The 7% Rule: A Path to Building a Lasting Business

[00:00:01] Scott Eckart: I'm Scott Eckart and this is Future Proof, a show for building something that lasts. Let's get into it.

[00:00:08] Scott Eckart: Hello everyone. Joining us today is Lise Stewart, a nationally recognized author and coach who works with family owned and closely held business owners.

[00:00:16] Lise Stewart: or you inherit a business, oh, you must be an entrepreneur. but the reality is, is that there's really only a small percentage of the population, maybe around 7%. I've seen it as high as 10.

[00:00:28] I've seen it as low as five have key attributes that are generally associated with effective entrepreneurs.

[00:00:37] Scott Eckart: Because Lise is a very successful business owner in her own right, her perspectives are incredibly insightful and significant. So let's get into it.

[00:00:46] ​

[00:00:49] Scott Eckart: Welcome everyone to this edition of Future Proof. I could not be more excited to have Lise Stewart with us today. she is a nationally recognized [00:01:00] author and speaker who draws on her 30 plus years of, experience, I think, and she's gonna share some really practical advice for us, related to family, business and closely held, which is one of my things that's very near and dear to my heart.

[00:01:15] So Lise, welcome to Future Proof. Can you say hello for us?

[00:01:19] Lise Stewart: Yes. Thank you very much. I'm equally as excited. I've been looking forward to this for weeks,

[00:01:24] Scott Eckart: Thank you so much for taking time out and,

[00:01:27] So very recently, I got to attend a business symposium, with about 60 other advisors And we had a, like a two day session. And to kick off our time was our keynote speaker, and it was Lise Stewart and her reputation, of course, preceded herself.

[00:01:46] she began to talk about just her work and her life, really, your life work in terms of working with family owned business.

[00:01:56] But I think the thing that has intrigued me a lot is [00:02:00] your story. Okay. as a business owner. And so, as you know, future Proof is a show made by Entrepreneurs for Entrepreneurs. And so you have had this, pretty amazing journey. but first I just wanna talk a little bit more. If you could just share with our listeners what you do, if we can start there, that would be great.

[00:02:22] Lise Stewart: So I'm actually an organizational psychologist by training, and I've started several different businesses bought and sold, and really enjoy the business world too. So my focus has been over many, many years. In fact, saying only 30 years is really, thank you, making me a little younger than I'm, but over many years.

[00:02:43] This has been on the family owned and closely held businesses. both and having the opportunity to train advisors who are as passionate as I am. So I've really done a lot of that work too.

[00:02:54] Scott Eckart: so let's go back and talk about. Really not your first business, but the one that's led you, where you [00:03:00] are now and how you were able to develop it.

[00:03:02] And then you attracted some, a very interesting suitor who came in and took that, and then went from there.

[00:03:09] Lise Stewart: I actually started my first businesses, several different businesses when I was living overseas. And then I returned back to the United States in about 1998 and started doing the same sort of work here in the us. And what I noticed was that there was a big gap. I was doing a lot of work in manufacturing because at the time I was working for the Manufacturing Extension Partnership program.

[00:03:35] what I found is that of course the majority of manufacturers in the United States are family owned or closely held businesses.

[00:03:43] And there was a great need to help them. many of them were finding that their biggest problems weren't to do with manufacturing per se. It was to do with how do we grow this business? What do we do with it? How do we pass it on or sell it, or [00:04:00] you know, how do we include our children and so on.

[00:04:02] there was a big gap and when I recognized that gap, I started another consulting company that focused on doing just that, helping family owned and closely held businesses.

[00:04:11] Scott Eckart: But the other problem that was so difficult is that there weren't very many people who specialized in doing family business work.

[00:04:18] Lise Stewart: there might be a few therapists out there that did family therapy, but that's not what we needed. And there were certainly plenty of business consultants out there who could help on the business side.

[00:04:28] But who helps with the marriage between family and business?

[00:04:32] because the need is great and there's more work there's more than enough for all of us

[00:04:37] Scott Eckart: a hundred percent agree.

[00:04:38] And my way of looking at that, and maybe you can either validate or not, but I call it parallel processing.

[00:04:45] Lise Stewart: Mm-hmm. Mm-hmm.

[00:04:47] Scott Eckart: because those two things, you know, we stand, I think at the nexus of where those two things really come together

[00:04:53] and, the personal and the family.

[00:04:54] And we have to deal with, in my opinion, both of them at the same time. if we [00:05:00] continue to leave them in silos, I don't think we're gonna get the job done. when you started to speak that day, and I thought, this woman has figured it out, she's got the keys to what people need to know, and I can learn a ton from you, and I have already. so you got this thing going

[00:05:17] and then what happened?

[00:05:18] Lise Stewart: there were two parts to it. Our training for advisors was a 5 0 1 C3, a nonprofit organization for really focused on education, and then we had the for-profit,Consulting group and we became a national provider of family owned business support and worked the largest in terms of the number of companies served in the country.

