Imagine your family business was a grass field. The business employees farmed that field. The family ate the grass from the field.
Initially, all is good for the family. During the first generation, the family feeds well as the field's yield grows.
Into the second generation and there are a few more mouths feeding off the field, but it still seems to be producing a high enough yield for everybody thanks to the skill of the farm hands providing for the family to survive. During this time, a high fence is built around the field (to contain the family). This is called the Family Constitution - a set of rules that the family must now abide by in this field. There is also a Family Council is created to ensure that the family abides by some rules to ensure the family live in harmony in the field.
Into the third generation and the field is starting to get more crowded. The fence is revised to ensure it is working. The family is starting to note that the yield is dropping. The grass does not grow as long as it used to. There is less food per capita than there used to be.
So one day, some members of the family decide to explore to see if there is another field that they can move to and see if they can grow grass in it to feed on.
But there is a problem.
There is no longer a gate in the field to leave from and the fence is very high.
Oh dear. Slowly the grass fails to grow very high. It is being overgrazed. There is not enough food for the family and they cannot escape. So eventually they run out of grass and go back to scavenging for food, trapped in a field of dust.
This all might sound a bit far fetched but that is the life of a family business and family wealth.
What is not being addressed?
Rules and Fences are being built around the family
They are being corralled together for strength by unity.
So eventually they all run low on money - the wealth is being dissipated as the family grows.
However, wait....is there a hero about to appear over the horizon in the shape of a Millennial who could be riding to the rescue.
Millennials or Gen Yers as they are often referred could be about to provide the solution.
So what do we mean by Millennials exactly? Think people between 19-35 years old, who have grown up on a steady diet of online services and new technologies, and are fiercely optimistic and relentlessly determined to change the world for the better. There 75.4 million of them out there and counting. They have also now surpassed Baby Boomers as the single biggest generation in America, both in and out of the workplace, as well.
By 2020, 1 in 3 adults will be Millennials. Did you know that 87.5% of them do not measure success in terms of money either – they measure it in terms of ability to achieve goals and make a difference in their business or community.
In fact, most Millennials say they would rather earn $40,000 per year at a job they love than $100,000 at one they hate.
What’s more, nearly four in five millennials want to work for innovative companies and believe they will work for themselves at some point as well.
At the same time, the conventions of a career are changing. No longer is it the norm to work in one organisation all one's working life. Millennials can literally wake up in the morning, open their laptop and make a $1mn. The old way was to put on a suit, catch the bus, train or car to a building and work in a conventional hierarchal company where office politics took up a large portion of ones working day and subjectivity was the judge of ones career success.
The Millennials could be the gate openers of the future, the entrepreneurs that break that three generation clogs to clogs trend that has existed since industry started. The Generation Disrupters.
Family Constitutions need to be about looking out and not looking in. They need to give freedom to the generational family members much like the founders found success, because they were not bound by any rules.
Going forward we need to give the future generations the strong foundations to future success with good life skills and good relevant experiences. Hopefully, with those two factors and a sprinkling of good fortune, the family wealth might well be maintained and grow in the future in pastures new.
Do not be bound up by your own rules. They will starve you in the end!