by Just because something is handed to you, doesn’t mean that it will continue on in perpetuity.
According to Peter Sides, the president and the third generation of his family to operate the Robert M. Sides Music Center in Pennsylvania, family issues remain the #1 challenge in most closely-held companies.
Family issues remain the #1 challenge in most closely-held companies. I’m aware of 9 or 10 businesses that were doing well over $5-10 million that just aren’t here anymore. A lot of it had to do with generational handovers or family dynamics that undermined the success of the business. Good things happen very quickly and bad things happen very quickly because there’s no middle management to slow either direction down.
According to Peter, to minimize family tension, you have to get the family issues out on the table.
Peter is no stranger to hearing these stories. In our recent conversation, Peter took me for a walk down his memory lane remembering how as a child his father would take him to NAMM and point out the owners who were doing all the right things as well as the owners who were doing things badly. Peter says this was done not in a mean spirited way, but was his dad’s way of teaching him the responsibility of ownership.
Lessons were being learned at the tender age of 9. And it looks like these lessons were learned well by Peter and his sister Alysha. I asked him how he was different than his sister:
She is more of a natural sales person than me. Although we can close the same number of sales, she seems to do so with more passion. My preference is merchandising and operations.
What surprised me was his next point about employees.
It’s not just with the family- the employees are not clueless about these things- they are more likely to talk about the family dynamics than even the family. They don’t want the business to go under. They might say- hey I wish so and so would do this. So Peter’s tip- listen to your employees
And that’s why the aphorism- shirtsleeves to shirtsleeves in three generations is ubiquitous. 70% of families fail to maintain wealth through the third generation. Peter says- Yes, it’s the third generation who usually kills it because we never knew what it was like to be poor.
In other words, the father buys, the son/daughter builds, the grandchild sells and his son begs.
Peter takes the pursuit of happiness and balance with the same rigor and discipline a CEO runs his company.
It’s a tremendous opportunity to be self-employed and chart your own course and much better than hearing my friends talk about the stress of corporate America.
And that’s why it’s no surprise that he’s not too macho to elicit the support of job coaches, executive coaches and when needed, therapists to help keep his work and life in the right balance. An essential goal for Peter is being a good husband and good father and it doesn’t happen by accident. It takes a conscious effort to live a life in harmony with one’s values.
I asked Peter for one last recommendation to other music retailers.
He said to diversify your wealth. It’s hard to pass the business to your family at a price your children can afford if the owner has 100% of their wealth locked up in their store. Music retailers must care of their own retirement for successful succession.
The old saying of not putting all of your eggs in one basket is worth repeating.
Wearing my financial planning hat, here are my 3 tips:
- Max out your retirement investment portfolios-i.e., 401(k) SEP, Roth.
- Make sure your life, disability, long term care insurance needs match your policies.
- Update your directives- Will, Power of Attorney, Health Care Proxy, Living Will.
And if Peter and Alysha have the same DNA as their grandmother who worked in the business until the sage old age of 99, they will have many wonderful years of music and joy ahead of them.
Please note: Peter Sides is not affiliated with BH Wealth Management or First Allied Securities.