[00:05:38] And it was extremely busy. It was very successful and profitable and a lot of fun. But I also recognized that I'm out there teaching our family business owners all about succession and how to build the business value and so on. And I was getting up there too, so I needed to make sure that I also had a succession strategy.

[00:05:57] we developed a number of proprietary products because [00:06:00] I'm sure again, that you know this, that it's very hard to sell a consulting company, especially when that consulting company really relies on just the skills, the knowledge, and the, I guess presence of a few top people in

[00:06:13] Scott Eckart: yeah. Or the brand of you, right? Like,

[00:06:16] Lise Stewart: Yeah.

[00:06:17] So we had to develop those proprietary products, and then we also let the marketplace know that we were looking to be able to find a new home, through some sort of an acquisition.

[00:06:27] So we did find a really good match, with, Eisner Amper. Eisner Amper is one of our largest, accounting and financial, advising firms in the country. And they wanted to focus more on family owned business work

[00:06:41] so, I sold to EIS Ramper in 2017 and became a partner there at that firm.

[00:06:48] Scott Eckart: that's a key moment because she didn't really let go a hundred percent.

[00:06:54] And this is key, right?

[00:06:56] it's a strategy. So we can roll this one out [00:07:00] for people that are thinking because just because sold her baby as it were, doesn't mean that she didn't have control or didn't have further interest. So this is where things get really interesting. So, go ahead.

[00:07:15] Lise Stewart: that was a choice actually. I had a choice. And the other thing I think is, Other companies that we talked to had some really interesting and lucrative financial plans for us, but we felt that EisnerAmper was the best cultural fit in terms of philosophy, I had to think about where would I like to be and contribute if I did decide to stay.

[00:07:39] And so understanding that an acquisition like that, it's like a marriage. You have to make sure it's really a good partner for you. I had the option of simply selling and not necessarily staying on. but I enjoyed it so much and I enjoyed the people and building the practice internally that it was well [00:08:00] worth it to do so.

[00:08:01] Scott Eckart: So I always tell people that maybe a small part of a very much larger pie is okay. Versus owning all of a smaller pie. And so I give you tons of credit for thinking globally and having a much larger vision, and also giving you credit for not having such a large ego that you couldn't get out of your own way.

[00:08:24] Lise Stewart: Mm-hmm.

[00:08:25] Scott Eckart: and I see that too many times where an owner, maybe we can talk about this, is, and I don't know if someone guided you, someone counseled you, but for you to recognize that it was okay for there to be others and that you didn't let your ego keep you from making a really wise and wonderful decision.

[00:08:47]

[00:08:47] Lise Stewart: You know, Scott, it's interesting, I think I've been so fortunate to work with so many businesses over the years and see the mistakes that other business owners made and I know you've seen this too, you work with so many [00:09:00] different companies as well, but you know, one, not recognizing that. You need to have your own succession plan that we're not gonna be here forever.

[00:09:09] And in fact, It doesn't serve the company well,to continue to hang around. So making sure that there is that long-term plan, I think is important. The other is that you can always learn from other people.

[00:09:22] You can always pick up and,coming into the company that acquired us, it was fascinating.

[00:09:29] the opportunities to continue to learn and grow even later in life are there as long as you're open to

[00:09:37] Scott Eckart: Okay. And is it fair to say that you are more of a generalist than a specialist? Because many times people will say, Scott, who do you work with? Tell me your profile, da, da, da, da, da. And what I tell them is that I am not industry specific, but what I am specific about is the human dynamic.

[00:09:55] and if people don't want to open up or talk about that, I [00:10:00] probably can't do my best work.

[00:10:01] Can you comment on that?

[00:10:03] Lise Stewart: I would say I'm definitely a generalist in the area of expertise.I am a generalist in the area of, family and business and that whole intersection. So whether that is the succession strategy, developing a, a strategic plan, forming an effective board, understanding who, and how you need to hire new people.

[00:10:27] Culture, et cetera, et cetera. And so I have worked with a wide variety of companies, a wide variety of sizes small to, you know, really big Fortune 500 and Fortune 200 companies. So it's, runs the gambit. But, you know, it's also really fun and interesting to note is that the problems, the struggles that people at the top of these organizations have are very similar, whether it's a big company or a small

[00:10:55] company,

[00:10:56] Scott Eckart: what is that common factor? I think that's what I'm driving [00:11:00] down on.

[00:11:00] Lise Stewart: people want to do the right thing. They really do. But what they struggle with is what is the right thing. And in a family owned or closely held. When I talk about closely held, I often use that word. What I'm really talking about is that the majority of the ownership and the decision making is still held in the hands of the people who either formed it or, you know, are still at the top of that organization as opposed to outside,ownership investors, et cetera.

[00:11:29] but the problems, I get owners all the time or leaders in these companies that they wanna do the right thing for the business, but they may be scared, they may be worried about the impact on their family.

[00:11:42] They may be worried that maybe their family members or other people that they have in the organization are not the right people to lead the company into the future. They don't know how to manage risk.

