Finance is a delicate topic that can sometimes lead to emotionally charged discussions, especially within family businesses. Obtaining access to finance-related information and understanding the information provided are two aspects that can give rise to fears. However, financial literacy, transparency and a bit of planning can go a long way in dissipating these fears. In this episode of our WiFB Conversations, Amy Katz and Ramia Marielle El Agamy discuss some ways to address the fear of finance and avoid conflicts in the family business.

This episode of Conversations with Women in Family Business is co-produced with Amy Katz, founder of coaching-business Daughters in Charge.


R: Welcome back to another conversation about women in family business with Amy Katz from Daughters in Charge. Today we’re going to talk about the fear of finance.

When it comes to the family businesses, there can be anxiety attached to the discussion of money, wealth, family ownership and the payoff the business brings. Today, Amy and I put together a few takeaways on how to get over the fear of finances.

Amy, when you work with women who are from a family business background, what are the tell-tale signs that there is anxiety in connection with a finance topic? Or do you feel it’s a topic that women connected to the family business feel very comfortable around?

A: I think many women in family businesses are comfortable with the whole notion of financial literacy. They grew up in the business, and that’s the language they heard around the dinner table, whereas women who don’t have that experience may have more fears. The values and the comfort with the discussions about money can raise a lot of issues that may make some women feel that they shouldn’t ask questions. It’s a delicate topic, and fears may arise in some women who are supposed to pay attention to it.

I would say, don’t be afraid of a balance sheet. Don’t be afraid to dig a little deeper into what’s going on in your family’s business – that’s your future. It’s definitely a fear-worthy topic and one that would be helpful for women to get more comfortable with.

R: The number one takeaway in getting over your fear of finance in the family business is financial literacy. Not understanding what’s going on is the source of this fear. For a lot of family businesses, finances tend to get delegated to other departments or third parties. This can be dangerous, especially if you’re looking to understand and shape the future of the business.

As a next-gen or a new addition to the family business, when you are trying to bring ideas to the table, understanding the financial implications of those ideas can be very important. You need to know your balance sheets and your financial reporting. Don’t use the excuse that you’re not a numbers person. That is not an excuse anyone can afford when it comes to running a family business or being a responsible owner. Try to understand the basics.

The big challenge here is obtaining access to that kind of information. A big part of the fear is the fact that you wouldn’t know where to look for it. There’s a lot of hidden stuff happening in the family business, and sometimes it’s linked to the informality and how we’re dealing with these things. How has your clients’ experience been around getting access to family business finances?

A: I think women can start asking questions that other people may not be asking. Something that is really emphasised in our culture now is the value of transparency. It’s giving employees at all levels the opportunity to see the status of the business and where their contributions are making a difference. Family businesses traditionally have been very private, and it can take a family member to push hard enough for that door to get opened.

Once people have a sense of their contributions, they have a sense of their future. It gives them the opportunity to plan and spend. When it comes to marriage and relationships, it is important to know where you stand on this topic rather than just assuming everything is fine. Wanting to know more about your own situation is a legitimate and important desire.

R: The number two takeaway is that you should push for and promote transparency in the family business around financial issues. Another big challenge that families face is the concern over who needs to know how much information. This will, of course, vary enormously from one family to another. Some families have reporting styles that are almost better than a public company. But for other families, it’s totally opaque and non-transparent. The family doesn’t have an overview of all the assets, and they don’t know where they’re going financially over the next couple of years.

Transparency takes away the element of surprise that you don’t want when it comes to finances. Especially since we’re all dealing with so much turbulence in the economic landscape, the last thing you want is for your own balance sheet to come as a surprise. You want to know where you’re going. If you’re an owner who is passive in the activities of the business, you want to understand the dividend policy that comes attached to certain performance markers of the business so that you can adjust your expectations. It reduces conflict between family members as well when those expectations are dealt with by clear reporting.

Some family members might feel like the less everyone knows, the better. But that can place way more pressure on the people working inside the family business. This also brings us to our third point, the questions surrounding the values of the family towards money and wealth. What matters to the family? Does it have a very strong emphasis on running the business for the sake of the family? For the sake of the community? Or for the sake of purely getting to the next generation without massive growth ambitions? Amy, where have you seen the main challenges in creating a clear set of values around the relationship between wealth and family businesses?

