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Success and succession: Five characteristics of a good family business

Wednesday, 20 September 2017

Chances are high that seven out of 10 of the businesses you know are family owned. As defined by audit firm PricewaterhouseCoopers (PwC), a

 

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How CEOs Can Work with an Active Board

Wednesday, 20 September 2017

At companies of almost all sizes, across all sectors, boards are undergoing a profound transformation. Largely as a result of

 

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Solving the Puzzle of Ownership Alignment in a Family Enterprise

Wednesday, 20 September 2017

alignment  noun | ə-ˈlīn-mənt State of agreement or cooperation among persons, groups, nations and the like with a common cause or view

 

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'The real value is in implementing your plan - although that's easier said than done'
Tuesday, 17 May 2016 14:29

THE PROCESS OF developing a strategy for your company doesn't end with a beautifully crafted business plan that sits on your office shelf and is dusted off from time to time.

The real value is in implementing it, although unfortunately that is easier said than done. To be truly effective, the plan must become a part of the daily, weekly and monthly routines that drive the sales and marketing initiatives, production efficiency, human resource practices and so on in your business.

Here are 4 steps that can help with this process:

 

 

1. Summarise the plan on a single page

Your plan needs to be converted into something that is easy to have on hand, simple to reference and can be communicated effortlessly. An 80-odd page document is not easily referenced, it needs to be a single page that highlights the main areas of focus in the plan.

 

If that's the best approach. then why do successful companies go to the effort of producing these large documents, you may well ask. The answer lies in a Mark Twain quote: "I didn't have time to write a short letter, so I wrote a long one instead."

 

It's often easier to ramble on and tell you everything rather than deciding what is truly important and what your audience needs to know. The business plan is a great way for you to clarify your thoughts, consider all the steps and ensure that a holistic view is considered for the proposed actions.

 

The reality is that not all staff need to know the thought processes behind a current strategy, but they do need to know what is most relevant to them.

 

 

2. Set achievable targets and track progress against them

What gets measured, gets managed and gets done. Knowing that someone will be scoring your performance helps focus your attention. So ask yourself, "How am I going to keep the plan on track?"

 

Think of key performance indicators, or KPIs, as a way for a company to keep score. They help management understand if the company is achieving the objectives set out in the plan. Unfortunately, far too many companies think that standard financial KPIs are sufficient. They are not. KPIs should be driven from the strategy and thus are personal to each business.

 

Measuring the right KPIs and determining what actions you need to take to ensure that you meet your targets can elevate a company above the competition. For example, failure to meet a quality metric should lead you to ask why, discover that there is an issue with the supplier and ultimately source from a new provider.

 

 

 

3. Find the person who will lose sleep if it isn't done

 

If you want something done, you need to make someone responsible and accountable. Relying on a group disperses the responsibility and can lead to delays in decision-making and meeting the targets. Holding one individual accountable means that they will be focused on delivering their metric which supports the plan.

 

 

4. Communicate and make sure everyone is aligned

Staff need to believe in the plan if it is to be successfully implemented. They need to all be pointed in the same direction heading for the common goal. There is a long history of companies failing, despite having the right strategy, simply because they couldn't get the staff on board.

 

To do this, you need to communicate the plan and take the time to answer questions from staff. Make sure to address their concerns and seek their feedback. In short, ensure that they understand the vision for the company and their role in it.

 

Tom Early is a senior investment adviser at Enterprise Ireland, which is running a series of workshops for exporting SMEs on 'finance for growth'.

 

 

 

 

Source :https://fora.ie/readme/how-to-implement-a-plan-2768500-May2016/

 
Family Governance
Monday, 16 May 2016 15:36

The goal of family governance is to establish a sustainable family structure in relation to the family business. The main purpose of family governance is to define how a family-owned company is to be run once more generations get involved and/or more family members become active within the family business. It covers such questions as how business decisions are taken in such case and how the company's future strategy is to be set out. A good family office in Switzerland can assist you in putting a solid family governance code in place.

 

 

What does family governance mean?


The term 'family governance' is not immediately clear to most of us. The main aim of family governance is to cover how a family-owned business is run once more generations or relatives get involved in it. Family governance is therefore not an issue for public companies, but in a family-owned company it could be essential for the continuity of the business to put the right governance in place at the latest when, or just before, the next generation gets involved.

