Challenges to Growth There are many theories on why family firms do not grow and rarely survive over the long term. The following are those most frequently seen:

• Growth is difficult for all long-established firms, family owned or not, because of maturing markets, intensifying competition, and changing technology. The business life cycle identified by Joseph Schumpeter (1990) is the natural order for all businesses.

• Once-effective personal paradigms eventually constrain successful entrepreneurs. As the business environment and requirements for success change, entrepreneurs can become particularly inflexible by clinging to habits of past success and avoiding decisions that might threaten their image or economic security.

• Inherited security or wealth deprives next-generation family members of the hunger and drive they need to be successful entrepreneurial business leaders. They often prefer the pleasures of leisure, artistic expression, and time with family and friends. • Children growing up in a family dominated by a successful, hard-working, self-reliant, decisive entrepreneur do not learn vital social skills of cooperation, shared decision-making, and unselfish collaboration. They also lack a parental role model for the teamwork and servant leadership skills so necessary for the next generation to work together or even to own a business together as a partnership of siblings.

• Even good business growth cannot satisfy the economic wishes of a family that is growing both in size and lifestyle expectations. Excellent linear revenue growth of 5% to 10% per year rarely keeps up with the linear growth in numbers of family members: Two parents (or more) might have several offspring who likely have even more children among them. An added burden is the frequent hope of most generations to live a lifestyle at least as expensive as that of its forebears.

• As families expand and acquire in-laws, the diversity of personal goals and values makes it unlikely that there can be consensus for business decision-making and common commitment to business ownership. Building a shared vision for the future and reconciling inevitable conflicts become increasingly difficult, if not impossible. Ward 325 All of these theories hold some intuitive appeal, as stories supporting each appear regularly in the media.

Family-business owners themselves acknowledge their validity. In questionnaires to speech audiences, owners rank the six most powerful challenges to their firms’ long-term growth in this order: (1) Maturing business life cycles and increasing competition (2) Limited capital to fund both family needs and business growth needs (3) Weak next-generation business leadership (4) Entrepreneurial leadership’s inflexibility and resistance to change (5) Conflicts among sibling successors (6) Disparate family goals, values, and needs...

Click her to read the full article: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.453.6770&rep=rep1&type=pdf

The last 12 to 18 months has been a whirlwind for employers in Ireland, with change in respect of employment law and employment rights over this period on a scale not seen since the influx of employment legislation between 1997 and 2003.

1. National Minimum Wage: it was announced in the Budget that the proposed increase of the national minimum wage from the Low Pay Commission will be formally introduced on January 1, 2016. Employers are advised to review and revise their budgets for the new calendar year, particularly in light of the changes to PRSI that will also be introduced.
2. Workplace Relations Reform: any employer that has been faced with an employment tribunal hearing in the past may well be aware of how cumbersome the process was. This was due to fact that there were four different tribunal bodies (namely the LRC, EAT, Equality Tribunal, and Labour Court) and one employee issue could very well result in an employer having to attend four separate tribunals. However, a new streamlined system was introduced on October 1 this year whereby all claims will initially be heard at the new Workplace Relations Commission with all appeals then moving to the Labour Court.
3. Workplace Inspections: Under the Workplace Relations reform, workplace inspections previously carried out by NERA will now be conducted by the WRC. Importantly, the WRC Inspectors now have the authority to issue employers with fixed payment notices of up to €2,000 should that employer have failed to comply with rules in respect of collective redundancy consultation, the issuing of payslips to employees, or the issuing to an employee of a statement of their average hourly pay in accordance with minimum wage rules.
4. Annual Leave Accrual: New rules were introduced on August 1 last whereby employees will now accrue annual leave whilst on a period of certified sick leave. Given the increase to the national minimum wage, this development will also carry any additional cost for employers.
5. Collective Bargaining: Collective bargaining legislation was introduced on 01st August 2015 which provides employees with additional bargaining rights, particularly in respect of the lodging and enforceability of trade dispute claims.
6. JLCs/EROs/REAs: Whilst this may not apply to all employers, those employers in industries previously governed by EROs or REAs are advised to keep abreast of changes in this area. Recent legislation has meant that new EROs and REAs can now be drafted and introduced. Indeed, new EROs have been in effect in the Security and Contract Cleaning industries since 01st October 2015 and it has been reported that the Agricultural industry is quite advanced in negotiations for an ERO in that industry also.
7. Travel Time as Working Time: A recent decision from the Court of Justice of the European Union found that where an employee does not work from a central office (ie, field-based staff) that their commute to their first appointment and their commute home from their last appointment ought to be deemed 'working time'. While this decision applies automatically in the public sector, it is as yet unclear how the Irish tribunals will apply this decision to employers in the private sector in light of current Irish legislation.

