Three Circle Model

Edward Rosenfeld and his team bring diverse and deep experience to assisting the family business and their advisors. We  bring years of experience to working with the Family Circle on conflict management, with the Management Circle in strategic planning and/or operational improvement and with the Ownership Circle in analyzing major changes in capital structure or implementing a board of advisors. Engagements  include

•Building governance structures such as a Management Team, Family Senate or Board of Advisors and facilitating their meetings
•Establishing policies for family-member entry into the business
•Leadership development for sibling teams and other successors
•Facilitating key decision-making meetings such as those for strategic direction, ownership and succession planning
•Compensation, job-description and accountability design
•Succession planning
•Strategic planning
•Transition planning

We use a collaborative approach  with other key advisors including the attorney, CPA and estate planner who have complementary skills and knowledge.  This assures the family business that the best practices are used and ensure that quality and perspective is always maintained.

We can help you keep your family business engine tuned up and in good working order.  In closely-held partnerships as well as  strictly family-owned businesses we work in a modular approach with one or more of the three systems that make up the family business.

The Management Circle symbolizes the building and continuation of a competitive and profitable family business that creates wealth and equity for the family and the business owners. Strategies that incorporate strategic planning, leadership development, good governance, and organizational development are critical to the ongoing success of the operation.

The objective of the management circle is to ensure that you are working on the business as well as in the business.

The focus of this area is to build and maintain a healthy business. It’s exactly like the story of the goose that lays the golden eggs. It’s vital that the goose stays in peak condition and doesn’t burn itself out by laying too many eggs!

The business must be able to respond to the competitive pressures within which it operates. Without a definite plan to guide them, most family businesses will not reach their full potential.

At the same time, this circle is about people and the roles they play. While a founder’s identity is invariably entwined with the business, this is not always the case with the second or third generation. Their identity is often obscured by the business. Family members involved in the business need to be put in a position where they can excel. This does not necessarily mean they play a leadership role.  Succession planning, contingency planning and enhancing structures that facilitate communication reduce the potential for conflict in the family business.

As with the other areas, Management issues should be addressed in a different forum from the Family and Ownership issues. The focus of the Management area is to oversee the short-term goals of the business – the day-to-day stuff.

We strongly recommend a Board of Directors or Advisory Board to provide structure for the operational side of the business. Add to that,  a management team to implement the business strategies and oversee the day-to-day operations of the business, and you have a valuable process to build a competent thriving company.

The Family Circle represents the emotional capital of the family in business, where family members support each other and have empathy for one another. A successful family business must have strong communication channels, deal with areas of conflict and emotions, build traditions and focus on creating a legacy.  Conflict can be positive if good change comes from it.  Conflict can be managed.  It does not have to be eliminated if that would lead to inertia and stagnation.

The success of a family enterprise has much riding on its ability to manage both the family and the business. However, the unconscious blending of these two entities can be dangerous to both. Priorities for the business differ greatly from those of the family. There needs to be a clear distinction between the two entities.  Good governance, succession planning and transition planning helps make roles and accountability clear.

By separating the family issues from the ownership issues and management of the business, family members will not only understand the importance of building a strong family unit, but be in a better position to ensure that everyone is valued as a family member and respected for who they are. In adopting the principles of empathy and support, families can ensure that individuals keep their identity and sense of personal self-worth. In the Family Business circle, we provide services and deal with those issues that affect individuals directly and the business indirectly.

A good family business governance practice is to develop a Family Charter and Family Participation Plan to provide structure and an forum for communication and participation of both working and inactive family members.

The Ownership Circle considers the management of wealth within the family business. Managing the ownership area of the business involves more than just minimizing taxes and protecting the wealth. This is the area that requires contingency and continuity plans, using such tactics as tax planning, estate planning and personal financial planning, to endure an equitable balance that is fair to both the individual family members and the business. Giving everyone an equal ownership of the business can cause conflict. It is not appropriate to put family members into ownership together when there isn’t a common interest.

To take the first step in planning for your eventual transition, we recommend that you take a complimentary test of the “Where Are You Now ?”, Discovery Survey, a succession planning tool, which will help you determine where your family business is now, in terms of its business, succession, and retirement planning activity.

The test version is for a single family member.  If you are then interested in taking this a step further, we would be happy to arrange for you to participate in the full survey where all family members with an interest or involvement in the business complete the questionnaire independently and in confidence.

This process helps to identify the conflicts and differences of opinion that need to be resolved to facilitate the development of a successful family business and/or transfer of ownership and management to the next generation. You will receive a detailed synopsis and profile of the key issues, concerns, potential conflicts and building blocks for the future. This report will highlight the areas where family consultation and business planning activity are most needed.

This questionnaire also provides you with a benchmark so that subsequent re-completion of the survey will give you a clear indication of the progress you have made in addressing some of the highlighted issues.

Take the free Discovery Survey.   Discovery Survey Test Ride (survey by independent vendor).

If you want to take the full survey, make sure you record your password and send us a message.

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