Growing Gains: Balancing Family and Business - with Rob Ferguson

0:01So many people that I know get stuck what I call in the do have loop. Well, I have to have a job, so I got to do this. I have to have money, so I have to do more of this. And without the context of what is it that I'm striving to become, then you just get stuck in this do have do have. so welcome to brave bold brilliant i am here today with rob ferguson and rob is the founder of ferguson alliance but has had a huge career both in the corporate world but in the last period of his career has been very focused on family businesses so we're going to have a great conversation today rob and nice to see you all the way from across the pond yes thank you jeanette glad to be here.

0:46Oh well it's wonderful and it's really nice to see you. So Rob just before we get into a lot of the detail around family businesses and kind of your experience of working with those organisations, do you want to just tell us a little bit about your career journey and where life started for you and how you ended up really focusing on family businesses? Sure, so the first 25 years of my career I spent climbing the corporate ladder. After I got out of the army here, I went straight to work for a large multi-billion dollar conglomerate and was part of their management training program and had a rocket career.

1:27Really enjoyed it. And then the division I was working in, we were notified we were going to be divested. And I thought the world had come to an end and instead it didn't. I was part of a small group of managers. I was the youngest. We ended up doing a leverage management buyout. So we spun that little company out and stood it up. And that's a whole different story. But anyway, I had got a great experience from that. Eventually, we fought, well, golly, we grew up from 30 million to probably 500 million over a 15-year period, took it public along the way. I became the CEO of that. So that was my first kind of experience.

2:09And then my second big experience was CEO of a family business. It was fifth generation, 17 cousins. I was the first non-family member CEO. It was a hot mess. It was my job was to turn it around and then to ultimately sell it, which in fact, we did do, I brought in a professional management team. We turned it around and we sold it to a publicly trade Australian company. And then while I was doing that work, I was with another family business, a hundred years old, 50 to 70 shareholders. I can't remember how many, but I was on their board and they were very successful in transitioning from each generation.

2:53So it was like a tale of two cities. You know, I was as a CEO of the worst of times. And then I was I was a board member in the best of time. And I just was, you know, I like to learn. And I was just intrigued about family businesses. And and the more I studied it and the more I found out that family business has such a huge impact on, you know, I'm focused on North America's economy, but global economy. Right. And here in North America, you know, 62 percent of our GDP in the United States is from family businesses. They're the primary employer. So it's critically important. And I was at an age at that time where I realized after I climbed the corporate ladder and I got to the top of the ladder.

3:38There was nothing there. I mean, I'm talking holistically. Right. I always thought, oh, once I get there, it's going to be utopian. And I realized there was more to life. And so I was at an age and a maturity that I really wanted to serve and give back. And I found family businesses is the best place to do that. Take the corporate experience I had and try to apply that into family businesses. And anyway, that was 16, 17 years ago. And here we are. Wow. And you're still still obviously passionate about what you do. You still really enjoy the field that you're in, Rob, because I can see the energy, you know, as you're speaking, you kind of light up.

4:22And, you know, Rob, I wanted to ask you, you know, with that transition for you out of large corporate and you said you got to the top, you know, you're really at the top, the pinnacle of your career. You've worked your way up all those years and you get there and all of a sudden you look around and you go, oh, maybe it's not quite what I thought it was going to be. after this sort of big vision that you had for yourself. How difficult was that moment for you then actually sort of to realize, wow, I've put all my heart and soul into this. And actually, it's not what I thought it was going to be.

4:55It was hugely difficult. I mean, it was it was, yeah, I would say it was a period of major transformation for me. I actually took a year off. I intentionally just said, I'm just going to take a sabbatical and try to figure things out because everything I was striving for that I thought to be true ended up there was just more ladder. I mean, there was not once I got to the I just looked up. There was more ladder. So I had to I had to make the transition for my perspective. Instead of climbing the ladder, I needed to get off the ladder and I needed to be grounded. So I needed to get down to the ground and ground myself and really serve others.

5:41And, you know, I think I went more from tactics to purpose and being purpose driven. And that was, like I said, that was probably 16, 17 years ago. And it's just so much more fulfilling living and purpose for me. Yeah, no, I think that's a really great piece of advice, actually, because, you know, I always really enjoyed my corporate career, actually. I know I was never one of those people that didn't enjoy it. And when I made the transition to becoming a portfolio business owner and an investor, actually, it wasn't coming from a place of not liking what I was doing. But I, again, had to sort of find my new identity, if you like, about what my new purpose was going to be.

