER_01 6:52

It it was. Frank Mars might not have seen eye to eye with his kid, but he clearly respected Forrest's skills and potential as a businessman. Perhaps this was less of a banishment and more of a kick in the pants, if you will. Um, I will say that before Forrest, well, he did go to England, but he also traveled to Germany and to Belgium to study the way uh the true chocolatiers were making chocolate, what they were doing to their chocolate to make their chocolate taste so much different than in the US. Funny enough, uh the people in in the Europe and in England specifically, they think our chocolate is disgusting.

SPEAKER_00 7:34

Do they?

SPEAKER_01 7:35

Yeah, they think our chocolate tastes uh a lot like um an unmentionable thing that oh wow. Yeah, not American candy. Um, but if you've had if you've had like Belgian chocolate or if you've had French chocolate, it does taste richer and it does have like a kind of a milkier taste to it. So um, so anyways, Forrest became aware of this, and so he wanted to figure out how to make it palpable to the Brits because the Brits did have a different taste and he wanted to capitalize on it. So he tweaked the original Milky Way formula, he added a little extra sweetness to it, and he called it the Mars Bar. When the Mars Bar provide uh proved every bit as popular with the Brits as the Milky Way was with the Yanks, Forrest knew he could very well achieve his goal of success, even during the worst of the Great Depression. Like that to me, that that right there I want to pause on, because this is during the time, this is literally during the decade of the Great Depression that these two men are building candy empires. So he was in England for two years, and during that time, Forrest got word from back home. Frank Mars had died at the age of 52.

SPEAKER_00 8:58

That's young.

SPEAKER_01 8:59

Yes. Uh however, Forrest chose not to attend his father's funeral. He also learned that his father had left the company to his wife and daughter Patricia. Oh yeah. The father-son war, it turned out, wouldn't couldn't even end in death. Yeah. And and I will say there was no love lost between Ethel and Patricia as well, because both Ethel and Patricia did their best to keep Forrest from taking over their company. However, eventually Patricia could not hold the reins anymore. It took three decades for Forrest to reclaim what he believed was his birthright. So the man chipped away for 30 years. And although although he had managed to build a global empire that outclassed the American Mars Company in nearly every area, Forrest was at this point 60 years old by the time he reached the ultimate goal. 60? He was 60 by the time he finally got to take over.

SPEAKER_03 10:09

Oh, okay.

SPEAKER_00 10:10

The man is definitely persistent, but my gosh, that seems like such bad blood between the family members. You wouldn't even you wouldn't believe it.

SPEAKER_01 10:17

So I will say that I'll say it here, but I'm gonna say it later too. That um I do have links that go a little bit further detail about the the story, but it is it is captivating. It is absolutely captivating. And there's more. Oh my gosh, it's insane. Between Patricia and Forrest, it was like War of the Roses or whatever you want to call it. I mean, it was no love lost between them. Anyway, so uh during the time that, during these 30 years that he was Patricia in order to take over the American Mars Company, he built an impressive portfolio. This included Uncle Ben's rice. And he went into business with the son of the Hershey Company president, Bruce Murray, to create a convenient snack for American soldiers to enjoy during World War II. And this was because he had noted that the British troops were enjoying Smarties. Now we have Smarties too, right? Like they're that they don't they don't melt. But they're a nice candy, they're a nice little sugar rush. And so he knew chocolate. How can you make chocolate into a candy that doesn't melt? So the two of them came up with the idea of shell of a shell coating so that um it wouldn't melt. And that that from that point on, it became the slogan melt in your mouth, not in your hand. And uh they named it an MM for Mars and Murray.

SPEAKER_00 11:43

Uh okay, I had no idea what MM stood for until now.

