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Family Business and Social Capital

Edited by Ritch L. Sorenson

The chapters in this cutting edge book comprise scholarly work on social capital in family business along with chapters written by family business owners and advisors. Topics covered include social capital as it relates to governance, trust, family and business identity, communication, family councils, work–family balance, and the use of advisors and continuing education to build social capital. Novel in its approach of integrating the voices of scholars, business families, and advisors, this book is useful not only for business research and classroom use, but also for business families and their advisors.
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Chapter 8: Building trust in advising family businesses

Margaret A.T. Cronin

Extract

At my law firm, I advise family businesses and families of wealth in business and estate planning matters. In preparation for this article, I asked one of the owners of a family business that I advise about trust. “George,” I wrote, “Do you trust me as your advisor?” “YES,” he responded. “If so,” I wrote, “why, and how did I build this trust with you?” He replied, “By gaining [the] confidence of my entire family. Also, by [you] being so organized for each meeting. Your attitude, smile and your ability to advise us of necessary changes that need to be made to keep our [documents] up to date.” In reflecting upon these words and my experience with other family business owners, four factors seem to stand out as building blocks in creating trust as an advisor to family businesses: congruity, value, strategy and connection. Congruity means the compatibility between the advisor’s direction and the direction of the family business. Value represents the advisor’s technical knowledge and experience in the field upon which the family business can draw. Strategy denotes the advisor’s effectiveness in being part of the solution that helps the family get from here to there. Connection means the ability of the advisor to relate to each family member, owner, and manager that is part of the system. I am certain that there are other compelling factors and that each advisor will have his or her own perspective on developing trust. In this article, I offer only my own observations in the hopes that sharing my library of experiences will help build our collective knowledge of what it means to serve family businesses.

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