Don't Chicken Out of Tough Money Talks - Tips for Success

“I don’t want to talk about it!”

Boy, I’ll bet you’ve heard that before.  Possibly even uttered it yourself.  I know I have.

And yet, there are certain conversations we really shouldn’t chicken out from having.  For example, as I discussed in my article in Family Business Advisor, every day, business-owning families encounter decisions involving money, including such matters as:

• Evaluating the performance of the business and its management
• Cash needed to grow the business
• Strategic direction of the business
• Determining areas in which to invest and grow the business or conversely, harvest or scale back, such as closing or selling a division
• Ownership transition planning and whether ownership continues in the family or the company is sold
• Retirement planning and liquidity needs of the current generation
• Income generation needs of the successor generation
• Fairness and equity in estate allocations to the next generation, particularly when some members may be employed by the company and others are not
• Philanthropic and entrepreneurial aspirations of the family as a whole and its members

Here are some ways that money shows up and can be a potential source of conflict in any one of the above conversations:

• Some family members have more financial experience and acumen then the others, creating a perceived shift in power and control
• Different risk tolerances between sibling owners or even between spouses
• One family member has a stronger sense of entitlement, given they were brought up in a different lifestyle
• A family member insists on a lifestyle that’s not sustainable with their ability to earn an income, independent of dividends from the business or gifts from the family.
• Trustee power exists over one another
• New money: A financial windfall occurs from a liquidity event and family members are ill-equipped to handle the monies in a disciplined manner
• Old money: Some family members may have shame of how the family historically made their money
• Inequities, real or perceived, that came from distributions, gifts or opportunities that presented themselves to one family member over another
• Suspicions and mistrust about how money was managed

It can even come closer to home, such as when family members find themselves in a financial pinch and need resources.  It gets dicey.  It gets very emotional.

Yet it is crucial to not chicken out from having the conversations.  Chickening out really just kicks it across the road, to be dealt with, or not, at another time.  Often, when it is even less convenient and hard feelings have simmered to a boil under the surface.

The best tips I know for preparing for challenging conversations come down to this:

• Prepare yourself. When possible, arrive rested and fed.  Take time to get centered and grounded.
• Think though the desired outcomes – for yourself as well as the other person. Focus on achieving the win win.
• Consider, with empathy, what the other person is needing. What might be their desired outcome?  What is going on in their life that may be influencing their thinking and approach?
• If things start going a bit sideways, be willing to call a time out. It may be a simple as a personal timeout where you stop, take a couple of deep breaths, and recenter before saying something.  Or it may be calling a timeout for everyone, acknowledging that a break is needed and you have a commitment to coming back to the conversation.
• It may be helpful to have an outside facilitator, particularly in family business situations where there are multiple constituencies (family, owners, and leaders in the business). A skilled independent facilitator can help conversations from straying into the ditch as well as ensure everyone has a voice.

When preparing yourself for conversations about money specifically, remember:

• Emotions are contagious as are self-fulfilling prophecies. Go into the conversations in a positive frame of mind.
• Be respectful and acknowledge the other person’s value and need for their own autonomy over their financial matters.
• Financial skills are survival skills. Don’t abdicate your financial responsibilities to someone else or take on someone else’s responsibility (unless there are mental capacity issues.)
• Protectiveness isn’t always protecting. In fact, it can rob the other person of the ability to develop their own skills sets.  Worse yet, it can backfire if they were trusting you and things go sideways.
• Transparency builds trust. When missing, it’s easy for perceptions and assumptions to creep in and cloud the conversation.
• Watch your words. Criticism, defensiveness, “you shoulds” and “you dids” are acts of verbal violence.  Frame discussion points constructively.  Share how certain experiences may have felt or how you experienced it without accusation.  Focus on the desired outcomes over the past pain.

 Talking about money can be challenging.  But they are vitally important for building understanding, knowlegde and acceptance.  Hopefully, using the tips above, they just got a bit more comfortable so you no longer chicken out from having them.

For more detailed insights, see the full article at The Family Business Consulting Group.