SPEAKER_01 11:46

Yeah, isn't that cool? So, anyway, I wish this were the end of the story, but sadly, the lack of love and attention Forrest got from his father, uh, he did not break the cycle. He continued this with his own sons. And when they took over, their affection or lack thereof rivaled that of Forrest and Frank. And it wasn't until the fourth generation of family that took over when warmth started to glow within the walls of that company. Oh my gosh. Four generations in. Yeah, I mean, there are years, right? Like that's insane. So there are stories um that are in these links, and there's a couple of books that I'm going to mention as well about um how Forrest would like um just go to the go to the ascent go to the plants, and he would like yell at people and he would throw things. I mean, they were so stunted in in their in their emotional maturity. Yeah. And they all and they all were like this. It wasn't literally until the fourth generation where there started to be a better, a less toxic culture within the company. So getting your children involved in business has more to do with your relationship with them than a paycheck. And after our commercial break, Tiffany is going to go into more detail on how to appropriately get them involved, how to pay them, and ensure your relationship or your business doesn't suffer because of it. Wouldn't it be great to hear the sound of us promoting your business for you right here on our show? Of course it would. You can have that and more by producing a show or multiple shows. All you have to do is email us at the businessbehindsmallbusiness at gmail.com to express your interest and we will share with you what you will receive with your investment. You'll have the opportunity to have your name and the name of your business mentioned multiple times on our show, having your company logo on our social media along with details on how to get in touch with you and other marketing opportunities as well. Please support us so that we can continue supporting you.

SPEAKER_00 14:00

Well, that's a fascinating story. Like, I mean, we do hear a lot about you know families, like yeah, keeping the business in the family and everything, but I had no idea like something as big as Mars and as long as lasting has such a like tumultuous like family history. Like, I mean, the father and son did not like each other, neither did the brother and sister, it sounds like.

SPEAKER_01 14:58

She was suffering from some form of complication, she just didn't have it in her, she didn't have the strength in her anymore. But holy moly, like, what are you doing this for? Why didn't you just say to your brother, hey, let's let bygones be bygones? You're my brother, let's do this together.

SPEAKER_00 15:11

Well, I mean, this just goes to speak that, like, in business, at least, even if you just sell a business. I mean, in a in a way, if you're moving a business to the next generation or to a sibling or something, like you're kind of selling the business in a sense to them, right? You're kind of passing it on to them. And that itself is already complicated enough. Like, not just talk about legal, but it's definitely like an emotional transaction. But add another layer of that where you have all this family history with the person that is like at the helm. I just can't, I can, I mean, I can imagine how complicated and hard that was for them. And I'm sure there was a lot of egos involved and a lot of her feelings and childhood traumas and all these things that kind of played itself out on the business table, so to speak.

SPEAKER_01 15:56

Yeah. So much of it had to do with the way they were parented. Uh, so much of it had to do with um how they were taught to have a relationship with each other. Yeah. You know, so like I can say, I can speak, I can only speak for um my family because we've had generational turnover, like businesses have been taken over. Uh like one of my one of my cousins, he was the he he took over the business from his dad, and now his sons are taking over the business from him. And we have this like unspoken, I don't know what it's called, but we have this unspokenness in our family where you leave business at business and you leave home at home. Like when we were within the walls of our business, you are my business partner. But when we are in within the walls of our home, you are my brother, you know. Okay.

SPEAKER_00 16:49

So that's really smart. I think that's like it's like almost like friends coming together and becoming business partners. I think one of the biggest uh issues that always come up is a lot of times the inability to live leave, you know, work at work and you know, home at home, you know, because you're friends as well as business partners. And I imagine as family, even more so, because I mean, imagine getting in a fight over business, but then you still have to go home at night or go to the Christmas dinner or go to some family dinner where you have to sit across from the same person you're just having a heat of match with.

SPEAKER_01 17:19

Yeah.

SPEAKER_00 17:19

Yeah, that's complicated.

SPEAKER_01 17:21

Yeah, or even working with family. Like if like I've had I've had a couple of cousins who uh we've done uh work for, and during it within that capacity, I am the service provider, you are the client. I treat you as such. But outside of that, you are my you're my cousin. We're not gonna talk business unless I've got something that I forgot to tell you. Oh, by the way, I forgot to tell you this. And then that'll be the end of it. Um but that's what that to me is part of the success and also part of the failure if you don't make it clear, if you don't have clear parameters.