[00:11:51] They don't know who to turn to for help. I mean, by the time I see them, you know, sometimes they've tried to talk to an attorney or they've tried to talk to, [00:12:00] banker or their accountant.

[00:12:02] And those people are pretty good at talking about the tactical aspects but they're not the right people to talk to about the fact that Junior really doesn't have what it takes to run the company of the future.

[00:12:13] So who do I talk to then?

[00:12:14] Scott Eckart: one of the things that you've helped me just very recently understand is we throw around the word entrepreneur so much, right?

[00:12:22] Very freely, like, you know, water, air, we just entrepreneur, right? And the research that you have done and learned from is that really if you look at. I think it's four or five very specific definitions and love for you to share that with us.

[00:12:39] Lise Stewart: You know, I think that one of the misconceptions that many people have is that. Because you start a business, you must be an entrepreneur or you inherit a business, oh, you must be an entrepreneur. but the reality is that there's really only a small percentage of the population, maybe around 7%. I've seen it as high as 10.

[00:12:58] I've seen it as low as five [00:13:00] have key attributes that are generally associated with effective entrepreneurs.

[00:13:06] And I think the word here is effective entrepreneurs. and so you and I were chatting the other day, and I, I think that the, some of the attributes,are not particularly well known, but are actually really important.

[00:13:18] One is an overabundance of optimism because if you weren't really optimistic, like over the top optimistic, you probably would never start a business because the odds are not in your favor.

[00:13:32] Scott Eckart: So, they tend to be very optimistic. People who see possibilities. Everywhere. They also tend to be very resilient, which means that when they get knocked down, they get back up, they can bounce, they have that ability to bounce.

[00:13:47] Lise Stewart: Sometimes it's that, that they can just laugh at their own mistakes and their errors, or they just have boundless energy for getting up and getting going. another one that many people don't understand is the ability to deal [00:14:00] with ambiguity

[00:14:01] in the world today of business. There are no easy, straightforward answers.

[00:14:06] always taking risks and there's not necessarily a clear plan. And let's say you do a great strategic plan or a great business plan, hallelujah. But if the market changes and we know it changes often we have to be able to flex and flex

[00:14:22] quickly so that dealing with that

[00:14:24] ambiguity and risk, you have to be comfortable with risk, a certain amount of risk, the ability to make decisions quickly.

[00:14:33] using the information that you have at hand is really important. Courage, the ability to inspire others because none of us can do it alone. You might think you're a brilliant entrepreneur and therefore you can do it by yourself. But the reality is that none of us got here by ourselves, So we have to have that ability to. Endless energy. It is tiresome. It's a lot of work to make anything, really effective and [00:15:00] successful. And so you have to have a lot of that energy.

[00:15:03] people don't realize that there's such a combination of factors and there's a few others, you

[00:15:08] know, to innovate, think creatively, think outta the box, and so on.

[00:15:13] And most all of these attributes are on a continuum. So we might have a whole lot of one, and, and just enough of the other. But the last one I wanna mention is around, our ability to look into the future.

[00:15:26] Because

[00:15:27] generally people fit into one of three buckets. They either have a strong past orientation.

[00:15:33] Those are those people that are really good at remembering all the things that happened early on in their life, and can tell you who their second grade teacher was and where they lived in all sorts of. Good storytellers. Then you have people who are present oriented, which tend to be the majority of the population.

[00:15:49] It doesn't mean that they don't plan ahead to three weeks or whatever. They might even have their summer vacation kind of in their head. But, it is the true future thinkers [00:16:00] that are a rarity. They're less than 10% of the population. And these are the people who can get a clear picture in their mind's eye about the future of what it could look like, what they want it to look like.

[00:16:12] And when I say their future thinkers, I mean, they can see it, taste it, smell it, they

[00:16:17] It's like in their brain and they live there. They tend to be the sort of people who, are always thinking about the next meal, the next day, the next event, the next holiday. I tend to plan years in advance years,

[00:16:31] It's hard to find those people, and I know you've probably done this too. You ask a business owner, so where do you see yourself in three to five years time? And they're like, well, let me tell you what my father did, Let me tell you what we're doing right now. And they really struggle to put into words what the future might be to have that vision.

[00:16:50] Scott Eckart: That

[00:16:51] Lise Stewart: that rare quality.

[00:16:52] Scott Eckart: and that was such a mind expander for me

[00:16:55] because I have scared people when I come in,

[00:16:59] Lise Stewart: [00:17:00] mm-hmm.

[00:17:00] Scott Eckart: with all of my guns blazing, and I think I'm here to save the day. We're gonna do a strategic plan, and I'm so excited for them. I think I'm more excited for them than they are for themselves in some ways,

[00:17:11] because I am so future oriented. And I am an entrepreneur, and I know this mostly because you've told me I am. But I scare people and what I've learned from you is to listen better to the signals and clues and language. when I have learned to say, it's so good to meet you, I'd love to learn your story. And then learning from you to say, depending on where they pick up,

[00:17:39] is the best clue that I could ever get about who they are. Right.