Source: Alan Price is managing director of Peninsula Ireland, specialists in Employment Law & HR Services

http://www.independent.ie/business/small-business/advice-centre/seven-issues-employers-will-need-to-know-in-2016-34274095.html

Succession Stories: The Good, the Bad, and the Ugly

Sylvia Wildfire, like many business owners with children, would love to pass her Thousand Oaks, California-based business, OnCallMedic, which supplies emergency medical technicians to weddings and big events like the Grammy Awards, on to her son, Michael. The only problem is that Michael, a 19-year-old college student who is also a registered EMT, doesn't seem to want it. "I am trying to set up a five-year plan where he would take over," says Wildfire, 48, a retired firefighter who founded her company in 1999. "This is a very successful business and I think that he could do anything with this under his belt. But, for now, he seems to want his own life." 

The unfortunate truth is that few family businesses like Wildfire's ever get successfully passed to subsequent generations. In a recent study of 1,600 family-run businesses conducted by consultancy PriceWaterhouseCoopers, only 36 percent of the businesses surveyed survived passage into the second generation. And things only get worse from there, since only 19 percent of businesses survived into the third generation and a mere 7 percent continued into the fourth. The reasons for why such businesses struggle through successions include challenges such as the lack of proper succession planning, poor communication, power struggles and lack of interest – to say nothing about the challenges brought by competitors in the marketplace. In other words, entrepreneurs like Wildfire face steep odds in terms of successfully keeping their business in the family over the long term because, well, they have to confront the same kind of emotional and sometimes irrational situations that every family deals with. 

To find out the secrets of how a family business might survive into subsequent generations, Inc. contributor Darren Dahl spoke with a sample of entrepreneurs who shared their experiences—both the good and the bad—of working in their own family's business.

Put a Succession Plan in Place

When he was a kid growing up in Delaware, Brad Winton worked at his family's popular dinner theater, which was founded by his grandfather and his grandfather's brother in the mid-1940s. Winton's mother was one of nine children in the second generation who gradually took over the theater's operations, which seated 1,000 and employed a total of 300 workers, as the founders, who had been circus acrobats in their youth, got on in years. 

The problem was that the founding brothers retained 100 percent ownership of the business even as their kids and grand kids kept it going. That led to problems, as the founders continued to weigh in on every decision impacting the business, such as whether the theater should begin selling alcohol (they decided against it). "That created a lot of hard feelings because the business was never able to move forward because of the way it was structured," says Winton, who, at the encouragement of his parents, became a financial planner rather than work full time within the family business. 

Because of its inability to change directions, the business unfortunately came to a screeching halt in 2008 when, with revenues falling, the founders decided to sell the business – putting their own children out of work. "After 30-plus years of working her tail off, my mother walked away with nothing," says Winton, adding that because they had worked for the family business their whole lives, his mother, aunts and uncles had specialized skills that made finding new jobs a challenge. "It makes everyone sad to think that the business didn't work out because they didn't do the proper planning."  

Lesson learned: Good succession planning should also involve a transition in decision-making. 

Put the Business Ahead of the Family

Jack Mitchell and his brother Ed were fortunate that their parents, who started a men's clothing store called Ed Mitchell's in Westport, Connecticut, in 1958, brought in an outside expert to help them best pass on the business to their two sons. As a result, when the Mitchell brothers inherited their parent's business in 1990, they had already been taught the value of good succession planning, which, given the fact they had seven sons between them, promised to be a challenge. After working with David Bork, a veteran family business consultant, the Mitchells, whose business has blossomed into The Mitchells Family of Stores, which earn some $100 million in annual revenue, decided to put three rules in place as part of their succession planning: 

1.    When it came to making decisions about the business, the interests of the business would come before those of the family.

2.    Any family member who wanted to work in the business first had to work outside it for at least five years. Then, they would have to apply for an open position. 

3.    Communication would be a priority. That meant that every Mitchell working in the business would meet each and every Tuesday to discuss the business. Then, every quarter, the family would hold a retreat where every family member over the age of 14, including spouses and significant others, would be briefed on the latest news. 

The plan has seemingly worked to perfection since not only has the business continued to thrive, six of the seven members of the third generation now work for the company. One of those is Andrew Mitchell-Namdar, who is now a vice president and heads up marketing for the business. After graduating college, Mitchell-Namdar worked for 10 years before deciding to join the family business in 1999 at the age of 30. "There was never an expectation or a guilt factor for me to join the business," he says. "But it was very rewarding for me to develop skills that I then brought back into the business." 