SPEAKER_00 17:55

Yeah. Well, I think a lot of people go into it and just think that, you know, usually it's the parents handing it down to the kids. And I think um it's not usually like a sibling-to-sibling thing so much, but it's definitely like an older generation handing it out to a younger generation. And I think there's two types of parents that I've seen in the past. Now, I'm not a parent, so I can't speak to it like personally, but I've had a lot of client companies who you can see that they're getting their kids involved in the business. And there's two types there's the parents who have this idealistic version of how their kids are just gonna take over the business and make it even you know last outlast them. And then there are parents who are far more sensitive to what their kids really want to do. And oftentimes the kid doesn't want to do what mom and dad is doing, um, assuming they even know what mom and dad does. Like, how many kids actually know what their parents do in life? And so, you know, we'll try to take like lessons from the the side where the parents are much more in tune with what their kids are set up for and would enjoy. And let's say there's like two types too. There's like kids who would grow up with a business, and then there are kids who basically follow a whole career path, like their parents let them do whatever they want growing up and eventually come back as like a grown person getting into the business. Well, I think if we start with the kids who are kind of growing up with the business, I think the best thing, like, and you can probably speak more to this, Savannah, because you're more building a business for the future generation, is it it's it helps to know as early on as possible which path you want to take, whether you want to sell the business or you want to pass it on to the next generation because then you can start preparing.

SPEAKER_03 19:35

Yep.

SPEAKER_00 19:36

Right. Um, and then you can um try to try to get your kids involved in the business as early as is practical. Right. Now, I know we hear from all of the influencers and the TikTokers out there, all these like shorts and reels about how you can pay your kid a salary and it's tax free.

SPEAKER_01 19:55

Right.

SPEAKER_00 19:56

Okay, not untrue, right? So I think in 2024 you can pay them up to almost like a little bit over $14,000 and it'll be tax free. Right. Now, the the um implied part to that that never fits in a one-minute video is they actually need to be doing something for the business. This is not just like it's not uh free money that you give them and you can write off as expenses on your taxes and they don't have to pay taxes, but they they technically should have been documented as actually working in your business doing something useful. Um, and let's say that instead of just paying them for no reason at all, let's say you do actually, you know, pay them to do something useful. It's a great way to kind of get them involved in your business, you know, go to work with mom and dad and see what their company is all about. Because I don't know, it's hard sometimes, I think, to explain to a kid what a business is, but to show them um and immerse them in it is probably much better. But then if that is the case and you, you know, you want to be able to pay your child, um, the best way to pay them is actually to give them a job. Um, I think the worst thing you can do for your child is getting them involved in a business. And you want to pay them, you want to put them on payroll. So you give them some role or title that they didn't earn or doesn't have the experience to fulfill, which, you know, worse off, has some kind of downstream effect on what all your other employees are doing. That's literally setting them up for failure and also creating a really good reason for your employees to basically resent you for nemotism. Absolutely. Um, the better way is to find a role in a position that really does fit them and put them on payroll. And if they have no experience, then they start at zero. So data entry, assistant job, note taker, glorified note taker, glorified coffee fetcher, whatever the case may be. But if they have no experience, then they start in a position that has no experience and allow them to work their way up from there. And then in the day to day transactions, like interactions, rather, like treat them like any other employee. Employees, give them the onboarding experience, give them the handbook, give them the hours in which they need to show up. Tell them what the culture is, tell them what the expectations and the value of the business is, give them clear responsibility and have them report to you at work just like everybody else, and to also respect you at work just like everybody else.

SPEAKER_03 22:19

Right.

SPEAKER_00 22:20

Uh, I've seen businesses where it is a family business, and the kids who are at work call their parents, who are the owners of the business, by their first names, or Mr. and Mrs. So-and-so, just because that's what everybody else calls them. And they should certainly follow the same line of respect.

SPEAKER_01 22:37

Yep. I agree. Wait, I have a question. So what about what about parents who are, because I come across this often, people who are paying their children who are too young to be working in the in the business, or perhaps they want to pay their children, or they have this preconceived notion that they can pay their children a salary without their child working there. Do you have a suggestion for an alternative as opposed to paying them to do nothing?

SPEAKER_00 23:11

Don't pay them.

SPEAKER_01 23:14

Of course.

SPEAKER_00 23:16

Yeah, I know. Is there any legal alternative? Is that what you're asking? Yeah. Do it instead. Well, we know for sure that you know they and that's the thing is you don't have to pay them $14,000 a year. You can pay something a little bit less and work their way up. And sometimes kids are a part of marketing and things like that. So they're not technically doing anything, but maybe they're face of some kind of marketing campaign. So that way that works too. I mean, other than that, I mean, I don't know about directly paying the child, but there's certainly like legal and tax alternatives to how you want to set up to your company to be able to pass it off to your kids so that they're not, in effect, having to pay a large tax bill or have any kind of legal implications. Um, like for example, and this is very high level, is like putting your business in a trust and then having that trust help you transfer ownership to your your child when they are old enough to take over or have them be a uh part owner in the business to be able to be able to be paid out dividends and things like that. So they that might be an alternative. Have you heard of anything else?