[00:17:45] And the other thing I learned from you is that just because you're not an entrepreneur doesn't mean you can't be a great business owner.

[00:17:52] Lise Stewart: No,

[00:17:53] absolutely. Yeah.

[00:17:54] Scott Eckart: However, it really is that combination. And that was what was such a mind [00:18:00] expander for me.

[00:18:01] Lise Stewart: So it's just when we're looking sort of for that magic formula, but also for anybody who's an advisor out there I love what you said about sort of scaring people off. A strong future orientation can be very intimidating. and you're right, we do come in guns blazing because we have that sense of, optimism, boundless energy, and so sometimes putting our own style on hold can be really a challenge.

[00:18:27] it's great that you notice that and think immediately about how you're going to put it into action for your own people.

[00:18:34] Scott Eckart: and sometimes there's people that are so far ahead of me that I have to kind of pull them back. Right.

[00:18:39] so let's talk about the ramifications for the family business or the closely held business when it comes to succession for the, either the future oriented or the past.

[00:18:49] Because you could have a son or daughter who really wants to go to the future and is frustrated by mom or dad who's mired in the past.

[00:18:55] So what have been some of your experiences and what are those [00:19:00] ramifications when it comes to the kind of planning that you and I do?

[00:19:03] Lise Stewart: I think one of the most useful things, that I've been able to do is to tell people about the difference in the way, the paradigm through which we see the world, and, around time, past, present, and future. As soon as families, family members hear that and understand they're, oh, like, oh wow.

[00:19:18] That's so true. You know, my brother's always telling stories, you know, he is,he's always talking about, what happened in the past. And he's kind of the history keeper of the company. And, you know, the other brother, the sister, she's very future oriented. and as I said, most are present. I was meeting with a family not too long ago, and they've been very frustrated by their father

[00:19:38] who was just as the person that you just described, very future oriented, coming up with new ideas all the time, really excited about this.

[00:19:48] And the kids just couldn't keep up. And what I say to people who are like this, who are like your boss, is to say, Hey, you've got a strength. It's just, it's a strength overdone, [00:20:00] and sometimes when strength is overdone, it begins to get in our way. So we wanna just dial that strength back a bit to be able to help us to be more effective in what we're trying to do.

[00:20:11] So it, it helps people to realize that, it's not a bad thing, that they have that strength that just is overworking for them. And sometimes we don't realize when they've become overdone. So I think that's one of the most important things in terms of family business and family succession, is to hold up the mirror so people can see themselves just a little bit more clearly.

[00:20:31] Figure out what's working for them and what may be holding them back. And so whether it's their time orientation, whether it's something else about their style, maybe it's a lack of knowledge. Another one that we mentioned earlier too is risk management. People's comfort or level of comfort with risk. So let's say for example, that you've got a mother who's running the company and she is really comfortable with risk.

[00:20:55] She's like, ah, we're gonna bet the farm, right? We can do this. We can go out here. She's very [00:21:00] entrepreneurial. She's been really successful, and away she goes. And she has a daughter who really wants to take over the business someday. The daughter has a different set of skills. She tends to be much more methodical.

[00:21:10] She takes more time to make decisions. She likes facts, figures, and information to support whatever it is that she's gonna decide to do. And it doesn't make her a bad business person. In fact, she's a great business person, but her style is different. And so the mother doesn't think she can do the job well.

[00:21:26] She doesn't have my energy, she doesn't have this, she's not like me. So sometimes it's showing how this different set of strengths can be useful for where the company needs to go. So

[00:21:38] we have to figure out where the company needs to go first. Then we figure out what kinds of knowledge, skills, and ability are gonna support that direction.

[00:21:47] Scott Eckart: in terms of generational mapping, which is part of what I do, it seems to me that the founder maybe, or I call them the legacy owner, the visionary, tends to launch the spaceship

[00:21:59] Lise Stewart: [00:22:00] Mm-hmm.

[00:22:00] Scott Eckart: Gen two. Maybe we don't need quite as much vision per se, if it's set, they need an implementer potentially. But if new technology comes in and love to pick on ai, 'cause that's what everybody's talking about, we still need. A visionary, but we can't forsake implementation. My experience has been that's one of the hardest, but gen two to gen three, that's a whole nother deal.

[00:22:28] So how do we map that visionary to that integrator as we move through on the succession planning? Because just because Junior is there doesn't mean he gets the job.

[00:22:41] Lise Stewart: I think in this line of work, it's really important because too many businesses try to decide who's going to take over the business based on that individual style and skills, or their relationship to the family or in the family, or, know, all sorts of other things.

[00:22:59] The one thing [00:23:00] that should really drive the decision about who runs the company or fits into any leadership position is the strategic direction of the company. What does the company need? We must put the needs of the company first and foremost in this thinking. And so let's say, and we'll use your AI example, which is great that you have a manufacturing company that has the opportunity to invest in robotics, to really grow the company in that way.