 

 

❝ How often do you sit together and discuss the family business? ❞


Family governance will not be an issue if you own 100% of a company yourself and your only child will take over the company (see succession planning). But if you own the company jointly with other relatives and each of you has children, you may very well imagine that the next generation of owners might not completely agree with each other on the way forward.

 

 

The complexity of operating a large family business


The more family members get involved in the business, the more their opinions can differ. This could result in a lack of consensus between the family members as long as no clear decision structure is laid down. How will the company strategy be decided on when the family members do not agree with each other on the way forward? How will family members who hold shares in the company, but who are not active in it, be financially compensated? How do family members communicate with each other? A Swiss multi-family office can play an important role in organising this potential trouble spot.

 

Additionally, good communication between the company and the (inactive) family members is of high importance. If this does not function well, the company, and its performance, could become paralysed. It could also have a negative impact on the relationship between the family members. And how will the company deal with potential threats to the business? All these issues are particularly problematic where part of the company shares are traded publicly.

 

 

The main components of family governance


Although there are no set rules, we usually see the following three components:  Family Governance overview

 

 -  A family constitution, in which the basic principles of the business and the family's policies and views are laid down.

 

 -  A family council - a council that represents all the family members vis-à-vis the company.


 -  Regular family assemblies, annually or twice a year, including information about the business, education of the younger generations, strategy of the company, potential changes of ownership, etc.

 

Family governance addresses all these topics and more. Most of the business-owning families find family governance a very difficult topic to address and a lot of family offices are not familiar with this topic at all. In case this topic is important to you, you should make sure to select a family office in Switzerland that has the necessary know-how and expertise to support you with putting the right family governance in place.

 

How we support you


If you have any questions about putting a family governance code in place and/or the selection of an appropriate multi-family office, please do not hesitate to contact us. We look forward discussing it with you.

 

 

 

 

 

 

 

 

Sources: http://www.switzerland-family-office.com/family-governance.html

 
Setting goals and objectives for an effective family business succession plan
Monday, 16 May 2016 09:56

Owners of family businesses often operate and manage their companies on instinct and personal experience, which may leave their management team and stakeholders guessing about the future direction of the business. When implementing a succession plan without the necessary goals and objectives it can hold dire consequences for the business, and may very well lead to disagreements, low staff morale and a decline in productivity and profitability

 

 

A succession plan with effective goals and objectives that are aligned to the business strategy and thus the business objectives and business goals, will focus all activities on achieving well-defined targets and will provide a foundation for measurement and evaluation of future business' activities.

 

 

Why is it important to define goals when setting a family business succession plan?

Before setting out on the preparation of a succession plan, the family business owner should have a clear understanding of his or her role in the future of the company. These decisions should be communicated to the stakeholders and the goals and objectives should be aligned as such.

 

 

Establishing goals and objectives for a family business succession plan

Although the establishment of succession planning goals holds intrinsic challenges, family businesses should implement this process to ensure that all parties are knowledgeable and aware of the future of the business, thus making every effort to avoid conflicts that might harm the business' future.

 

Grant Thornton (PDF 433 KB) indicates that as preparation starts for the succession plan, the business should engage with the wider group of stakeholders, including family members, employees, suppliers and customers. Engagement and involvement of stakeholders in the development of the future of the company will ultimately result in their approval of the succession plan's goals and objectives and therefore foster greater business stability.

 

 

Aligning the goals and objectives of the succession strategy to the family business' overall strategic business plan

A succession plan can only be successful if it is aligned to the strategic business plan of the business, linking the succession goals and objectives with the overall strategic business plan. The development of an overview of key competencies for each position in the business is the roadmap or template for the succession plan.

 

Of vital importance is the development of specific benchmarks for each position in the business. The benchmark should be developed by skilled and qualified personnel that understands the overall strategic goals and objectives of the business, and can align the expectations and demands of the position with the business strategy and potential candidates, with the assistance of a human resources specialist. These detailed requirements can help ensure seamless changeovers of people into new positions, when required.

 

Research done by Dobson & Associates (PDF 30 KB) indicates that more than 67% of American corporations do not have a succession plan based on competency. However, the small percentage of businesses that follows a succession plan that is aligned with the overall strategic business plan is able to show quantifiable results.

 

In conclusion, the most successful succession plans for family businesses, are the ones that have been aligned to the overall goals and objectives of the business that are clearly defined and that provides for development of future business leaders from within.