SPEAKER_01 24:20

Yeah, maybe uh setting up an IRA for them.

SPEAKER_00 24:23

Well, you mean to pay directly into the IRA from their their their salary per se, right?

SPEAKER_03 24:29

Yeah.

SPEAKER_00 24:29

So yeah, I mean, I think wherever the money ends up so that it doesn't end up directly in their pockets is fine, but there is still the act of having to have a qualified reason to pay them.

SPEAKER_01 24:40

Right.

SPEAKER_00 24:40

Uh, which is, you know, is just kind of the fine line and gray area most people are in now.

SPEAKER_01 24:45

Yeah, I think sometimes parents are looking for uh sometimes parents are looking for a way to evade taxes so they'll pay their children, right? But it's like maybe don't do that. But maybe would you say or would you agree, instead take a certain distribution and put that towards either a SEPIRA or a 529, uh something like that, until your child is old enough to physically work for your company. And that physical work could be anything, right? Like you said, it could be data entry, it could be, I don't know, cleaning up your emails or or sweeping the floors or whatever. Um but you don't want to pay them for something that they're not actually doing. But if you you could instead take a distribution and then put that into uh a 529 or something like that instead.

SPEAKER_00 25:43

Well, yeah, but it again, like it goes back to the fact you still need a reason to be able to pay them out money from the company. Right. Of course. So they're not doing anything. It's just really hard to get to that reason, regardless where the money ends up, right? Whether it's in their hands and the kids' hands, it's or they're too young and it's in the IRA or it's in a 529 plan, however, you want to invest that money post the payout. But to take money out of the company to pay your child, there's only like a limited amount of ways you can do it. One of the most popular is they have to be doing some kind of function for your business. So too young to actually do any physical work. I mean, we've seen a lot of people put their kids in their marketing campaigns and things like that. You know, that's one way to do it. Yeah.

SPEAKER_01 26:25

One way would be to like for your kid to be the face of your marketing campaign.

SPEAKER_00 26:29

Like to Yeah, so that makes sense because if you were to hire any other model, you would have to pay them money to be able to be the face of your campaign. So it's it's as long as there's a qualified business reason, you can pay your child out. But then uh where that money ends up, then I think that's you know, depending on what goals you want for the business, um, or for your kid, actually. Um and it's interesting because this is part of a lot of conversations. I feel like um my my friends who are my age who have families are saying just talking about generational wealth and trying to build generational wealth for their kids. And you know, one way to do that is you know, pay them early, it's tax-free, put in an IRA, put in some kind of investment fund so that it grows over time so that when they are of age in their 20s or 30s, they kind of have this growing compounding fund that's ready for them at a certain age. And that's one way to actually create generational wealth. I know that some people have put it, you know, sometimes put it toward um, you know, help help their child accumulate the salary and put it toward um a house, um, a house that they can then rent out that is actually, you know, managed by their parents, right? And that way, you know, that mortgage is getting paid off. And by the time the the kid's 30, they you know have pretty much a house because the 30-year mortgage is pretty much paid down. So that's another alternative of how you can use your money. Yeah. Never thought someone is like light bulbs.

SPEAKER_01 27:49

My kids are too old for that at this point.

SPEAKER_00 27:53

They can go get their own house. Yeah, but like the the the real factor of it is you know, having a family business is a big decision. Um it impacts the kids, it impacts the parents, it impacts even the like I feel like the families within like one degree of separation, even the immediate more immediate families too, because it changes the relationship. One of the people I looked into when I was doing research for this topic was Gary V, because I've heard him talk about multiple times working in his family's wine business and how he kind of grew up in that. And he had to work with his dad, who is the head of the business, and he talks about a lot just the struggles and the challenges, especially since if you're working in the family business, there's also a generational gap. There's always a generational gap. So how business was done 20 years ago is not how business is done today, and now you have the old school fighting with the new school or the old guard fighting with the new guard, and that inevitably is going to cause friction, right? And then on top of that, just being father-son or mother-daughter, like that's just you know, that just exacerbates any kind of argument, I'm sure. And so you bring that in the business world. And I think Gary Vee says the best because you know, he's he doesn't he doesn't BS a lot. And he uh says it in one of his uh videos um that you know, he's like your relationship with your family will never be the same once you go into a family business. He's like, There's no pros or cons about the statement. He's like, it's just facts, it's just never gonna be the same again. And so I think that for people who decide they want to build a family business, they just have to be really aware of the fact that that relationship is going to change. And clearly, as we've seen in the Mars family, uh also has never repaired itself even toward the end because it just sounds like there was just a lot of bad blood there that's gonna go away even after his dad died.