[00:23:29] But the type of robotics maybe are less, driven by the. Say the fancy parts of, of ai, right? You know, and more to do with just basic production. So when you start to understand where the company needs to go, where they need to make those investments, where does it, they really want to be able to grow.

[00:23:50] What are going to be the demands of the market? How are they gonna meet those demands and so on. and you've got a clear picture, then we step back and say, oh, [00:24:00] what kind of knowledge, skills, and ability do we need at the top of the organization to drive in that direction?

[00:24:06] maybe nobody in the family has a high level of comfort with risk, has knowledge, skills, background, or even interest in robotics or growing in a way in which they're going to really invest in high technology. and so on. Then perhaps no family members are the right people to lead the company.

[00:24:24] Maybe they need to bring in outside professional management.

[00:24:26] How do we get them to see that's not a failure on their part.

[00:24:29] know, if you start to take a look at the strategic plan, what we need to say is we need to work in the best interest of this business because when the business is successful, helps to support the family and it helps to support all the people employed, and it also makes a contribution to the local community and beyond.

[00:24:50] That's really important. If the skills that are required don't match you or other members of the family, that's okay. There are other ways in which we can [00:25:00] utilize your knowledge and skills. We can look at a family board.

[00:25:03] As long as the company is doing well, it may also be able to support family members in opening up new ventures that really do support their skills. So we try to take the individual people out of it.

[00:25:15] Now, the reality is, is that usually there are family members that can fit in the direction.

[00:25:23] And so we can usually find a good place for the family to continue to contribute. Boards are highly underutilized in terms of, there's a family board, there's the business board, all aspects of family governance and governance of the business. There's many different ways in which we can use family members.

[00:25:40] Scott Eckart: two of our planks in the 10 principles that we talk about. One is wise counsel and the other one is collaboration.

[00:25:46] And I know you talk about that a lot,

[00:25:49] and I refer to it as Advisory Council, but when you bring in collaboration with Wise Council, I think there's no stopping you in what you wanna do, [00:26:00] if you can get out of your own way.

[00:26:02] Lise Stewart: Mm-hmm.

[00:26:03] Scott Eckart: I often say to family businesses, either the family runs the business or the business runs the family.

[00:26:09] Lise Stewart: Mm-hmm.

[00:26:09] Scott Eckart: And the latter is usually not good. Right? then they're frustrated and they sometimes feel trapped. Right.

[00:26:17] And they're just unhappy and they make everyone else unhappy around them,

[00:26:21] I think.

[00:26:23] I mean, you have talked about how you then bring in these outside people potentially,

[00:26:30] whether it's a board or an advisory council based on specific skills and or the ability to provide wisdom,

[00:26:38] Lise Stewart: Based on what it is that the business needs. And so it's an opportunity for the family to learn from outside expertise and honestly having a good advisory. Is so much more cost effective than just hiring a whole lot of different consultants. it's a wonderful way to provide education, knowledge, and support to the next generation.

[00:26:58] I think that advisory [00:27:00] boards are such a powerful and yet terribly underutilized governance methodology that can be incredibly helpful for family owned and closely held businesses.

[00:27:10] Scott Eckart: And I am also concerned about the echo chamber that family members put themselves in.

[00:27:14] They're not exposing themselves to other ways of thinking and I often will say to them, have you surveyed? You're best people, you know, and I say, why did they choose you to begin with your top accounts? And why do they stay with you year after year?

[00:27:32] I think you're gonna learn some really interesting things, value that they see that maybe you don't. And I think sometimes they're afraid. I know I was I'm afraid if I ask, I'm gonna lose 'em. I know it was odd that I had that thought. but I learned some things that I did not see coming, right, that were values that they had, that I assumed were other places.

[00:27:56] And I just learned a ton. And so, we're in our head a lot. [00:28:00] I know I am with this echo chamber that, oh, this is the right thing. But when you expose those things and you go outside, then you learn sometimes things you think are valuable or not, and things that you put no value on. People say, oh, that's why I chose you. That's my biggest value for you. You should run with that.

[00:28:20] Lise Stewart: I like that. it's so smart. It's funny. quite a number of years ago We have a model that, we use when we engage with a client. And I started asking at the end, can you tell me what did I do that added the most amount of value to our project

[00:28:38] or to our working together, or whatever it might I thought that the things that they would tell me was they would say, oh, you know, you just did a great job developing the strategic plan with us, or, you know, facilitating through our succession strategy, or, you know, you were just so good at this, this, and this. That's what I was prepared for.

[00:28:55] Fingers crossed. But you know what they told me, it blew my mind and changed the [00:29:00] whole way I did my practice. They said over and over again, some version of this, you helped me to put into words and to communicate with others the things that mattered most to me, that I'd never been able to express when you help me to talk through with my family members or my board or my staff, or whatever it is, in a way that they could actually hear me.