The Mitchells recently made another significant shift, as Mitchell-Namdar and his brothers took over full ownership of the business from their parents, who still remain active consultants in it. "I get a great sense of excitement and pride when I see the boys making decisions that will impact the future of the business," says Mitchell. Challenges remain for Mitchell-Namdar and his brothers, though, since the oldest of the fourth generation recently turned 16. "We still have a ways to go, but the next generation has a massive spread in age where the youngest is 4," he says. "It's possible that what worked for my parents and grandparents might not work as well for us." 




Succession Planning Can Get Emotional

Pete Walsh loved working for Walsh Bros. Office Equipment in Phoenix, the family business his grandfather started back in the 1950s. By the time he was 36, Walsh had risen up the ranks to claim the title of vice president, where he reported only to his uncle, the company's president. But even though he was given the autonomy to run an important division, Walsh thought he was ready to run the whole show. 

The problem was his uncle, then 55, had been running the business for 30 years and wasn't ready to step down. "My uncle told me he planned to run the company for another 10 to 20 years," Walsh says. " I told him that I didn't want wait that long." Feeling frustrated and disrespected, Walsh left the company to start his own consulting business, Peak Performance Coaching. That was 12 years ago. Walsh admits that his family was shocked and surprised when he decided to leave, but he now knows it was the best thing he could have done – especially after his uncle sold the business in 2009. 

"In my business today, I see so many kids coming up in the family business who think they're ready to take over but they don't yet have all the skills in place," says Walsh. "That's when people get frustrated and resentful." Walsh now counsels family businesses on how to break free from the emotions that often can wreak havoc with life at work and around the holiday dinner table. "In most cases, as soon as things get emotional, they start avoiding an issue," he says, noting that bringing in an outsider like himself could have helped he and his uncle work through their own issues. "But if you don't spend the time to communicate and put a plan together, you can create forces that blow up and cause irreparable damage that can last for generations. What should be a source of joy becomes a major discord for a family."

Lesson learned: Make time to plan ahead and bring in an outsider to work through emotional issues.



Sometimes You Need to Let Go

Entrepreneur Irving Feld made a shrewd investment when he purchased the Ringling Bros. and Barnum & Bailey Circus in 1967 for a reported $8 million. But hiring on his son, Kenneth, three years later proved an even better business decision. The father-and-son team soon reinvigorated the 141-year-old circus, making it again worthy of its title as "The Greatest Show on Earth." 

But the younger Feld didn't stop there after his father passed away in 1984. Under his direction, Feld Entertainment grew into the largest provider of live family entertainment in the world, where some 30 million people around the world buy tickets to the circus as well as other smash hits like Disney On Ice, which began in 1981, and motor sports events like Supercross, which started in 1997. 

More recently, Feld, now 62, has taken a lesson from his father and welcomed his three daughters into the business: Nicole, 33; Alana, 31; and Juliette, 27. Before they were hired on, however, each of his daughters spent at least a year and half working outside the business before they returned. "It's tough to be the boss's kid," says Feld. "I think it's the hardest position in the company because the expectations of you are so much greater. I figured that if my girls worked elsewhere first, they would bring in valuable skills from the outside." 

For daughter Nicole, that meant working for two years at People magazine before the call of the circus, which she now produces, brought her back to the family business. "There was never any pressure to come back," she says. "I decided to come back because I thought I could make a difference." 

To put his daughters in the best possible position to succeed, he has recently taken a step back from taking an active role in decision making. "If this business is going to remain relevant by changing and evolving, it needs new blood," says Feld, who also hired a president and COO named Mike Shannon to whom his daughters report to. "It's conceivable that the business will continue to thrive another 60 years, most of that without me. I would rather have my daughters get their feet wet now when I'm around to offer advice and ask the tough questions." 

 
It's Tough to Follow in a Parent's Footsteps

Cheri McBride, now 65, was just a kid in 1951 when her parents opened up a jewelry store called Nowlin Jewlery in Lake Jackson, Texas, a Dow Chemical factory town that sprung up in the 1940s. As she grew up, she saw how hard her parents worked—staying up late or spending weekends doing paperwork—to make it a success. That was why, when it came time to go to college, McBride, who goes by the nickname "Duckie," couldn't wait to get out of town. "I wanted to be the world's greatest artist," she says. "And I honestly think my parents hoped I would find a job with nice benefits." 