SPEAKER_01 29:43

Mm-hmm. It took close to a hundred years when you think about it. Like that's insane to me.

SPEAKER_00 29:47

Yeah. And here's the thing though, it's not like it, I'm I'm sure it did impact the the growth and progress of the company, but I mean, it's still a wildly successful company, right? Oh, yeah. On paper, it probably checks all the boxes. I mean, today it's probably one of the fortune, you know, like fast that they were around today. Like um started today, they would probably be the you know, one of the fortune 1000 or 500 companies, right? Like on paper, it probably sounds amazing, but I mean, listen to all this internal turmoil behind the scenes, and you know, that's that's tough um to grow up in that. Yeah, absolutely. So I I would say too, is I feel like everything you need in business to have a successful business uh just becomes 10 times more important when you have a family business. So one thing we always talk about is inner communication. Yeah, one of my favorite things to talk about. And how imagine how important that is in a family business. And be able to see beyond your history and to be able to talk it out and not take anything personally in a family business and talk about business challenges and problems. Like your inner communication has to be so on point, and you have to practice that all the time. Um, because otherwise you're gonna be at an impasse and you're not making the business decisions that you need to make in order to keep the company going. And first of all, employees are smart, everybody knows what's going on. So the last thing you want is like what you were saying, like somebody coming on a you know, factory floor, yelling at people and kind of bringing in their family laundry in front of everybody. Like that's so unprofessional, but that's and that's not the business most people go in building. But oftentimes family businesses can quickly turn into that because there's just so much emotions. Yep. And then the other thing is um being able to again like uh grow and innovate. Like this a lot of this is new garden, old garden. And this really kind of hits it off when um Gary Vee was talking about it and some other videos I was watching about questions that people had. And a lot of times the questions that people had about how to make things work in a family business has to do with I have all these new ideas, I want to do all these changes. Yeah. Business has been around for 20 years, but my dad or my mom, you know, don't like things as a fad, it's a trend, it's not gonna work, and they don't they don't want to do it, right? Like, how do you resolve that kind of conflict? And you know, going back to Gary Vee as an example, he said that he ran into the same thing because he was the one who brought in a lot of digital marketing into this business, this this wine business that his dad has been running for years now. And his dad was skeptical, right? Um I'm sure a lot of people were skeptical of the internet back then.

SPEAKER_01 32:30

Well yeah, well, yeah, but I mean this goes this goes to this goes to the the uh fight that uh Forrest had with his dad, where he was like wanting to innovate, and his dad was like, No, we're gonna do it this way. I mean, also he wanted a third of the company, or rather, he wanted the recognition for of for all that he was putting into the company, but his dad was like, absolutely not, and there's a whole other section of of nonsense that I didn't even talk about um with his chocolatier that was going on. But yeah, but yeah, like his dad things like came to a head because the old guard and the new guard could not seem to coexist.

SPEAKER_00 33:08

Yeah, yeah, it's a fine balance between innovation and intuition because if you think about it, his dad's probably thinking, I've been around for a long time, I know what I'm doing, I've obviously had success. You know, how what you know I have um credibility in what I'm saying, and somebody new comes along, like Forrest, who is you know younger and maybe does have less experience, but they're probably a little bit more in tune with what's new and what's what's going to be in the future. And so it's unavoidable that you're gonna have that. And it's so interesting that you brought up the word credit, because um, part of my recommendations and what's gonna be in a show notes is actually like a seven-minute video where Gary Vee actually answers this question about should you go into the family business? And he has such an interesting way of talking about he asked the person asking the question, he was kind of like, give me a ratio. What's out of a hundred percent, what's more important to you? Credit or money, right? Or credit and money, like which percentage is most important to you? And the guy came back, and long story short, he basically said that both him and his father, who currently owns the business, credit seems to be the largest piece of that pie that's important to them. And Gary Vee just flat out and said, Well, your relationship is incredibly vulnerable then. Because just imagine, like every time you guys get in an argument, you're fighting over who's gonna get that credit. How is that how's anybody ever going to win?