[00:29:29] And so what I realized is that. The value that I was adding was not so much my whizzbang strategic planning methodology, or the way in which I designed the succession strategies. It was the fact that I was listening really hard and with an open heart and really trying to understand and then reflect back in words that they then could use or adopt, I was listening beyond what they were just saying at that surface level, which may not have been super clear, and helping them to convey that message to other [00:30:00] people.

[00:30:00] Well, when I realized that, well, that's my super strength,

[00:30:04] it helped me to refine how I work with people, so my service that I deliver changed.

[00:30:11] Scott Eckart: powerful. Thank you.

[00:30:12] Lise Stewart: I know Lise, that you and I both have, had experience with what we call rockstar parents. Okay. and they cast a wide shadow. andthere was a phrase that you used, in your session with me called the Shadow Generation, which I found fascinating. And I did share this with one of my good friends the other day and I was talking about imagine what it's like to grow up in your family. You are all rock stars and every single one of you. And think about, you know, children and what that must be like to grow up. Surrounded by rock stars and you're not intentional. You never lord it over them. You're never say, Hey, this is the standard and you must [00:31:00] measure up. you, they've done an amazing job with helping them to find themselves and pursue their own path. There's still some element of I'll never get there.

[00:31:11] Scott Eckart: I actually see this a lot, and this happens in a business where, as you were saying. Let's say you have a parent or parents, and they really are powerful parents. They are influential, they have big personalities. They make decisions quickly. They're, inspiring or even extremely annoying, but they get stuff done right. And

[00:31:35] Lise Stewart: even if they're not that famous, it's just that their personalities are so big and,they command a lot of, a attention sometimes a lot of respect. And the children growing up, especially if they're in the business, they live in the shadow of that parent and often don't feel like they're ever going to be the big personality that their [00:32:00] parent has.

[00:32:01] And so this might manifest in a number of different ways. So one. You might find that child is just running a hundred miles an hour trying to live up to the person that their parent was or is, and they find that they, they just can't. And, they may suffer from the imposter syndrome.

[00:32:19] they don't really deserve it. they're worried that they're not like their parents. they may just work and struggle and drive themselves into the ground with stress. some of them develop what we call the artificial swagger, and that is. they walk through the business like, well, you know, I'm an owner.

[00:32:36] I, I got this. I, you know, and,they act like they're super confident. They're on top of it, People can't stand them. but what it's really. Doing is covering up a feeling of inadequacy. They really don't have that sort of feeling behind it, and I see this more with young men than with women.

[00:32:56] it's the only way that they can, they compensate is to pretend, to act, to [00:33:00] swagger is if they've got what it takes to, to be at the top of the organization. And it is really off-putting for other people. some family members, some kids just retreat, they leave the family business or they become very quiet and very small.

[00:33:13] You know, I was working a, a couple of years ago with a, a wonderful family, a manufacturing business. Dad was one of these powerful parents, had been very successful. He had a daughter in the business. In her heart of heart, she'd really like to be the CEO, but she's in exact opposite in terms of personality.

[00:33:30] His personality is big, and you know, he is out there. He knows all the customers. He loves being with people. He's highly extroverted and so on. He's built a successful company, but she is the backbone because she's the person who follows through, manages the details, understands the finances, gets all the sort of stuff done that actually keeps The going,

[00:33:50] She didn't think she could ever be the CEO of that company because she doesn't have what her father possesses. So it took quite a bit of time to help her to [00:34:00] see what it was that she was able to bring to the organization, but also to help her father see. And again, a lot of times these powerful parents are looking for those same set of attributes in their children.

[00:34:11] But as we were saying earlier, those attributes might not be the attributes that they need for the future of the company. What's in the best interest of the business? And as I thought you made that point beautifully when you were talking about the fact that sometimes you know, that truly big, personality, entrepreneurial leader at the time, it was great to get the business up and to get it going, but that might not be what we need in order to make sure that it's sustainable for the long haul or to build that business value, which is often around sustained growth. Systems and processes, right, that you get a turnkey business, all those kinds of things that you really need to strengthen for a potential sale. Entrepreneurs rarely have those

[00:34:58] Scott Eckart: right.

[00:34:58] Lise Stewart: I think it is really [00:35:00] important to say, you've got a great set of skills and this is where you've been using them. Go for it, and now we need this.

[00:35:08] How can we find somebody who compliments what you do so well?

[00:35:12] Scott Eckart: Well, one of the things maybe you can help me with, if you and I ever get a chance to collaborate and it's, this is taking that legacy owner,

[00:35:23] That's my new word for founder.

[00:35:24] 'getting them to embrace and love the process of helping a new leader emerge and for them to see it as the ultimate strength and power move.

[00:35:37] Lise Stewart: Mm-hmm.

[00:35:38] Scott Eckart: I believe that through giving right, you change the paradigm, right? the balance of power changes if I'm going to let you take over my business, right? somewhere in their mind they're thinking I'm giving up control and the balance power shifts. But here's my quest, okay, and you can help me with this, is help them understand that the servant leader [00:36:00] in that the one who's going to help the person emerge is actually has the most power.