But, after spending a few years pursuing artistic adventures, like filming a documentary in Alaska, McBride decided to come back home in 1973 and join her brother, a former engineer eight years her senior, in taking over the family business. The siblings worked well together and the store prospered. The third generation even got involved as McBride and her brother had four children between them. "My son, nieces and nephews would make deliveries and help with holiday wrapping," says McBride. 

But either because of or in spite of their years helping their parents, the third generation of the Nowlin family told their parents they didn't have any interest in taking over the business. That's why four years ago, McBride and her brother decided to sell off their entire inventory and close the business down after 50 years of operations. "Nobody would have bought the business since it was only worth the amount of inventory we had," she says. 

McBride recently decided to go back in business with her husband Glenn, as they now operate an art gallery in Lake Jackson called Duckie and the Grackle Studio and Gallery. When she thinks back to why her kids didn't want the family business, she thinks maybe it's because that in an era of big-box retailers, they didn't see how they could stand out. "I wonder if there is a fear in many children about whether they can be as successful as their parents," she says.

Lesson learned: Not every family business is suited to be passed on to future generations.



Keep on Churning

Few businesses can boast the longevity that Velvet Ice Cream, which was founded in 1941 in Utica, Ohio, can. Joseph Dager, an immigrant from Lebanon, started churning ice cream because he realized it was a true "American" food. Today, Velvet is a thriving enterprise that earns some $20 million in revenue from selling about 5 million gallons of ice cream to restaurants, groceries and institutions like hospitals and nursing homes each year. Another aspect that makes the company stand out is that Velvet is still a family-owned business where the third generation, brothers Joseph and Michael, have transitioned away from the day-to-day operations of the company to allow Joseph's three daughters to take senior management roles – something the family has come to call "misters to sisters." 

While Joseph, 70, remains chairman of the board, his oldest daughter, Luconda, 41, took over the role of president in 2009 after working for the company for 15 years (sisters Joanne, 39, heads up food service while, Andre, 37, is in charge of guest relations for Ye Olde' Mill, the company's restaurant and museum that caters to 150,000 visitors a year). Luconda Dager says that she and her sisters were never asked to come work for their father. Rather, they were encouraged to go to college and get a job on their own outside the company for at least three years. Plus, when she finally asked her dad and uncle if she could join up, she needed to start at the bottom. 

"I put together my own training program where I didn't even have a title for the first eight years I worked in the business doing everything from production to warehouse management," says Dager, whose grandfather made her father follow a similar path. "But by doing that, I think I got to really know the business from the ground up which now helps me make better decisions." 

Dager says that two of the biggest keys to the continued success of her family's business is making time for planning and communication. "It takes a lot of effort to put things on paper," she says. "But you have to be open to communicating about tough issues, like my dad's goal to retire by 72. That's why every member of the family who works in the business gets together every quarter for an advisory meeting where we can talk through emotions or hurt feelings. It's not easy, but you have to do it - you have to plan forward." 

That advice has become even more relevant as members of the sixth generation of Dagers have begun spending their summers working for the family business. "We don't want to influence what they do since they may want to be veterinarians or chiropractors," she says, referring to Justin, 19, and Devin, 17. "The only way to find out is to expose them to the business, give them an opportunity and let them make the final decision."

Source: http://www.inc.com/articles/201103/succession-stories-keeping-the-business-in-the-family.html

Every business is faced with challenges. However, as a family business owner, you are faced with unique threats to your business that, if not recognized and addressed quickly, will drastically affect your success in the market place. Here are five common threats that every family business faces and tips on how to manage them.

1. Family Feuding:

There is simply no fun and games when it comes to family feuds in your business.

Family businesses are faced with internal conflict that typically arises from the inability to separate your business and personal lives. Sometimes the feuding is due to the varied interests of each family member, personal egos or personal rivalries that spill into the business environment.

Regardless of the cause, if you do not find a way to stop the feuding, it will be absolutely impossible to define and achieve common goals for the business.

In addition, excessive conflict in your organization can increase employee turnover and create a hostile work environment.

2. Nepotism:

Managing family is a delicate matter, and it is important to be aware that the fastest way to alienate the people that work for you is to create a company culture based on nepotism. Everyone wants to help out family, but hiring, promoting, and paying someone based on a familial relationship rather than on their actual merits and abilities, is a recipe for disaster.

You will quickly find that non-family employees will lose the motivation and desire to work for you. In addition, family employees may become complacent because they will not face consequences for non-performance.