 

 

 

 

 

Source:https://home.kpmg.com/xx/en/home/insights/2013/07/setting-goals-and-objectives-for-an-effective-family-business-succession-plan.html

 

 

 
Keeping a business in the family can be tricky
Thursday, 12 May 2016 10:13

There are benefits to getting involved in a family firm, but there are pitfalls too:

 
 
You can choose your friends, but you can’t choose your family. The same might be said for your business partners, but many people nonetheless choose to tie their professional and family lives together, bringing with it inevitable ups and downs.
But the Irish family business remains a dynamic and resilient sector, with a 2014 PricewaterhouseCoopers survey saying it provided more than 50 per cent of the State’s GDP and employment.
 
It is undoubtedly a unique business model that brings with it specific challenges and obstacles. Dr Eric Clinton, director of DCU’s Family Business Centre, says conflict can arise when family values that are “emotionally driven” clash with the business values that are “rationally driven”.
 
Some of the major factors include succession planning. While the average tenure of a chief executive in a family business is 23-24 years, only one in 10 firms will have a succession plan in place.
 
Clinton says this is the “hot topic” for family businesses.
“Succession for many family businesses is inevitable. It’s one of the biggest topics people want to talk about. How to do it? When to do it? Who to engage? Is it a family person? What if the family person doesn’t have the attributes?” he says.
 
Dr Melrona Kirrane, a lecturer in organisational psychology at the DCU Business School, says the onus on family businesses to elevate family members can often have a detrimental effect.
 
“The family business can’t afford to take a talent management approach, and the reason why they can’t is because of family dynamics,” she says. “While most family companies choose someone from within the firm to carry the business on, they don’t consider the successor’s capabilities, and that’s one of the main reasons for failure.”
 
The upshot of that is that only 30 per cent of family businesses are expected to survive the first generation. Only 15 per cent are expected to survive to the third generation, and less than 3 per cent are expected to survive until the fourth generation.
 
One of the ways to combat problems with succession is to put strong corporate governance structures in place. If rules are established and adhered to, the business is less likely to fall foul of some of the usual pitfalls.
What are the rules for getting involved in the business? Is it automatic because you are family? Do you have to work outside the business for a number of years? Do you need to have a particular skill-set or educational requirements?
 
 
Of course, when it comes to family, there will always be issues that arise. Clinton suggests a “family council” where issues related to the family are expressed and discussed.
“One of the things families are very often not good at is communication. We see conflicts between siblings; in-law involvement can also create conflict. Some family businesses don’t allow in-law involvement as a rule. That’s about trying to make sure there is harmony and no friction,” he says.
 
“We see a lot of firms that have a thriving business and it makes no sense on paper for them to be sold, but often it’s just that the family members can neither agree nor agree to disagree. It’s just not functional. Often it gets very personal, and irrationality creeps in very quickly.”
Kirrane points out another pitfall called “consensus sensitivity” which she describes as when people “want to agree the whole time and keep things harmonious”. However, that doesn’t always happen.
 
There are also gender-related issues. Kirrane says the data indicates that sons – and even sons-in-law – tend to be favoured over first-born daughters when it comes to succession.
“When it comes to daughters, they have a much rougher time. Only 2 per cent of daughters are likely to become presidents in family companies. One reason is the father’s desire to protect the daughter from the cut and thrust of the business world,” she says.
 
“Daughters also get a double message. Interestingly, women-owned family businesses are 1.7 times more productive than those run by men. They are also six times more likely to have a female chief executive.
 
“One of the reasons they do well is the feminine qualities of being supportive and co-operative and attentive. They’re less hierarchical and more likely to take more time over decisions and seek information and other people’s opinions.
 
“That can result in better management, and better business decisions being made. It also means they are better placed to deal with rivalry issues or wellbeing in the family. That’s productive as well.”
 
 
 
Power and competition
 
That is in stark contrast to the relationships between fathers and sons, which are categorised by control, power and competition.
“The son can want to establish his own identity really fast, leading to competition with the father. The son can feel pressure to outperform the father, which can lead to a lot of poorly thought-through decisions and strategies that may not be helpful,” says Kirrane
 
There is also the issue of the “glass ceiling” for non-family members in the company, whereby an impression exists that senior management positions will always go to family members.
Paul Keogh is currently chief operating officer with the Ballymore Group and has worked as a non-family member of a number of family businesses over the past 30 years. He says there are “a lot of plusses” to the business model, but that it “doesn’t suit everybody”.
 
