Welcome to the Network of Family Businesses & SKM Associates Family Business Advisors.
An Innovative Global Firm For Family Businesses overflowing with resources. Focused exclusively on the unique needs and concerns of Family Businesses, Solopreneurs, and Small Business Owners by providing educational material, networking opportunities, business family consulting, and leadership development for families in business.
Sunday, August 29, 2010
Are Family Businesses Prepared to Lobby for Tax Exemptions
Sunday, August 22, 2010
Issues for a Family Business in a Merger, Acquisition or Generational Transfer
Families in business must begin planning.
In our recent on-line seminar, Robert H. Nice of Robert H. Nice Consulting in Telford, PA and a member of the Partner On-Call Network stated for a Family Business that desires to ‘cash out’ and obtain the highest dollar value, the planning process should begin at least three to five years ahead of time.
Robert stated it is critical that Families in Business understand the subtleties of the “deal” whether acquiring another business or passing the business to the next generation. He stated that in many situations the seller has unrealistic expectations of the value of the business. In defining the trans-generational issues, Robert stated the valuation process must be understood by all family members and will be critical for the transfer and for estate planning purposes. Failure to plan correctly could jeopardize the long-term family legacy as well as tax complications. Robert strongly advocated having all family members involved in the buy / sell / transfer discussions giving all family members a chance “not” to be part of any deal. He stated this also helps determine who of the family may have the drive, desire, knowledge, skills, and abilities to lead the family and continue growing the family legacy. He added, “It may not always be the first born.”
Other internal family issues he defined included determining how Dad will get paid back and will the next generation be willing to sign a bank loan as a guarantee of their commitment. He also stated that any acquisition a family in business makes should be structured with the next generation in mind, in order to reduce the current generation’s estate planning burden. Keeping the next generation in mind does not always occur.
Robert reiterated that families in business must know and understand the financial picture and value of the business in order to make the right business decisions. He also stated that regardless of the size or scope of the business having documented processes and procedures for operational items, customers, accounting, exit strategies, and liquidity policies will enhance the positive transfer whether to family or in an outside sale. Another key point was to begin planning for the transition now, and that means involving the next generation.
What has been your experience in acquisitions and generational transfer of the family business?
Sunday, August 15, 2010
What does change mean for Families in Business
“There is nothing permanent except change."
Heraclitus, 513 BC
Based on this quote, people have been struggling with change for over 2,500 years.
I recently was talking with several business owners who commented that they felt the economic climate, the business climate, and the family dynamics were changing so fast they did not know which way to turn. Those comments stirred my thoughts to explore what do business families need to be aware of, or not lose in a changing environment?
If we stop to think why people usually fight change it is frequently because they feel they do not have or will not have control and the familiarity of the known is more comforting than the unknown. The natural response to this feeling of powerlessness, frustration, and fear is resistance. This resistance requires inclusion in the discussions, evaluations of the options, and a belief that as a family all are united.
Several ways we can begin to help our families and businesses deal with change is to recognize and admit that change is a fact of life and without it we will never grow our business or build a family legacy. With a recognition of these facts, together the business family can decide what, where, when, and how the change will be met.
By reaching out to other family members, maintaining realistic optimism and a can-do spirit the business can meet and plan for changes by finding new opportunities in changing situations.
Sometimes change feels like a roller coaster with no one sure which way to go.
If you expect the unexpected you will not be surprised that you are surprised.
How is your family and your business planning for change?
Thursday, August 12, 2010
How much stress is created in the Family Business?
The recent episode regarding the JetBlue flight attendant that took a rather unique way to exit the organization, make a statement, and gain notoriety raises questions that each family business should consider. If one believes the Flight attendant’s actions truly occurred as a result of his inability to handle “stress”, what is the alternative. Some stress can be debilitating and individuals respond differently.
Another part of the answer lies within the structure of the organization. Are the processes, procedures, workflow, reporting dynamics, or structures creating a toxic environment? Leadership needs to look in the mirror and honestly explore their contribution to the crisis.
