How Do Family-Owned Businesses Impact Legacy?
Updated: Oct 25, 2022
David Shands & Chick-fil-A's Dan Cathy Explore Generational Impact
Legacy is a word that is thrown around frequently in modern media, but what does it mean, truly?
The Cathy family, the founding family of the Chick-fil-A empire, is the epitome of legacy.
Feeding families since 1964, with its world famous fried chicken sandwich, the Chick-fil-A business model is one that every enterprising family should look to for guidance.
Our very own, David Shands, host and creator of The Social Proof Podcast, sat down with the eldest son and former Chick-fil-A CEO Dan Cathy, at EYL's (Earn Your Leisure) annual event, InvestFest.
If you have children, are planning for a family or have dreams of obtaining legacy, you will not want to miss this episode or blog.
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TABLE OF KNOWLEDGE
Family Values + Privately Held Business = Success
The Chick-fil- A Customer Service Factor
Principles In Business
Dan Cathy has been a part of his family business since birth. He jokingly states even before birth, he was in the mix. His mother was pregnant with him as the family restaurant began.
He knows firsthand the benefits of working for and being a part of a family business.
Aside from the financial aspect, which does matter, Dan states one of the biggest benefits of a family-owned business is the leadership skills family members and team members learn.
Specifically, a positive family business work environment can develop compassion, work ethic, empathy, patience, and develop character.
These principles meant the most to his late father and Chick-fil-A founder, S. Truett Cathy, and his mother, Jeanette McNeill Cathy.
Neither of them, unfortunately, had much love in their households. They decided that needed to change. They broke that pattern by having love in their family and created the same in their business.
They proudly created a business where employees and patrons felt love through their hospitality.
Continuing the Legacy
Whether you are from a small town or a large city, you've seen a thriving family business suddenly disappear after years of dedicated service.
The business may close for any reason, but specifically it closes because no one in the family may feel called to step up and carry on the torch.
As it relates to Dan, becoming the CEO of his family's business was all about finding his purpose.
One of his favorite quotes is from Steve Harvey: "Our career is what we're paid for and our calling is what we're made for."
Dan feels if we can find our unique calling, it will bring unspeakable joy into our lives.
Dan was fortunate to find his calling at seventeen in the hospitality industry.
His father didn't force Dan to continue the family business, he wanted him to make his own decision.
Dan soon realized through his calling and him being the eldest, that his future was with Chick-fil-A, maintaining and preserving his family legacy.
Dan served as CEO for several years and passed the torch to his son, Andrew Truett Cathy, on November 1, 2022.
Legacy Law: For those who run a family business, your children get a front-row seat as you build. Show them a positive work environment. Plant a seed of interest in their mind so, if they desire, they can easily transition to a role in the family business. Instill in them fundamental principles of business but allow them to be themselves.
Nurturing Growth Within the Family
Dan, his brother and sister, made a pact with their parents that they would keep Chick-fil-A, a privately held family-owned business.
This may sound easy, but Dan makes it clear that this takes work and organization to uphold. He has sixty-five members in his family. To keep everyone on the same page and focused, they commit to share, treat each other with respect, and remove all divisiveness from their family.
Each family member must discover their calling, as he did, before aligning with a role in the family business.
Next, it's important to make a distinction in what capacity they will work for the business. It's more than just being born into the family.
Regarding family involvement, there are a few considerations he advises families to make.
"There's a choice that you have about being involved in the management of the business, but they don't have a choice on the ownership [or] stewardship of the business. "
"They are going to be future owners of the business that may not be involved in management of the business. You've got to make sure that the manager of the business has lots of competencies and that you're not compromising the quality of the leadership based on somebody's last name or family relationship." - Dan Cathy
Legacy Law: Use your resources. There are many case studies about successful family businesses. Dan urges that you be mindful that only a third of family-owned businesses survive to the second generation, and far fewer than that survive into the third generation. Be smart and study to develop your best practices.
If you have gone to any Chick-fil-A, no matter where you were, you probably noticed two things.
The impeccable customer service and the immaculate flow of operations.
Down to the placement of the pickles on the sandwich, consistency is the landmark of their success.
David asked how they permeate this value throughout every Chick-fil-A location.
Dan believes that leaders of an organization must have a crystal clear understanding of the experience they want their customers and guest to have when patronizing their business.
From a Chick-fil-A bag of goodies he had with him on stage, he grabbed a conductor's wand.
He urges business owners to think and be like a musical conductor and blend everything together to make a top-notch experience for consumers.
Do this by having a clear cut clarified vision.
If it's not clear, you will be in trouble when you try to duplicate your product. Do not dumb down your "music" because you don't have the right people on your team. Get the right people and maintain the standard.
How a Roll of Toilet Paper Illustrates Consideration
The next item from the bag was a roll of toilet pater, which David held up quizzically.
It was a roll of toilet paper.
Dan said hotels that fold the tip of the toilet paper on the holder typically charge more and are higher rated than other hotels that don't.
Dan encourages small, privately owned business to find an insignificant detail to impress and entice customers to keep them coming back.
Dan does this wherever he goes publicly, just to enhance someone's experience, and at home.
Do the same in your business to make people feel valued.
Pass The Baton
The last object, Dan, pulled from his bag was a runner's baton.
He shared with the audience a quote from John Maxwell, "Success is all about succession."
This is how many family businesses die off when the founder does. They do not put proper planning into place to secure or sustain the health of the business.
Legacy Law: Who can you pass the baton off to carry on your business? Dan urges that you take them with you so they can observe your actions. By learning and sharing space with you, they will maintain your enterprise.
It's all about the exchange of the baton.
"It's not the four fastest runners that run a relay [race]. It's the team that gets the baton around the track first who wins the race." -Dan Cathy
In a race, for a successful baton pass, both runners must be upright and in balance. This applies to the principles that a company must uphold.
They must align everything before it's passed off to the successor.
Secondly, to avoid dropping the baton, one runner must feel the other runner pulling the baton during the handoff. The best leadership transitions are when the successor is ready to lead and not when the founder is ready to leave.
If they pass the baton too early, then the results are horrific, and the business pays the consequences.
If you want to build a legacy for generations to come, follow these principles that the Cathy family use. It will ensure that you pass the baton, pay attention to the smallest details and create an environment that will foster the effective growth of every facet of your business.