Act Fast - Know Your Legal Rights We Help You Make Key Decisions

Ultimately, nepotism does not empower your employees, and as a result your bottom line will suffer.

3. Letting Emotions Run the Business:

You have probably heard the phrase, “It’s not personal, it’s business.” Well, in a family business, it is always personal. Separating your emotions from the business is not an easy task, especially if you are directly managing a family member.

It is difficult for people to receive critical feedback from peers or their boss and even more difficult to receive it from someone they love.

Be aware that if you let emotions interfere with your business, it can make you appear weak to your employees and customers, and severely affect your ability to make sound business decisions. On the other hand, if you are insensitive, you may appear cold and unapproachable. Lack of sensitivity with family employees can also cause problems at home if you are not careful. You will need to determine the right balance of emotion needed based on the dynamics of your business environment.

4. Losing Non-Family Employees:

There are two main reasons non-family employees will leave: limited growth opportunities and family conflict. Most employees want to advance within a company. Unfortunately, in most family businesses there are often limited opportunities for advancement, because family employees occupy all leadership positions within the company. Without opportunity to advance or take on a leadership role, many talented and ambitious employees will move on. Another problem is that non-family employees will leave because they feel as if they are always in the middle when a family feud breaks out.

As a business owner you need to realize that every business needs a good mix of people to help you grow. Non-family employees add balance to the organization because they have an ability to view the business from an unemotional position. If given the opportunity, they can offer valuable input on how to make the company better. Failing to recognize the positive impact non-family employees have on a family business is a huge mistake.

5. No Succession Plan:

There is going to come a time when someone retires, leaves, or perhaps passes away. If you do not have a plan, you are setting your business up for failure.

According to Nancy Bowman-Upton in the Small Business Administration publication Transferring Management in the Family-Owned Business, it is estimated that less than 33% of family businesses survive the transition from first generation ownership to second generation ownership. Sometimes this is due to the family not having interest in running the business, but in most cases it is due to the lack of creating a plan. A succession plan is absolutely necessary to ensure the business lives on from generation to generation.

Tips to manage threats to your family business:

• Clearly define the goals of the company and make sure everyone is on the same page.
• Outline each family employee’s role and responsibilities and hold them accountable.
• Keep an open line of communication at all times.
• Address all concerns quickly and in a non-emotional manner.
• Create a fair promotion and salary system that is based on individual merit and ability.
• Take a management course to learn how to separate your emotions from the management process.
• Provide opportunities for advancement in your business for non-family employees.
• Be prepared and create a succession plan to ensure your business lives on after you are gone.

SOURCE: http://familybusiness.about.com/od/managementandoperations/a/commonthreats.htm

In January, 'Forbes' magazine highlighted that Ireland was the best country in the world to do business, while previously the World Bank said it was the seventh easiest place to start an enterprise. Many European reports have stated how people in Ireland are very positive towards the idea of entrepreneurship..

Click here to read the full article: 

http://www.independent.ie/business/small-business/advice-centre/what-government-support-is-available-to-me-im-setting-up-my-own-business-30330088.html

If you have ever wondered why the heirs of Sam Walton show up as perennial winners of the wealthiest Americans moniker, it’s because the creators of Wal-Mart did great estate planning while they were alive.

Click Here to read:

http://www.forbes.com/sites/steveparrish/2013/10/09/transferring-the-family-owned-businesstime-is-running-out/

Clodagh Doyle, an entrepreneur from Wicklow saw a business opportunity and went for it and along with hiring her husband she has never looked back...

Click here for more information:

http://www.independent.ie/business/small-business/your-stories/my-big-idea-hiring-your-husband-is-a-risk-but-we-both-love-working-together-34274097.html

For those whose relationship with their parents is even the slightest bit fraught, this sounds like an exhausting and unwise exercise.

For David and Orion, nothing else makes sense.... 

Click here to read more :

http://www.entrepreneur.com/article/251181

A lovely read on how a couple have convinced diners to pay months in advance and travel to the westernmost parts of the Connemara coastline for their seasonal Dillisk project...

Click here to read more :

http://businessetc.thejournal.ie/dillisk-project-2403738-Oct2015/

Anyone who owns a family business is intimately familiar with the blood, sweat, and tears associated with building and then keeping the business viable. Nevertheless, it is not unusual for the business owner to postpone consideration of various issues involved in transferring the business to the next generation, including determining the value of the business...

Click here to read the full article :

http://www.familybusinessunit.com/blog/family-business-succession-planning-points-to-ponder-before-transferring-ownership/