November 21, 2023 by Interchange Capital Partners
By Ahmie Baum, CFP® CFBA
It’s easy to underestimate the sacrifices made by earlier generations when you weren’t there to witness them and only see the end results. Likewise, it’s easy to stifle the vibrance and fresh ideas of the newer generation when you’re attached to the way you’ve always done things.
As an intergenerational family-owned business, we’ve experienced discord and misunderstanding between the founding generation and the next generation. Rather than allowing our differences to divide us, we intentionally acknowledged and celebrated those differences through productive conversations to create a stronger company.
Acknowledging the Differences
No matter how many times you tell the story of the sacrifices you’ve made or the failures that contributed to your success, there will always be an element the next generation doesn’t fully understand because they didn’t live through it. While they bring youthful energy and a new dynamic to the company, it may often feel like they’re dismissive of the risks, scarcity, and contributions from earlier generations. The founding members typically didn’t have as much support behind them, which pushed them to build skills like self-reliance and unshakeable confidence.
In comparison, the newer generation has your support and guidance to rely on. While they may not have the lived experience of the first or even second generation, they still have their own vision, ideas, and autonomy. As such, they need the opportunity to explore, make mistakes, and even fail with a bit of support.
Failing With Support
Building a successful family-owned business is no small feat. In the initial stages of creating it, you likely encountered mistakes and failures that shaped the way you do business today. However, at the time, you were probably concerned that you might lose it all. Instead, you could allow your up-and-coming generation to fail and learn irreplaceable lessons in the process.
That’s how we decided to approach the next generation at Interchange Capital Partners. We said, “You’re going to have to go out there and build something new, with our support. In the process of building something new, you get the experience of failure, except if you fail, it’s not like your bills won’t get paid. You can fail with support.”
Instead of hammering the idea of “You’re only successful because the first generation was successful,” it’s helpful to let them earn success in their own way by offering your guidance and support along their path.
Decision Autonomy
When considering how to include the next generation in the family business the opposing thought is typically, “They don’t know. They haven’t been through it,” which dismisses the second and third generation’s perspective and could shut down their opportunity to learn. An instrumental part of creating a lasting family business is to allow the new generation to build experience by identifying issues, creating solutions, and locating opportunities for themselves.
The common pushback we see inside family-owned businesses sounds like “The younger generation hasn’t proved themselves” or “They’re not ready for the responsibility.” However, if you haven’t allowed them to prove themselves, how would you know what they’re capable of? When the older generation won’t release the reins and the younger generation is chomping at the bit for the chance to prove themselves, it brings the generational conversation to an impasse.
When we talk to family businesses, we often ask to hear from the next generation. When you have a pulse on their perspective and the opportunities they’re recognizing, it helps phase them into the conversation and eventually into making their own decisions. Choosing to bypass including them in the conversation could mean missed opportunities for the business.
Continuing the Conversation
Ultimately, finding the common ground between the generations in your family-owned business is an ongoing conversation that requires empathy, acknowledgment, and inclusion on both sides. By allowing the younger generation to fail with support and learn to make the appropriate decisions for the good of the company, you’re strengthening the fabric of your family-owned business.
If you’re ready to start the conversation on how to phase in the next generation of your family business, Interchange Capital Partners can help. For a personal, trusting partnership, please take advantage of our Second Opinion Service. Email us at team@interchangecp.com or call our office at 412-307-4230 to schedule an introductory appointment.
About Ahmie
Ahmie E. Baum is the CEO and Founder of Interchange Capital Partners. Using a collaborative and comprehensive process developed over 43 years of working with wall street banks and financial services firms on behalf of families.
Interchange Capital Partners provides family office and transition strategy services for family businesses, helping families protect and grow their family capital with clarity, understanding, and action by being relevant and resourceful around their unique circumstances.
As a graduate of the University of Pittsburgh, Ahmie began his career with EF Hutton in 1979 and transitioned to UBS in 1993. Ahmie is a CERTIFIED FINANCIAL PLANNER™ (CFP®), received the Executive Certificate in Financial Planning from Duquesne University School of Leadership and Professional Advancement, and has a Certificate in Family Business Advising (CFBA) from the Family Firm Institute. He also has Certificates from The Growth Institute around Growing and Scaling Business and Cash Management. For the past 20 years, he has been involved with Strategic Coach, an international entrepreneurial training program
When he’s not working, Ahmie enjoys spending time with his wife, Sara, their three children, and their granddaughters. He recognizes that health is wealth so he has committed to daily yoga, meditation, and plant-based eating. His other hobbies include woodturning, golf, reading, listening to music, and biking. He is active in his community and served as the Foundation Chair of the Jewish Federation Community Foundation of Greater Pittsburgh and supports the Big Brothers Big Sisters of America (BBBS). To learn more about Ahmie, connect with him on LinkedIn.
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