KEITH BROWN, PRESIDENT & FOUNDER, Financial Confidence Advisors Inc.

KEITH BROWN, PRESIDENT

"Protecting Everyone: Family Businesses,

Succession Planning and Keith Brown"

Legacies of business acumen and skill. Knowledge transferred through formal and informal apprenticeships. Marriages that are sustained through hard work and a commitment to cooperation. A conversation with Keith Brown is rich with these respectful impressions of his clients. He is surrounded by people who have built successful family businesses. He also knows that family businesses have an entrepreneurial culture where succession can’t be left to chance.

Keith is a Certified Financial Planner and Certified Exit Planner who specializes in succession planning. He advises the heads of family businesses on how their operations should move forward when the founders retire, decide to work less, pass on or exit the business.

“Businesses are harder to run when there’s love involved,” Keith says. “My concern is ensuring that family businesses not only have the structures they need to function at optimal levels, but that the children have the knowledge to run the business or a professional management team is in place, and most importantly; to ensure that the family’s assets and well-being are protected for the future.”

The old saying that family fortunes go from “shirt-sleeves to shirt-sleeves in three generations” looms large in the mythologies of family businesses. Families call Keith to get the expertise they need to make plans to prevent that fate. That they do everything they can to protect their businesses is vital to all of us. According to the Go Forth Institute, 80% of Canadian businesses are family-owned, but only 20% have a fully-realized succession plan in place. Creating a plan can mean hearing some hard truths about the roles of each family member and the value of those contributions.

“Fair isn’t equal. Not always,” Keith says. “It’s a fact that no one in the family wants to hear, but once they hear it and validate it, we can move on to creating a plan everyone can live with and prevent conflict in the future.”

While the assumption that the children will inherit the business is still a factor, Keith reminds his clients that there is no single way of looking at the future.

“Sometimes, the kids have the same entrepreneurial spirit and drive as their parents. They are fiercely independent risk-takers who will work hard and, if they lose, they will recover,” Keith says. “In some of the other families I see, I know that none of their children have the aptitude or the fearlessness to do what their mom and dad have done, but how many people really are willing and able to take the risk and make the sacrifices required to run a business? Some people are just not entrepreneurs and don’t know how to build a business or make money, while others do.”

Like other forms of financial planning, the succession planning Keith facilitates protects families from some of the risks inherent in self-employment.

“My primary goal is to get them to sit down and strategize,” Keith says. “It’s important to just get a plan going, something in writing that clarifies goals and outlines the steps needed to get there. Then, if a good opportunity comes along and they need to grow or to sell, they will be ready for it.”

Part of that strategic plan means putting guidelines and procedures in place that govern how a business operates.

“When people are working every moment to start and grow their businesses, they hire their family and friends to get the job done,” Keith says. “The mutual loyalty and dedication in those relationships get the business off the ground. Unfortunately, when the business grows to the point that they need to formalize their professional positions, like hiring an HR person for example, there is often no rule book for how your family member employees get to become a manager, earn a bonus, or even have a performance review. In a privately-held company where some are performing and some are not, there is often a lot of reverse engineering that has to be done to create formal structures and operations that closes gaps in expertise and experience.”

Family businesses that operate without a strategic plan or operations structure can become successful entities, but behind the perceived success of a family business is often a family working without protection.

Keith’s drive to protect entrepreneurial families was inspired by the origins of his own career.

“It was a trial by fire,” are the words Keith uses to begin his own story.

When Keith was 19 he had an older brother who was married and living out East. His much younger siblings were in elementary school and he was working in his family’s business.

“We were developing real estate on a small scale,” he says. “I was doing the drafting and designing the houses. There was an economic boom cycle at the time and we thought we had a bright future.”

While father and son were in the midst of building three houses, Keith’s father was diagnosed with pancreatic cancer and given a month to live. Told to get his affairs in order, the elder Mr. Brown called his brother-in- law, an insurance broker. The broker asked if there was life insurance on the business loans. Uncertain if there was, Keith’s father called the bank. The bank manager then asked why the information was required and Mr. Brown explained his situation. A week later the bank called and said there was no insurance and called in the loans. The family’s primary residence had been put up as collateral and had to be sold.

“It wasn’t an emotionally overwhelming event at the time,” Keith said. “I didn’t have time to grasp that. I just had to concentrate on getting the work done.”

To get the work done Keith called in a few friends who were carpenters to work with him side-by-side.

“We managed to finish one of the houses very quickly, so my mother and siblings could live there,” Keith remembers. “Once they were taken care of we could focus on building the other two houses and selling those to keep everyone afloat.”

Keith’s trial by fire taking over the family business did not trap him, or seal his fate. As often happens, life’s worst challenges created the opportunities for life’s greatest accomplishments. He was able to build on the experiences that followed his father’s death and determine his own path.

“My friends and I built a few more houses after that, but in my twenties I knew I wanted to go to school and find my own way,” Keith remembers. “I eventually went into my uncle’s insurance business and learned a lot about what life insurance can do from him. It wasn’t long before I went off on my own again and have built my own businesses and my own family.”

Keith founded Financial Confidence in 2002 and it quickly became a family business too.

“My son Dylan came in to help over the weekend once and, 10 years later, he is still here!” Keith says.

Businesses might be harder to run when there’s love involved, but once family businesses are in your blood, it’s there to stay. Good succession planning just makes it easier for the love to grow along with the business.

Kate Baggott's technology and business journalism has appeared in the Technology Review at MIT, the Globe and Mail, Canada Computes, the Vancouver Sun, and on the Business to Business News Network Kate is the author of two short story collections.

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