It is important to note that some stress can actually be healthy and encourage higher performance levels and more alert behavior.
How much stress are we creating in our family, or in our business, or for our employees?
How are we helping our family members gain higher levels of self-awareness?
What are we doing to provide proper and acceptable ways of dealing with stress?
The JetBlue flight attendant may become a folk hero, but it is not the type press coverage a Family Business should desire.
Sunday, August 8, 2010
Leadership Development Requires Intentionality
In a study cited by the author it was found that approximately half of the companies surveyed plan to increase their leadership training budgets in 2011. Many organizations are recognizing the cost effectiveness of building leadership from within as opposed to only hiring the key talent. At Rockwell International they are now realizing their leadership development programs were not connected. They are now realizing that must change, quickly.
This Journal article got me to thinking about the impact the author’s premise may have on family businesses. As the Baby Boomers plan the transition of the business to the next generation, Families must intentionally help the next generation grow and develop. The potential talent pool already knows and understands the family culture. The investment is truly building the legacy and looking to the long-term as the next generation is nurtured.
So what are a few intentional ways to develop the next generation?
1. Continue to develop yourself: As a leader in your family, you set the example. Seek to learn and grow at whatever stage of life you may be. The more competent you are, the more likely people are to trust you. Developing oneself influences relations with others, motivates others, and inspires others.
2. Carefully select learning projects: Everyone has areas of growth opportunity. Take time to analyze what the business will face in the future and intentionally have the next generation take responsibility for beginning the investigation or data gathering of what and how the business can address the issue. The opportunity to learn the business, craft analysis and presentations will help the next generation face future business needs.
3. Utilize 360 Degree Feedback: This feedback can prove invaluable to gain deeper insight into how others view them. Many times we don’t know what we don’t know, and that is what can create bigger problems for the next generation later on. This can be a very valuable learning opportunity, BUT IT MUST BE DONE VERY CAREFULLY. I am a proponent of 360’s but also believe very strongly the process must be carefully monitored. It has the potential of crushing the spirit if the process is abused. It must be done in an environment of trust, caring, and confidentiality and is often best done by an independent unbiased third party.
I will suggest additional ways to develop the next generation in future blogs, but would be interested in hearing your thoughts on these first three ideas.
So Comment please.
Monday, August 2, 2010
Family Business: Merge, Sell, or Transition
Robert H. Nice of Robert H. Nice Consulting in Telford, PA and a member of the Partner On-Call Network just posted a White Paper identifying the broad issues a Family Business needs to consider when buying, selling, or transitioning the family business. Many of these issues are not clearly understood, adequately considered, or even discussed by all family stakeholders.
Robert states it is estimated within the next ten years over a trillion dollars in the United States will be transferred to the next generation. This statement invites many questions for families in business beginning with what must be considered if we are buying or selling the business and if that sale will be to family members. There are some basic facts that all family members should consider if they are looking to grow their business via acquisitions or if they are planning a sale. The family and stakeholders must consider whether the business will be passed or sold to the next generation, or is the family simply looking to harvest the business. In another little known fact, Nice states there are generally 12 Buyers for every profitable business for sale, yet only 20% of businesses ever sell. If the family is acquiring a business are members of the buying family willing to sign personal guarantees.
We have an On-Line Educational Seminar on these issues and more scheduled with Nice for August 17th at 11:00 AM EST.
For the Family that desires to pass the business to the next generation the issues to be considered not only include the financial concerns Robert discusses, but the interpersonal relationships within the family. Is there a level of trust between family members? Are family members able to openly and honestly discuss all the issues? Is the next generation ready, willing, and able to take over the business? Is Dad really ready to let go?
Further reflection on the issues Robert raises for the family transitioning the business to the next generation, it becomes more evident to me that the planning process must begin now and families must work at educating the next generation long before the transition is at the doorstep. This means instilling values, stewardship, business knowledge, creativity, humility, respect, …I think this list could go on and on.
So how do we help and support this education process?
Let me know your thoughts, and how your family is educating the next generation.