“One of the things families don’t realise is they might meet for Sunday lunch, for example, talk about something to do with work, make decisions, and then you come in on Monday morning and the whole strategy has changed since you left the office on Friday,” Keogh says.
 
“The other thing that is quite common is that families don’t tend to write anything down. So if you’re a non-family member, you have to pick things up intuitively and realise a conversation has been had that you weren’t involved in. In a plc company, you would just go and find the strategy paper. There tends to be a lot more verbal interaction.”
Keogh also points to the “different mindset” of a family company, which is more concerned with long-term viability than profit-driven goals. “It’s much different to working for a stock market-listed company where the chief executive is completely obsessed with share price,” he says.
 
“A family business doesn’t answer to the share price and doesn’t have this quarterly review feel to it. Not everything has to be geared towards the financial reporting. They are not necessarily profit- and money-driven.”
 
Weighing into discussions as a non-family member of the business also brings with it its hazards.
“You have to remember that blood is thicker than water. The advice is to pick your battles,” he says.
“Don’t get involved in that grey area between what is a family dispute and what is a business dispute. If it turns out to have a family element, stay away from it. You are after all an employee and they are family. You have to be comfortable with that.”
 
 
Keogh says his advice to family businesses is to steer clear of employing in-laws and to have family members spend two or three years in a different company to get some outside experience.
 
“You can talk to your siblings and eventually tell them they are not working out, but it’s very hard to fire the in-laws. If you take them on, you’re stuck with them,” he says. “It’s also a good idea to get educated and to go off and spend two or three years somewhere else before you join the family business so you have a little bit of outside experience.”
 
 
 
 
 
 
 
Family Business Succession: 15 Guidelines
Wednesday, 11 May 2016 15:31
Succession is the most painful and critical time for family businesses. Less than one-third of family businesses survive into the second generation, and only about 13 percent make it into the third generation.
 
 
How do the successful ones make it? After working with hundreds of family businesses, we'd like to offer 15 guidelines that we hope will help you during the succession process.
 
 
1. Succession is a process not an event
 
Rather than thinking of succession as an event that happens on a designated day, consider thinking of it as a process that occurs over a long period of time. Parents should begin to lay the groundwork for succession while their children are still small. How? By the way in which they talk about the business at home.
 
 
As the classic story goes, the business owner comes home from a typical day at the shop and complains that three key people quit, a customer didn't pay his bill, the suppliers sent the wrong order again, and the bank is threatening to jerk the loan. Then, he turns to his son or daughter and says, Someday, this will all be yours.
 
 
Of course the truth of the matter is that most people who are in business for themselves love it, or they wouldn't be doing it. However, the tendency is to talk more about the bad events than the good ones. But making a conscious effort to present a balanced perspective on the family business can help the next generation gain a better understanding and appreciation for the business.
 
 
 
2. Present the business as an option not an obligation
 
Many, many parents hope that their children will want to follow in their footsteps and join the family business. But some fall into the trap of overselling the need to follow the family tradition. Others never bring up the subject because they don't want to pressure their children. The key is to present it as an opportunity, not as an obligation.
 
 
How? We encourage parents to tell 15- or 16-year-old children, Whatever you choose to do with your life, we will support and encourage you. It's probably too soon for you to know now what you want to do. If you should become interested in the family business, you will be very welcome. We have found it to be very rewarding and very fulfilling, but it's clearly not the easiest way to live or the only way to live. It's one of your many options and we will support and encourage you no matter what you decide.
 
 
That's a conversation that rarely, if ever, takes place in a family business. But we think it's very important to extend a non-conditional offer of support during the child's high school years because it is very healthy for the son or daughter to think in terms of options.
 
 
Speaking of sons and daughters, beware of making assumptions on the basis of your children's sex. In terms of interest and capabilities, both sons and daughters can contribute to your firm's success.
 
 
 
3. Get outside experience
 
Of the hundreds and hundreds of family business successors we've interviewed, all who have had outside experience said that they recommend it highly.
 
 
Why should your child work for someone else after finishing school? There are many good reasons why outside work experience is an advantage. Your sons or daughters can build their own identity, get outside knowledge, increase their self-confidence, bring back knowledge to the business, grow up a little bit, make mistakes on someone else's time, find out what it is like to look for a job, discover what their market value is and learn how to take criticism. But the best reason is that this is how they will learn that the grass isn't greener on the other side of the fence. They will learn that there is no such thing as a perfect boss or a perfect business.
 