[00:36:06] Lise Stewart: Mm-hmm.

[00:36:08] Scott Eckart: they are setting them up to emerge. And that is the true strength, true sign of true leadership.

[00:36:15] Lise Stewart: Mm-hmm.

[00:36:16] Scott Eckart: And this is my quest, okay? Because they're going to nip at them from the sideline. They're going to not give them everything that they actually need to succeed, right? and they have so much power to say, I have chosen Lise. She is my first choice. And make it,

[00:36:36] Lise Stewart: There's a couple of things just to bear in mind. I think and I think for any business leader who's even listening is this, Often business leaders are not able to pass on their knowledge and skills because they are heuristic now, which means that they are so ingrained they can't put them into words.

[00:36:54] They don't even know what they are. They don't even know what makes 'em successful. so often we're actually asking [00:37:00] them to do the impossible. They cannot pass it on because they cannot tell you what they do

[00:37:06] and why they do. They can't put into words why they have such successful relationships with certain, suppliers or certain customers or whatever it might be.

[00:37:15] So that's number one. part of what we need to do is to find a different way of pulling that out. Sometimes what I'll do is I'll ask the successor or others to help as observers

[00:37:28] so that they start to write down what they notice about the leader, right. So we can show the leader what they actually do.

[00:37:34] Yeah. So that's number one. Number two. Is when they start to give up. If a leader starts or thinks they have to start to give up. A lot of those, interactions, decisions,they're starting to pass their knowledge and skills on not delegating, but rather increasing the competencies of the people around them.

[00:37:56] That's what true succession is not delegating things. It is [00:38:00] increasing competency for those around

[00:38:01] you. When they do that, that often undermines their own sense of self-worth or their ability to, contribute. they fear losing their dignity. So if we're going to ask somebody to do that, we have to substitute something else in there that helps 'em to grow that sense of dignity, that sense of contribution, that sense of value.

[00:38:23] So we need to find other things such as starting a family board that they can lead or helping them to record their legacy story or, it might be doing something else or different that's in, in the company or starting a side business or whatever it might be. So you

[00:38:40] can't take something a away without replacing it with something

[00:38:44] Scott Eckart: So that's really about re-engagement for them, right? That is

[00:38:47] really, and that process needs to begin before. Right.

[00:38:51] Lise Stewart: Exactly.

[00:38:52] Scott Eckart: you also wrote an article that it was so interesting that it's not succession planning, it's success planning.

[00:38:59] Lise Stewart: yeah, [00:39:00] we are trying to plan for the long-term success of the business. That's what real succession planning is. It's not about replacing one person, it is about having a plan for the future to grow the success of the

[00:39:10] Scott Eckart: Yeah. Yeah. I love that.

[00:39:12] Now there is a, a dark side to this too, decisions have been made, out of guilt. and you and I have both been kind of around that. And I think that businesses suffer more through decisions out of guilt versus saying, just making the hard decision from the get go, right. To not select a certain person. what are your sage advice to business owners who have a difficult decision in front of them and the effects that guilt have over, this first gen or, the legacy owner?

[00:39:45] Lise Stewart: everybody that I've ever dealt with, is trying so hard to do the right thing.

[00:39:50] they don't know what the right thing is.

[00:39:52] And so you're right, they sometimes end up making decisions out of guilt and then feeling really bad about them. I can't tell you the number of [00:40:00] times I've had business owners call or, talk to me and say, oh, do I do the right thing? Is it my fault that my kids don't get along?

[00:40:07] Is it my fault that my son or my daughter's a really bad leader? Was it me? Did we not raise good children? Did we not instill good values? Why do we have a black sheep in the family? Was it us? So I find that so many business owners, parents, people

[00:40:25] feel bad or worried that somehow they contributed to maybe the lack of skills or knowledge or abilities of the next generation.

[00:40:34] And this is what I always say. We all make the very best decisions that we can. With the knowledge and information that we have on hand at the time. And if it turns out later that maybe it should have been another decision or have gone another way, it's okay, we did the best we could.

[00:40:53] Now let's look forward and see what's possible here. sometimes what parents need or what owners in [00:41:00] the company need is support a way of how do they deliver bad news to people that they love.

[00:41:06] That's a big difference in so many family businesses. Is it often the tough decisions that they have to make, the bad that the news that they have to deliver it is not to somebody that they've employed somebody that they've only known for six months.

[00:41:20] It's people that they love and who supports somebody to make that kind of decision to choose between children. Like who does that?

[00:41:29] So that's why I think more advisors. need to be able to really learn to listen, to have compassion and empathy for those tough decisions and help the family to navigate how they go through this.

[00:41:46] You know, I know you've heard me say this before, but deal with the emotional issues before emotion becomes the issue.

[00:41:53] Scott Eckart: give you an example. if you are a father running a business, and let's say you've got two or three [00:42:00] children working in the business way before they're old enough to take over or move into key leadership positions and so on.