SPEAKER_01 34:28

Yep.

SPEAKER_00 34:29

Yeah. And he said for himself, he was saying the exact same with his dad, they both value credit more. So they were always constantly butting heads and arguing over things in a business. Whereas him and his, I think, current business partner, the the ratios were switched. So, like if Gary V was like 95% credit, 5% money, his business partner was 95% money, 5% credit. And they worked well beautifully because everybody is gonna get fed no matter what situation they have. I think he calls it they had their, you know, they they got their scrap, like they get to, you know, scratch their itch, basically.

SPEAKER_01 35:03

Right, right.

SPEAKER_00 35:03

Everyone gets a piece of it. So it is a really interesting dynamic. So you're right, even in in the Mars story, that's exactly what happened, right? Like there's that infighting, you know, the new versus the old. Like it's a it's an age-old tell. It seems to happen over and over again. Uh luckily, I I think I've only I haven't well, maybe I'm just not privy to the arguments behind the scene, but with my clients, you know, who have family businesses and their kids come up, I've seen them done it. Like it's gone pretty well, like surprisingly well. Um, I think the times where I think the one time I can think of where it didn't go well is how would you say the kid just didn't have what it takes to lead a business. You know, it just wasn't innate in them and a lot of the intuition that's needed, it just wasn't something that that they were just good at, naturally good at.

SPEAKER_01 35:56

Well, and you can't force it, right? Like no, if you assume, like I mean, I've I've I've got three different children could that could potentially take over the business. But if all three children don't seem like they could take it to a level that I couldn't take it to, then why would I why would I give it to them?

SPEAKER_00 36:12

Yeah. And they they're miserable too, right? Because like then you have this, you know, if if you're like it, let's say you do have a great relationship with your child, sometimes that also creates unbearable pressure on them because they want to do well for you, they want to succeed for you, and maybe that's not the right reason, maybe it should be more of an internalized reason to succeed. Yeah, but you know, that's natural that your kid wants to make you proud, but that's pressure, that's a lot of pressure.

SPEAKER_01 36:37

It is, but in the end, it it's it's to be their business, not my business. I had of of my clients as well who have I I've only ever had one guy who it was not going well, um, where he had his son had taken over the business, but he just would not leave.

SPEAKER_00 36:57

He doesn't feel comfortable enough to let go of the rings. Do you think that was more of a was that a more of like an internal ego kind of feel? Or was it he saw his son and he was kind of like, dude, you're not gonna make it?

SPEAKER_01 37:09

No, I think his son was uh entirely capable. His son was who we dealt with.

SPEAKER_00 37:14

Oh, see, that's tough. Yeah, his son. What are the messages he's sending to his child? Like totally.

SPEAKER_01 37:19

I don't trust you. Basically, basically, this is not the direction that this company is supposed to go in. This is not my vision, this is not my blah blah blah. I mean, they would fight all the time. And it got to a point where we could no longer provide our services to them because I just infighting. Well, so much infighting, and plus, like we would be given by the kid, we would be, and I keep calling him a kid, but he wasn't a kid. He was probably a grown man, probably a man, but just for argument's sake, like the kid would tell us to do something one way, and we would do it that way, and then immediately the dad would get mad at us. Why did you guys do it that way? This is how it's supposed to be done. Like, we kept getting diff like mixed messages between the two of them. And I'm like, I'm not getting myself in trouble. Yeah, if the kid is doing this and the dad doesn't like it, and and then it was later I found out, later, like nearing the end of our relationship, I found out that the dad had given the company over to the son two years ago. Two years. Oh wow. And I was like, so for two years this has been going on? Yeah, no, we're not. We're I can't help you guys. Yeah, yeah. And um it rubbed up kind of it kind of felt like the kid the dad was upset that the kid had opened a second location, was doing really well. He had taken the company from paper to uh internet. I mean, he was making a lot of strides, and there was a level of ego in the dad that he had not. I mean, granted, this was a personal problem between the two of them, but it did create a lot of chaos because the son was becoming more successful than the dad had been. I see.

SPEAKER_00 38:54

He saw it as his child was showing him up totally. That's terrible, right? I mean, just think about all that.

