Fighting Entitlement Is Part of the Family Business

There are many entitled characters in shows and movies, but our favorite might be Veruca Salt from “Willy Wonka & the Chocolate Factory.” Unlike the patient and good-hearted Charlie Bucket, Salt wants a lot and she wants it now, and for today’s family-run business owners thinking about the future, that attitude is a concern. (Cue the Oompa-Loompas.) 

Thirty years ago, business owners were most concerned about competition, regulation and labor, according to research published at the time by the Family Business Consulting Group. A new study from the organization finds the top concerns are now about preparing the family for the future, especially preventing a sense of entitlement from taking root. 

“The question for family businesses is no longer only if the business can withstand external pressures,” said Kristi Daeda, president and CEO of the FBCG. “It is increasingly, ‘Are we preparing the family to own this responsibly and with purpose?’” 

Advisors working with business owners said that preparation for the next generation requires serious coordination and planning. Education, clear expectations and meaningful responsibility are how families build engaged stewards of wealth.

Silver Spoons

“When kids grow up with a luxury life or know their family has significant wealth, it can alter their perception of reality,” said Noah Damsky, principal at Marina Wealth Advisors. “Unfortunately, it’s challenging to instill this sense of urgency after they’ve grown accustomed to an entitled lifestyle.”

The fix? Lower their expectations. “Swap the [Mercedes] S-Class for a Civic,” Damsky said. “Eliminate the safety net to inspire them to achieve. Even better, start when they’re kids. Don’t lead them to believe your luxuries will automatically extend to them.” 

Parents often struggle to facilitate honest conversations about money or business succession, said Brian Abatemarco, CEO of CedarStream Wealth.

“The financial education phase should start as early as possible and result in more responsibility for the children as they get older,” he said. “Money is an emotional subject that hinges on a family’s values. It needs to be responsibly disseminated to the next generation.”

Founders who earned wealth the hard way want their children to understand the effort, not just enjoy its rewards. That’s perfectly reasonable as a belief, but it’s not a strategy for inspiring the next generation, and entitlement grows in silence, advisors said.

Some values-building strategies advisors shared include: 

• Asking heirs to work elsewhere and earn a promotion, before joining the family business. 
• Giving together via donor-advised funds, where kids research and recommend grants to develop decision-making skills. 
• Crafting (and frequently discussing) a family mission statement that turns unspoken values into shared guidance. 

High Hopes. Despite their challenges, family business owners remain optimistic. Ninety-five percent of respondents to the FBCG survey expect revenue growth over the next five years, and the same percentage expect their businesses to remain under family control.