 
If we can make only one recommendation to young people, it is to work for someone else for three to five years.
 
 
But what if that isn't possible? What if the daughter is 32 years old and is now vice-president of marketing? Or, what if the business is small and they need a family member on sweat equity just to survive?
 
 
Then we try to find out other ways for that son or daughter to get the same sense of reality and outside perspective. Sometimes that means getting involved with their trade association or with other sons or daughters of another family business or with a community service group.
 
 
For many parents, however, it's hard to believe that their children will want to come back, after working somewhere else. But the odds are better than two to one that they will come back, because magnetism to the family business generally increases with age.
 
 
 
4. Hire into an existing job
 
It's very important to hire your son or daughter into an existing, meaningful, defined job. Why? You will know how much to pay and what to expect. The rest of your staff will know how your child fits into the office hierarchy and how to treat him or her.
 
 
Often family businesses hire their children into ill-defined jobs and say, Because you're family, you can do anything that needs to be done around here. We wear a lot of hats and now you do, too. But then you open the door to resentment on the part of the rest of the staff. Sometimes, employees doubt that the second generation is qualified to lead the company. Don't set your son or daughter up for failure by giving him or her an overwhelming but undefined job. Instead, create a situation where progress can be measured.
 
 
 
5. Encourage the development of complementary skills
 
After the next generation has entered the business, encourage the development of skills that are complementary to your own. Why? Your own skills are probably well ingrained into the business by now. If the parents are super salespeople, then the children are going to need to bring some operations or information system skills to the business. If the parent generation adhered to the philosophy of make it and invent it, then the next generation is probably going to have to know what the terms market segmentation and break-even analysis mean.
 
 
Is it easy to accept the fact that your child can improve or add to your business? No. You have to be a very secure person to be open to this type of action from your own child. But consider the alternative: would your business be better off having a second generation who brings nothing and can only try to duplicate everything you have done?
 
 
There is a cartoon that shows a son saying, Dad, sales are up 200 percent, production costs are down, and we're on the cover of Business Week. The father says, Yes, and your shoelace is untied. It's hard to recognize and praise our children's professional achievements.
 
 
 
6. Teach the foundations
 
One of the most valuable things the parent generation can give the next generation is an understanding of the historical, cultural and strategic foundations of the business. It's very useful for the children to be aware of the firm's underpinnings of the underlying principles that hold the enterprise together.
 
 
Even though you, the business founder, have lived the business, you may not be able to take a step back and identify your strategies. You may be too close to it all. If that is the case, let your child learn from a key employee who is able to explain why you do the things you do, as well as how you do the things you do. For example, instead of just showing your son or daughter how to treat your customers, the key employee will explain how the customer service policy evolved and what advantages the current policy has.
 
 
 
7. Start with mentors
 
We always recommend that when the children enter the business, they should work for a mentor rather than with the parent.
 
The mentor should be the most valuable, loyal, secure, and long-lasting employee. That person should be your alter ego, the one who does all of the things that you don't like to do.
 
 
When you set this arrangement up, you should have a conversation with the mentor that goes something like this: I would like Karen to work with you because she can learn a lot from you. But I know what will happen in three to five years. You two will clash. It won't be anybody's fault it's just inevitable that she will want to do something on her own. The moment that happens, the mentoring relationship will end, and I will move her into the next step of the plan that I have in mind for her. It's very important to clarify all of this and set it up right from the start.
 
 
We would like to add a word of caution here. Even if you have always made it clear that you intend to keep your business in the family, you may have an employee who believes that he or she is better and more qualified and rightfully deserves the opportunity to lead the company. Could it be that the employee may attempt to undermine your successor's efforts? Be aware that this possibility exists. Be clear, keep your eyes open, and don't let an unpleasant situation build up. You may have to offer the employee two options: recognize the successor's role, or leave the company.
 
 
 
8. Designate an area of responsibility
 
What is the next step of your plan? Give your son or daughter his or her own area of responsibility. It should be well defined. It could be a certain department. It could be handling the advertising. It could be managing personnel. As your child gains in experience and competency, increase the number of areas of responsibility. By giving pieces of the business, you will be working toward a smooth succession.
 