SPEAKER_01 39:01

Oh my gosh. So, one thing for certain, when you are planning on giving your company to your child, you have to remember that that is your child, not the company. So, you know, the company's not your kid. So your child is planning to take your company to a place that it had never been before, it's not your problem anymore. And to be honest, like that was what happened with my my cousin. His father had a different vision and did a different was in a different field, if you will, with their company. When he took it over, they followed the the path of um technology and innovation, and they they pivoted the company, also moved locations, so they pivoted the business, and it it made the company even more successful.

SPEAKER_00 39:51

Yeah.

SPEAKER_01 39:51

Now, I mean, yeah, you know, but you have to be okay with that. You have to be okay with the fact that your children are probably going to have a different idea for the business, and that has to be okay with you.

SPEAKER_00 40:04

Yeah, yeah. I I think you know, the ego and then also just feeling like you know more because you've been around longer. I mean, it's not that you don't know more because you've been around longer. It's just that everybody has their own ideas. And um, yeah, and the like I said, the successful relationships I've seen where it is a family business is that there is either, I don't know if it's uh spoken or unspoken, but there is like lines of respect and lines that both the the child and the parents understand when they're at work, when they're at home, there's really clear disciplines between both parties for it to be a success for the business. And that's hard to come together, but you know, when it does, it's it's also amazing when it when it's done right. So then I I you know, I know we talked a little bit quite quite a bit about the emotional side, but I mean, we can't go without saying that there's a practical side to all of this about passing the business on to the next generation. Uh, you probably want to get your estate lawyer, uh, estate planners or lawyers involved, financial advisors, and certainly your CPA, because you want to have the most effective way to legally and the most tax-friendly way to move the business to your next generation without a hefty tax bill or any unclear lines being crossed. Right. Yep.

SPEAKER_01 41:21

All right. So shall we move on to recommendations? Let's do it. All right. So there's a saying that goes put your money where your mouth is. And we're gonna drill down a bit further here to connect what we've discussed at a granular, granular level to tangible sources you can take to get you to that next level.

SPEAKER_00 41:41

So I made a reference to the Gate Gary V video, which I'm gonna link in a show notes below. It's seven minutes, but a very, very powerful seven minutes. Um at the same time, there's another seven-minute video. I don't know why they're all seven minutes, but it's another seven-minute-ish video uh that is uh under uh build build wit, um, and it's called How to Take Over the Family Business. And on it is Jocko Willock, uh, which is you know somebody who's also pretty big when it comes to kind of entrepreneurship advice and things like that. So we'll link that in there as well. He gives some great advice about what we were talking about, old school, new school, how you know, how do you work with the previous generation and things like that. Um, definitely a few books. I mean, there's like a lot of books written about this. So I think it's a very, very, very important topic um and a popular one. But like books like Keeping the Family Business Healthy, How to Plan for Continuing Growth, Profitability, and Family Leadership by John Ward. There is the Family Business Succession, The Final Test of Greatness by uh Greg E. Arnoff, uh, Stephen McClue, and and also John Ward. Okay, so John Ward's popular about this. I feel strongly about the subject. And then last but not least is secession Are You Ready uh by Marshall Goldsmith. And you know, this one has some practical advice, um, probably practical hands-on advice about managing this whole secession process that you may have. And other than that, make sure you hire yourself a good lawyer and CPA. Well, not even just any lawyer, but you really need somebody who was like an estate planning, secession planning lawyer, like specifically in that experience and niche, because this is very different than a lot of other legal practices.

SPEAKER_01 43:25

So I agree. I agree. All right, so I pulled my information from a series of websites and articles, and we're going to be listing them below. They are a great source of information, and truly, there is so much more to the story. You really should take the time to read and to listen. So, from there, there's also a great book called Chocolate Wars Inside the Secret Worlds of Mars and Hershey by Joel Glenn Brenner. You should read it. And if you are planning to leave your business to your child or children, this book is also worth a read: Dynastic Planning, a seven-step approach to family business secession, planning and related conflict management by Walid Chinyara. Lastly, you should have, I also recommend you should have a chat with your CPA, uh, a state plan with an attorney that does secession planning, estate planning, financial advisors, well, on best practices for paying your children the right way, and then also bequeathing your business over or transitioning your business over to them. Uh, we do have great suggestions here, however. In the end, you should do what you feel is best for your family and of course, what is best for your business. With that, please hit the like buttons and the follow buttons and tell all your friends about us. Our show is on all of your preferred podcast platforms, social media, and YouTube. We'd love for you to also share our episodes. All of our links are posted below. And until next time, mind the business behind your business because all great successes start small.