[00:42:07] Lise Stewart: You sit down with your children, you say, listen, we're gonna grow this business. We're gonna act in the best interest of the business, and we're going to make sure that the people who fill any leadership position are there. Not because they're family, not because they're friends. It's because they are the best fit and they're the best fit because they have the right competencies.

[00:42:25] We're gonna figure out a neutral way of identifying and measuring and monitoring against those competencies, and we are all going to celebrate when we've got the right people in those

[00:42:35] jobs. Right. You don't say that to them the day that your son is saying, I'm gonna take that job. That's not the day to deliver the bad

[00:42:42] Scott Eckart: You're like, no, you're not. Yep. your point goes to time and my biggest challenge always is getting the time

[00:42:48] with the owner, right. creating space, creating margin, to be able to do that. And I may have mentioned this to you, but one of my,sadder moments was, and I do, biographical interviews.

[00:42:59] That's one of the first [00:43:00] things I do when I get a chance to work with any business. We sit down with the key decision makers and I said, tell me your story. You know, tell me about you. And they're waiting for someone to ask the question, right? And I don't have to ask 'em any questions. And out it comes. And one patriarch was telling me, he said, Scott, my greatest fear is that my children, my adult children only see me as an ATM

[00:43:24] Lise Stewart: Oh,

[00:43:24] Scott Eckart: right

[00:43:25] Lise Stewart: hard, isn't it

[00:43:26] Mm

[00:43:27] Scott Eckart: And I said, but you're still here and they're still here, and we have time to change that if you have the will to do so. Okay. and the other thing that cautionary tales that I have is we don't know if we have tomorrow

[00:43:44] and we only have so many trips around the sun and then we're done.

[00:43:46] Right? And I don't wanna go in and ever be, come from the negative, but I do want people to see time as a gift because it is, and the

[00:43:56] richest person in the world, in the poorest have one thing in common, and [00:44:00] that is their number of days.

[00:44:02] And so if we can have people think about being good stewards of time and understanding that, time is non-renewable resource.

[00:44:11] Now I can pay somebody to rake my yard or do whatever, but I can't, until Elon Musk makes a time machine, I only get so many days. So what do you wanna do? Okay.

[00:44:22] And if you continue to procrastinate, if you can continue, because that hard decision is there. Is that really helping anybody? So there's that and are there times when maybe we do need to refer to a professional licensed therapist?

[00:44:38] if things are really dysfunctional, 'cause I'm not a therapist.

[00:44:41] sometimes people treat me like I am, but, what's your thought on when you actually refer out?

[00:44:46] Lise Stewart: I have a little list of therapists,

[00:44:48] around the country that I could refer to. what I have found is that families are generally really reluctant to do that because that is, that there's a problem that's deeper where they want to go. But certainly, there are [00:45:00] times when there're absolutely open to it and, it can be really, really very helpful.

[00:45:05] Scott Eckart: So,

[00:45:05] um, this has been such a great time and I have loved every minute with you. I knew I would. but as we conclude, as we wrap up, last thoughts, last encouragement for our listeners and our entrepreneurs that are hearing this, what are some high level thoughts or just some things you'd like to send folks away with?

[00:45:24] Lise Stewart: families matter,

[00:45:26] businesses matter, and the more we can come together to help these entities to be successful, we do good things for those families, for those businesses, for those employees, and for those communities. So the work that we do is important and the families and the businesses that we serve.

[00:45:47] Are the key that they're the foundation to our entire economy's success.

[00:45:52] Scott Eckart: yeah. our economy runs on the back of Clo Hill business and they're never gonna be on the stock exchange. Right. But without them, our [00:46:00] economy does not work. So

[00:46:01] they are awesome. And they are important.

[00:46:06] Lise Stewart: Exactly.

[00:46:07] Scott Eckart: I'm so, so grateful to you and that we're able to meet and do some collaboration. And so I can't wait to, hear your next adventure and what you're gonna do. And so I just wanna,

[00:46:17] express thanks and hope that folks will get a lot out of this. And, the future is bright, so don't forget that.

[00:46:24] Lise Stewart: During my conversation with Lise, there are three key points that I wanna look back on. Number one, know your view of time. Are you most comfortable thinking about the future, the past, or the present? This will make a difference in how you plan for the business. Number two, even though only 7% of the population scores as a true entrepreneur, that doesn't mean you can't be a great business owner.

[00:46:47] Scott Eckart: Number three, think about who you will talk to when it comes time to make the big decisions for your business. How do you know what is the right thing for your family, your team, and your community? Head to the show notes of [00:47:00] this episode to find links to connect with Lise and remember, the future is bright.

[00:47:05] I'll see you next time. Thank you for listening today. If you like what you've heard, please join us in the Velocity Network and sign up@www.velocoaches.com, which is a gathering of entrepreneurs, business owners, and people who desire to learn more about running and owning a business. Also, you can subscribe to future proof on Spotify, apple, YouTube, or wherever you listen to podcasts.