6:26So I think for anyone that's listening or watching this, that might be in that sort of thinking, oh actually maybe I need to move into a different phase and you know I think this is really really valuable lesson that you've shared there around stopping taking time out and just letting almost decompress from that corporate world um but and when you did that Rob did you immediately know what the next move was going to be or did you have to just have that that space and it just kind of came to you over time no i did not know i it it came over time i was intentional about you know really creating a space to be thoughtful um i started doing things i got busy doing stuff you know like okay well maybe i can go buy a business and get a private equity sponsor let me do this do that and you know i i realized that my doing was getting in the way of me really figuring out what I wanted to be.

7:24Okay. Because so many, so many people that I know get stuck, what I call in the do have loop. Well, I have to have a job. So I got to do this. I have to have money. So I have to do more of this. And without the context of what, well, what is it that I'm striving to become? Then you just get stuck in this do have, do have. So for me during that sabbatical, it took me a year to go, okay, wait a minute. I can create a new identity. I can be whatever I want to be and let me discover what that might become. And once I kind of let go of the and got myself out of that do have loop, things started happening for me.

8:06And I was invited to help a business. I was referring in. And the next thing I know, I'm actually being a help. I'm being useful to others and I'm helping them grow their business or solve a problem. So I'm working through them. And it became very, very fulfilling for me. I didn't even think I was working, quite honestly. And then it was Christmas. I can't remember which year it was. My wife came and said, well, when are you going to get a job? When are you going to decide what you're going to do? And I thought, well, I guess I ought to decide. So that's when I just said, okay, well, I'm a business advisor.

8:49I just said, okay, well, I'll just be a business advisor. And I hung up a shingle on the outside of my door and voila, my new identity. I was no longer CEO, I was a business advisor. And I did that as a sole proprietor for, I don't know, about 10 years or so or nine years. And I really miss building something and I really missed having a team. And so I made a decision. I wanted to partner with two other younger guys to help me build a partnership. And anyway, COVID came along. That scared them off. They didn't want to start a business during COVID. I thought that was the right time to start it.

9:25So I did it on my own. Here I am. We're not a very big firm. We have eight employees.

9:34so before we continue i want to speak directly to those of you who are listening and thinking i know i'm capable of more but i need structure i need some help because here's what i've actually learned after gosh more than three decades in business you know ambition without clarity creates frustration. And motivation without structure, it really does fade very, very fast. So that's exactly why we created Rise Academy. And Rise Academy, it's not theory. It isn't fluffy motivation, although you will be motivated. And it certainly isn't another online course that you never finish. It's actually a fully structured growth environment for ambitious entrepreneurs, leaders and founders who absolutely are ready to do all of these things.

10:31Sharpen their strategy, elevate their leadership, increase revenue with intention and build businesses that actually support the life that they want. And inside Rise Academy, we focus on the foundations most people skip. Leading yourself, leading your teams and leading the business. It's about clarity, standards, decision making, commercial intelligence and execution. Because scaling, it really isn't about doing more. It's actually about doing the right things and doing the things right consistently. So if you're serious about stepping up into your next level of your leadership, your business life, and not just consuming content, but actually implementing it, then Rise Academy was absolutely built for you.

11:19So you can find all the details on our website. Go to www.brave-bold-brilliant.com. And now let's get back to the show.

11:33Actually, what you talk about there, you know, living with purpose and identity and all of these things, it's so important because, you know, we change and we evolve as we as we get a little bit older as well you know I've been around the block um for many years in business as well and um I think you're right if you absolutely love what you do and you feel like you're you're contributing then you're normally going to get better results and you're going to feel more fulfilled um throughout that process as well and that's clearly what's what's happened with you and but Rob I want I want to loop back around what you were saying with the the family business that you got involved in where you were the CEO but you were the only non-family member of that particular business.

12:16How did you navigate through that? And I'm really intrigued about the family relationships and some of the positives of family businesses, but also some of the challenges because people are people. But how did you manage being not only the only non-family member, but also the CEO running the shop? Yeah. Very interesting. I'll try to be succinct here. A friend of mine was an executive recruiter, and so she kind of recruited me into this. Now, this business did have a formal governance structure. So they had a board of directors. They had a couple of independents on their board, primarily professionals like their attorney and their CPA.

13:00And then they had some of the family members on the board, not all of them. And so through the recruiting process, I was introduced and they liked me and they wanted to hire me. So they decided to hire me. It took probably three months for me to negotiate my employment agreement. Long time. And I think you'll be surprised. It took me no time to negotiate my compensation. The biggest sticking point was the level of authority of decisions that I would have. And that they really took a while, but I wasn't going to take the job if I couldn't come in and do the job because it was a turnaround situation.