 
The model that we encourage you to have in mind when you think about succession is the track relay race. One runner has the baton, and the other runner has to catch up, take the baton, and continue the race. Your business will pass to the next generation much more smoothly if that second generation is running at full speed right next to you. It should be an exchange that is almost imperceptible.
 
 
 
9. Develop a rationale
 
I've just described the ideal transfer. But what if somebody breaks stride or stumbles? Lots of things could happen.
 
 
As a matter of fact, the transfer zone is usually a very painful period. The parent may go through a grieving period as he or she says goodbye to the business. But the son or daughter has pain also. He or she may have the most pain.
 
 
Maybe there is a disagreement over money. Maybe it is over power. Maybe the founder is not entirely convinced that the successor is ready. How do you make it through this period?
 
 
You, the founder, and the successor could both benefit from forming a rationale or a statement that says why all this is worth it to you. When things are particularly painful and you are wondering why you are going through this, you can tell yourself, It's difficult now, but it's worth it because For example, after thinking things through, you may conclude, It's worth it because we employ a lot of people, and I'm proud to be part of this business. Sorting out your feelings will help you though this difficult time.
 
 
 
10. Recognize that you are not alone
 
We have found that it often helps families to know that they are not alone. All families face the same difficult issues such as How should we value the business? and Should the founder keep a title like Chairman of the Board? Somehow, it helps to know that these issues are difficult for everyone who tries to settle them.
 
 
It can also help to know that the way in which family members respond to the issues is fairly predictable. In many cases, mothers are overprotective, and fathers think they are invincible. Rather than blaming your oldest son for being too hard driving and too achievement oriented, consider the fact that almost all first born children are like that. Rather than blaming your youngest child for not taking the business seriously, consider the fact that the baby of the family almost never takes anything too seriously.
 
 
Rather than thinking that your family members have personality problems, recognize that it is very natural for the people involved to feel the way they do.
 
Because conflicts are universal, you can learn from other people who have gone through them. That's why we generally recommend joining family-business forums or support groups. Not only will you be able to see how other people resolve their problems, you will also see that you may not be as bad off as you had previously thought. There is almost always someone who is in a worse situation.
 
 
 
11. Have family meetings
 
Of course, good communication among your own family members is essential. Sometimes productive communication occurs spontaneously, and sometimes you need to plan for it.
 
 
At a family meeting, the whole family gets together to discuss an important matter. Sometimes it is best to hold these meetings at an outside neutral location, such as a resort or a restaurant; sometimes it is best to sit around the kitchen table.
 
 
How do you begin? You may wish to start by selecting a topic and moderator. We usually recommend, however, that you keep things informal and relaxed so that everyone can participate comfortably.
 
 
The benefits of these meetings typically include a greater feeling of unity (or team building), a clearer understanding of the issues, and a better understanding of the family's range of perspectives.
 
 
 
12. Plan, plan, plan
 
Long before the succession should take place, we encourage the founder to write a business plan, an estate plan and a succession plan all at once. We always know that we're asking for the near-impossible, but we do it anyway because it works. You need to write these plans at the same time because they influence each other.
 
 
This is not, however, a do-it-yourself project. Help from your accountant, your attorney, and someone who has knowledge of organizational development is critical. Your job is to bring these experts together and develop the plans that can guide you through the succession period.
 
 
We're not going to tell you that it will be easy. We're not going to tell you that you will be able to do it quickly. But the long-range benefits of this approach cannot be overstated.
 
 
 
13. Create an advisory board
 
We recommend advisory boards to all small businesses. Why? They are an extremely valuable sustaining resource. The board should include the type of people mentioned above (lawyer, accountant, and organizational specialist) and at least one other person from your industry whom you respect. Often, the business owner will offer the board members an honorarium instead of a salary. If liability issues are a concern, you can call the board a council. In any case, you will benefit from group discussions of important issues.
 
 
 
14. Set a date
 
As you go through the planning process you will be able to determine a realistic and financially advisable termination date. When your plans are concluded, you should know exactly when the leadership evolution process will be complete and you should be ready to hand your business over to the next generation. It is essential that you are fully committed to that date, that your staff is aware of the plan, and that your successor can depend on you to follow through with it.
 
 
We have emphasized many times that succession is a process. Choosing a retirement date, preparing your successor, preparing your business for transition, and preparing yourself for a different sort of life are all important components of that process.
 
