I attended a presentation on Business Succession Planning entitled “Making Your Family Business Endure Across the Generations.” The speaker was Mitzi Perdue, author of a recent book on this topic. Mitzi lives this topic first-hand, as her father’s Henderson family started Sheraton Hotels, and her husband’s family owns Perdue Farms, the largest producer of organic chicken in the world.
I expected the presentation to be all about corporate governance and how to set up the best structure for a business enterprise. That’s not what Mitzi talked about at all. Instead, she said the solution to having a family enterprise last lies with the family culture.
Mitzi gave a number of tips on how to create a strong family culture. I will share more of her ideas in future emails, but today’s focus is on one tip she emphasized most emphatically, a tip that may surprise you as much as it surprised me: family travel, and not just family travel, but endowed family travel. Here’s what Mitzi had to say about “endowed vacations,” the surprising solution for how to sustain a family business enterprise.
- The family travel started 130 years ago when her ancestor, John Henderson, set up a trust to pay for an annual family reunion. In her words, “the annual reunion is our safety net, the most important part of our lives.”
- Mitzi encouraged the Perdue family to also plan vacation reunions. The Hendersons travel annually on a more upscale trip; the Perdues travel each 18 months on a more modest trip. It doesn’t have to be lavish; the key is to all be together.
- Per Mitzi, if you don’t set up a trust to pay for the costs, then after Generation One dies, it lasts only a couple of years, then people go their separate ways. For a couple of years, it’s Thanksgivings, by year 5 it’s just weddings, then just funerals, and by year 10, they don’t even go to funerals.
According to Mitzi, you not only need a trust to endow the costs, but you also need a trust to provide the structure. It takes a trust so there’s a trustee whose job it is to make sure someone plans the reunions and they actually happen. This structure dovetails perfectly with the FAST (“Family Advancement Sustainability Trust”) pioneered by The Blum Firm and Tom Rogerson. The FAST is a trust that (1) provides the funds and (2) provides the leadership to make sure families continue to meet regularly. To learn more about the FAST, here’s a link to our May 2021 post on it.
As I’ve said before, “don’t let a funeral director plan your next family reunion.” Family travel is not just fun, it’s critical to sustaining a family culture, and it’s critical to the survival of a family business as well as the survival of the family.
Marvin E. Blum
The Blum family’s annual trip to YMCA of the Rockies, now in 30th year. The travel doesn’t have to be lavish; the key is to be together.