13:42You know, when you're a CEO in a growing company, that requires different skill sets. When you're a CEO of a company that's on fire and it's a turnaround, that requires a different leadership approach. So I knew that I needed, you know, there's not going to be a lot of consensus building and collaboration. It's going to be a lot of probably some autocratic decisions. So anyway, finally, we got breakthrough on that. And I'll just tell a short little story here. So the first week I walked around and the board of directors told me that the solution to the problem was just sell more. And I wasn't sure about that.

14:18Anyway, make a long story short. All the cousins, I called them into the office my second week, asked them to bring in their car keys and their platinum America's press cards. and hand them over to me. And everybody lost their job except for two because they were actually producing. They were valuable. I mean, we had some cousins in there that showed up to work maybe once a month and got some pretty nice salaries from it. So it was a, what I would call, they had moved off the rail and they had become a family first business. So they were serving the needs and wants of the family as a priority over what the business needs were.

15:10And so I had to make a radical change. And I remember, of course, I had the authority to do it. And I was empowered by the board. And the board knew ahead of time I was going to do this. And they said, well, good luck. But they had to give over their stuff, too. And anyway, that's what we did. And so it was a major transformation. So we needed to do that and make a radical shift to become a business first family. And we didn't quite get there with all the family members. You can imagine there was a lot of entitlements and things. But with the governing body of the family members, we were able to get there.

15:44And that shift allowed the team to actually do some major transformations. And we had some difficult times. We had two labor unions inside of this business, and so we had to negotiate through them to do the things we needed to do to turn around, get it positioned so the business could be sold. So that's how I worked on. I love that. That's great. Hand over your keys. Give me a house. Not quite. It was everything that was non-related to the business, the costs they were running through the business. We needed to make a symbol. I mean, it was some money, right? But it was more important for all the employees.

16:28And it was the only way I was going to be able to get the employees on board, too, because I had to do some changes in compensation. I had to do a lot of things, right? So I needed the owners to lead that. They didn't really want to lead it, but I made sure that the groups of employees knew that they were leading. Hey, look, this is what the owners have done, so let's follow them. Yeah, yeah. What sector was this business in, Rob? What was it all about? Industrial packaging. Right, right. And how many employees? Just under 300. Yeah, yeah. Okay. So kind of mid-sized sort of payroll. Yeah, yeah.

17:09I would say middle market. Yeah, yeah, yeah. But nonetheless, you know, that's still a lot of people to try and bring on the journey with you in the right way. Yeah. And Rob, obviously you had some, probably some tension there. You had some people buying in. You probably had some people not buying into the future. But when you came through the other side of all of this, what was the feeling from the family then when you'd actually proved that this was the right thing to do and you'd got through and really put the business in a different situation completely? Well, I think there was mixed feelings, to be honest.

17:49I mean, not everybody got on board. Not everybody had the same equal amount of shares. And so I would say there was some that were really trying to hold on to grandfathers or great-grandfather's legacy. And he was the sales executive. I should be the sales executive because I should inherit that role. That was kind of the thinking. And then there was others just saying, hey, look, I'm so glad we don't have this burden on us anymore. We were able to get it positioned in a way where we could sell the business. So it wasn't fully butterflies and unicorns at the end. OK, no, we did. They did. We it was three branches of the family.

18:31And I think a couple of branches really were having some struggles personally, familial struggles, which had bled into the business. But once I got there and brought in a team that was non-family related, that that kind of put a boundary of protection around the business so that those family dysfunctionalities didn't bleed back into the business. Yeah, because I guess I guess the question really is is around, you know, I know that you're you're you're very passionate about family businesses. You believe that you can create an infinite legacy, you know, by passing on multi-generations, et cetera.

19:05You know, but but I guess what are some of those biggest mistakes that family businesses make that jeopardize the chance of creating an infinite legacy? I mean, you've touched on a couple through this example, but are there any other things that you've seen over these years that kind of prohibits that infinite legacy being created in a family business? Well, the first one that I mentioned it is not making a conscious choice. I mean, a real conscious strategic choice. Am I going to be a business first family or a family first business? That has to be deliberate. Once that choice is made, then all the other decisions kind of live from that.

19:52and you can always go back and say, well, wait a minute. We said we're a business first family. Is this decision lining up with that? So we, and you know, family first businesses are great. In fact, most businesses start off that way, right? I mean, right. You're an entrepreneur, you're sole proprietor, you're just trying to get groceries on the table. But as that business goes through its life cycle, there needs to be a natural shift in philosophy to move from family first to business first. And it's that inflection point that not attended to can be very problematic. And that's why 60 percent or more of the first generation businesses don't make it through the second generation.