A: There’s one category that I think is important, and that is, employees. Where do the employees fit into our value system? Who comes first and what policies and practices do we have? Sometimes the focus becomes very heavy on family members and not as much on the other employees. For some families, that’s a hard shift to make, and it can be hard for the employees as well.

Another important category is philanthropy. You mentioned the community. A big question for wealthy families is, how do children understand their role as philanthropists? What kind of philanthropist do they want to become? Do they want to write cheques or do they want to be social entrepreneurs who are thinking, “How do I invest in businesses that reflect my values?” I think we’re seeing a shift around topics such as, “How do I identify myself as a philanthropist in my community or in my country?”

This is an important part of identity formation, particularly for wealthy next-generation members. Some families are naturally big savers, and others are big spenders. All of us have to figure out our own tolerance for risk or our own comfort with the way we manage our money.

R: Our third takeaway is to clarify the family values around money and how the family perceives the importance of money in their wealth since wealth is composed of more than just financial assets. The biggest challenge here is in relation to which generation we’re talking to. If a family business is in the founding or second generation, their attitude towards money is very different than if you’re talking to a fourth-generation member. Their relationship with the business would be exclusively through philanthropy, for instance. The alignment between how the business creates value, how it makes money, and how the family then spends it becomes very important.

When talking about multiple generations, we often hear that the third generation will destroy the wealth that the first two generations have built. There might be something to that in the sense that they may have lost the reason “why”. Why are we doing this? Why are we making this wealth? What continues to drive the family? I think this goes into an even bigger discussion about not being able to survive generations because the values around money vary from one generation to the next. That is a very important topic when we talk about succession.

There’s another aspect of this that leads into the whole succession problem that we very often see in family businesses. The fear of finance also ties into our identity and role within the family business. Often, you just go in, you love it, and it’s all emotional identification. Establishing what your financial values are can get lost along the way. For instance, asking for a raise can be challenging for an individual in a family business. Amy, why is that discussion so emotionally charged?

A: Parents who created a business that their children can easily enter have also created a situation where the child feels very grateful and indebted to their parents for the life that they have been allowed to enjoy. All of a sudden, it moves beyond, “I’m so grateful and lucky that I work in a family business,” to, “Wait a minute. I’m contributing quite a bit here. My brother, sister and even non-family employees aren’t doing what I’m doing.” Then you may have your husband or partner saying you deserve more, and things can get a little dicey.

It takes a fair amount of personal courage to approach family members and say, “I think my role has expanded and I deserve more money.” It comes from a sense of understanding your value in relation to how others are contributing. Just as it does in a non-family setting when you start to realise that what you have contributed to has shifted over time. You’re gaining more responsibility and developing credibility, and you believe that you deserve a raise.

Depending on the personalities and relationships, being able to speak up and ask for something that you feel you deserve can be fraught. But it can also be a statement that you appreciate what you’re bringing to a business. It’s a really important thing for both men and women to feel when they join a family business.

R: I would add the whole timing issue to this. In any family business, a key thing to remember is never to ask for something in the moment that you want it, especially if you know there’s no structure for it. If anyone asked about the first things they should do when joining the family business, I would say set up the structure (as in rules) now for the things you know you’ll want one or two years down the line.

Eventually, a raise always becomes a topic. The problem is that asking for a raise while also asking for structure around how that raise is justified can be overwhelming. This is fraught with difficulties because you’re playing two roles, and that never works in my experience. Don’t ask for two things at the same time. Eventually, we all come to the point where we feel we deserve more – and so we should. Don’t shoot yourself in the foot by trying to do these things at the same time.

Finally, the four takeaways to get over your fear of finance in the family business are: don’t forget to work on your financial literacy; don’t forget to promote transparency within the family business; make sure everyone understands the value that you have towards wealth, wealth creation and how to deal with money; and lastly, understand your own financial value so at the right time you can ask for what is due to you.

A: The other thing I might suggest is to consider finding your own financial advisor. When a family business has used an advisor for many years, that person becomes part of the family. But I also know women who got their own advisors and found that to be particularly helpful.

R: Thank you very much, Amy, for this great conversation. We will be back next week with another topic for women in family business.

About Amy Katz and Daughters in Charge: Amy Katz Daughters in Charge

Amy Katz is an executive coach and social psychologist whose business, Daughters in Charge, focuses exclusively on supporting women in family businesses.  She is the author of Daughters in Charge: Learning to Lead in Your Family’s Business.