 
 
15. Let go
 
Why do so many founders at the end of the transition process say, Well, I was wrong. We are not going to be able to complete the transition this year after all? Or, even worse, why do so many decide that they want to come back to the business two or three years after they left if for good?
 
 
It is hard to let go of responsibility. It is hard to let go of authority. But it is even harder to let go of control.
 
 
A psychiatrist can give you a lot of explanations about why this is true. Letting go is a very complex and difficult process that should not be underestimated. We're sure you know many business founders who are in their 60s who do not want to leave the business because they are afraid of giving up their identity, they don't know what they're going to do with their time, and they know three people who died the day after they retired.
 
 
But we would like to offer an additional explanation for why letting go can be difficult for entrepreneurs. If you are tied financially to the business, it will be almost impossible for you to let go of it.
 
 
One of the central goals that you should have while writing your business plan, estate plan and succession plan is to create financial security that has no ties to the business. You need to be financially independent. And if you aren't, you won't be able to resist the temptation of interfering with the business.
 
 
 
Conclusion
 
Perpetuating a family business is the ultimate management challenge. We're convinced, however, that you can increase your chances for success if you believe that succession is a process that may take fifteen or twenty years to complete. Fortunately, there has recently been a sharp increase in the number of resources (books, journals, support groups, and conferences) that have been developed to help you. We hope that you will take advantage of the support, plan ahead, be candid with your family and staff, and successfully transfer your business to the next generation. Good luck!
 
 
 
 
 
 
 
 
 
These Glass Doctor Franchisees Found Smashing Success in a Family Business
Tuesday, 10 May 2016 11:17

Franchise: Glass Doctor

 

Franchisees: Husband-and-wife team Kevin and Tamera Tennant

 

Franchisee/Location: Glass Doctor, of Fairbanks, at the North Pole, Alaska

 

Number of years in business/Number employees: 6 years as independant entrepreneurs, 11 as franchisees/ 6 employees

 

Initial Investment: $30,000, on average/Tennants' cost was $12,000

 

 

Kevin Tennant first braved the rigors of life at the North Pole as a sergeant in the Air Force. But after leaving the service and deciding to start a family business in his new home in Alaska, he faced the rigors of something equally dangerous: glass. That's how Kevin and his wife Tamera found themselves knee-deep in a local dumpster 20 years ago, digging out shards of glass from trashed windshields.

 

The point was to use the glass to teach themselves glass-repair skills. So, the couple invested $500 in a rock-chip kit, liberated those windshields from that dumpster -- ironically, the property of a future competitor -- and spent hours upon hours at their kitchen table working with their kit. For income, Kevin joined the National Guard, and Tamara worked at a local video store.

 

Still, sharpening their skills, so to speak, in glass repair was primary. "At the time, we had zero experience repairing chipped windshields," Kevin Tennant relates by email. "We did make a few phone calls to the company that sold us the rock-chip repair kit, but most of what we know was learned through trial and error. We eventually drove 400 miles down to Anchorage to work in a shop for free so we could learn how to replace windshields, in addition to repairing them."

 

 

After an even bigger investment -- the purchase of a truck -- the Tennants took their rock-chip repair kit and the meager experience they had and opened for business in January 1998. Just six months later, they were doing full replacements, in addition to rock chip repairs. "Business was booming and the profit quickly surpassed Tamara's income at the local video store," Tennant says. "By fall, our profits surpassed my income from the National Guard, as well, and we made the glass business our full-time venture."

 

In 2005, after nine years as independent glass-repair business owners, came the Tennants' move to franchising. "Glass Doctor reached out to me; their plan was compelling enough for me to fly to Waco, Texas, and take a firsthand look," Tennant says. "I saw an opportunity to grow my business, with a ton of help and support from a company I was completely aligned with."

 

The couple, who already had most of the equipment they needed, purchased the franchise and brand-specific equipment and signage for $12,000 and dove in -- just as they had to that dumpster -- teaching themelves about marketing and managing the business' books. "I've learned to work smarter not harder, and I try to work on my business -- not in it," Tennant writes. "I now feel that I could teach others how to successfully work on their businesses because of all the education and support provided by Glass Doctor over the years."

 

That education included assistance from what the company calls a Sure Start consultant, as well as a franchise consultant that Tennant was in constant contact with. "At conferences, I paid particularly close attention to the most successful franchisees that attended and what they had to say," