The Five Secrets of Enterprising Families
In this month’s article, I would like to continue my series on the most common family success mistakes by sharing the Five Secrets of Enterprising Families,
These were originally developed by Northern Trust in the US[1]. I like Northern Trust and their approach to business, and I wanted to share these useful pointers, which focus on helping parents connect with their children and grandchildren.
The reason they are ‘secrets’ is that they are not that obvious. They tell you what to do, but also, by implication what it is you should not do (the mistakes you need to avoid).
The secrets are aimed at families who have accumulated wealth and who want to ensure it has a positive (rather than a negative) impact on future generations. They explain that the key to making that impact positive is properly preparing your children and grandchildren for the future.
I can vouch for the validity of these suggestions from my own experience. They may have been developed in the US, but they are relevant to CEE families. In fact, because of the way that Communism destroyed family business culture and traditions in our region, they are even more relevant here.
Secret 1: Silence Doesn’t Make It Go Away
Families with significant wealth often avoid talking about money. There are many reasons for this: a natural tendency toward privacy, a feeling that the subject is “taboo” or vulgar, or a worry that too much information might negatively affect your children’s motivation.
However, if you don’t communicate with your children, you cannot prepare them for the day that wealth becomes their responsibility.
Effective communication doesn’t mean sharing every bank balance. You should also take into account your children’s ages and their ability to process information maturely. Rather than focusing on the dollars and cents, your goal should be to “normalise” the conversation. Focus not just on what wealth brings, but on the challenges and responsibilities that come with it. This openness helps your children gain a healthy perspective.
Secret 2: Resist the “Carrot and the Stick”
It is very tempting to use money as a tool to enforce specific behaviour. However, doing so often produces the opposite of the intended effect. It is far better for your children to be motivated by a personal desire for success and a determination to achieve in their own right.
Money should be a tool that helps them achieve, not the reason for achieving. It should also not be used as a punishment for failure because it is important to let them make mistakes and learn from them. Using wealth as a “club” to force certain behaviours can create deep-seated negative attitudes toward the family and the wealth itself.
Secret 3: Write It Down — And Communicate
Putting pen to paper is the first step in developing your shared family vision. This isn’t just about the money; it’s about deeper questions:
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- Who are we as a family?
- What values define us? What things are important to us all?
- What role does our family play in the family business (and how does the business ‘fit’ within our family?)
- What does our family look like in 20 or 50 years?
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This should include a two-way discussion: what your children can expect from your family, and what your family expects from them.
In the Czech Republic, I often see “Family Constitutions” treated as top-down decrees—much like Moses descending from Mount Sinai with stone tablets. But if you simply impose your own rules, without discussion, your children usually won’t buy in.
In contrast, a well-communicated, shared vision can truly last for generations – but only if you take the trouble to write it down (and sign it!).
Secret 4: Develop Financial Skills
This is about gradually building the business and financial skill sets your descendants will need. On an obvious level, this could mean supporting appropriate university studies. However, this needs to be tempered with a recognition that not every child is interested in finance.
Remember too, not all education is academic. I have seen younger grandchildren taken on factory tours so they understand what the family business does and why it matters. Young adults can be given holiday jobs in the family business. They can also be given the chance to practice making financial decisions with real outcomes but limited downside. Supporting an adult child’s start-up is a great use of wealth—provided the business plan is realistic. Other adult children benefit from working in your family business, or even better, in other companies in similar business sectors.
Secret 5: Anticipate Conflict and Find Common Ground
This is perhaps the most challenging of the secrets in practice. While the first generation is still around, things seem simple because you are there and you can steer things in the correct direction.
But what about the future? In 30 or 50 years, your family will be much larger, with more members and a much wider set of views. Even the best set of rules will struggle to cope with a changing world and a wide range of opinions.
As I mentioned in my last article, this is why clearly expressed shared values are much better than prescriptive rules. Defining, and agreeing these values means your family can adapt to change and reduce conflict by focusing on them – rather than the strict letter of the law.
A lot of this conversation connects with the idea of a family constitution. If you are a business family wondering about the transition from one generation to the next, then writing a constitution is a great place to start. A well written constitution will cover the topics above – and more.
Not every family constitution indicates the need for a succession plan using trusts, foundations etc. Sometimes the constitution itself is all the roadmap that you need.
On the other hand, if you do, then go through the process of setting up legal structures and mechanisms, a good constitution will make that process much easier – saving a lot of money and greatly simplifying the process.
What next?
I am happy to help you develop your own family constitution.
Sometimes I can be directly involved as ‘a facilitator’ at a family meeting. This can be especially helpful if there is already some level of conflict within the family – as I can guide the process and act as an independent intermediary.
But more often, this is a ‘do it yourself’ project. If you do decide to go that way, please let me know. I would be happy to send you some (free of charge) worksheets which will provide an agenda for your family discussions.
As with many things in life, it is not so important how exactly you start. What is important is that you do start.
[1] https://www.northerntrust.com/united-states/institute/five-secrets-of-enterprising-families