20:39It's a huge failure rate. And then it bleeds further to the third generation, where the statistics are even worse, right? It's like 12 % or 13 % maybe might make it to the third generation. So that's a strategic conscious decision and it has to be made consensually with all of the shareholders, majority, minority, doesn't matter. Everybody's got to be part of that, own it and then live in it. So I'm very passionate about that. I have seen so many businesses be wildly successful because they made that choice and all their decisions, strategic decisions are lined up against that and those who haven't.

21:24And then the other, Janelle, I'll just say, is being indecisive with it or being opportunistic, saying in the boardroom, yeah, we're a business first family. But yet when it comes to a family perk, well, on this issue, we're going to be family first. Yeah, we're going to hire cousin Harry. Yeah, we know he doesn't really have the talent, but he's a nice guy and he needs a job. So we'll just make an exception here. So when you stand on the threshold of that door going, are we or are we not business first family, that actually becomes worse. And your employees know and understand that. Employees and customers, all your stakeholders, your business are going to appreciate a business making a declaration that we're a business first family because they're going to go, oh, you're going to be here for a long term.

22:11Oh, you're thinking about the future for me. You're building in succession plans. They want to be part of that. So non-family members understand there isn't a ceiling because my name's not on the door of the building. I have an opportunity to grow my career here inside of this business. So to me, I mean, I really try to preach this quite a bit. That's the single biggest inflection point of can this business survive from one generation to the next? And I mean, I've also advised quite a few businesses that have been founder led. And, you know, I always find it a very interesting period around when a business founder is thinking about, do they exit?

22:58Do they sell? Do they pass it on to the next generation? And I'm just interested in your perspective on this, Rob, where maybe the children, the next generation don't want to take on the business. The parents, maybe, you know, that might be their preference, but the kids just just not interested or they don't want to. How do you deal with that situation and from the experiences that you've had? Well, it depends on when we are where we are in the life cycle of the business. is I always encourage everybody to start your succession planning early. I mean, even from the, you should start it when you've found your business, right?

23:41Be thinking about, okay, how am I going to be exiting? Because you can have these kinds of conversations. So I think if it's early, you just build in contingencies. That, yeah, your children are, you know, they're in school. They're school-age children. and you're making succession planning decisions 20 years down the road. You don't know if that child's going to be there or not. So we try to coach them and prepare them to think of some other alternatives. When we have a situation where the child just all of a sudden says, I don't want the business. And the founder has been thinking that child's been in the business, say 10 years.

24:19We had a case like this. They've been there and they said, no, this isn't for me. it's quite a big upset. And so the role of us that we have is to make sure that that owner understands there's optionality. You don't want to just get locked in on one option and always build in optionality. We help them discover what those options are. And in the case that I'm talking about, we actually found a non-family member executive who ended up coming in and buying the business from the owner because the children had decided they didn't want to be part of the business. Well, I mean, you're an example yourself, aren't you?

24:59That you went in as a non-family member, as the CEO, you know, and actually as a living, breathing example in your own direct experience there in the role that you played in that as a non-family member coming in. And, you know, when things can get emotional and heated, Rob, with the work you do as an advisor, how much of that ends up turning into you being a counselor or a family relations therapist yeah well we're we're dealing with human beings and so i would have to say most of the time right um so i i think for us when it gets really challenging um it's because human beings perspective are misaligned.

25:44The objective is to try to focus in on what is the real problem distinct of emotions and reactions. People can have opinions, but that doesn't mean it's factual. And so we have to help them really understand, well, what is the true fact here? What is it that we're really solving. And once we can get all parties to laser in on the real problem, distinct from emotions, then we can get through it pretty easily. But it takes some time. And I think it takes some good professional facilitation at times to do that. And we try to coach our executives to become very good at handling conflict or upsets with having difficult conversations.

26:33Yeah, no, and that's it, isn't it? Because like you say, you know, when people say, oh, you know, it's only business, it's not personal. Well, it's always personal, even in not even even when it's not a family business, you know, because we're human beings with emotions and feelings and everything that comes with that, you know, and I think sometimes we can dehumanize business sometimes, but actually we can't forget, forget that we are emotional beings. And that's a good thing, right? Some, you know, leaders of businesses, entrepreneurs, I mean, we have a hard driving personality. I mean, we get stuff done.

27:06We're high receivers. And so what happens is, is we believe we need to fight for being right. Right. And so what we try to do is help those individuals, whoever we're working with, is give up trying to be right and fight for what's right. and once you give up for being right, because when you're trying to fight for being right, that means you're going to make somebody wrong. And so it's really hard to get that solved or get clarity or alignment. So let's back up and look, let's look at, well, what's really right here? Go back to, hey, we decided we're going to be a business first family. Okay, is this really right for that?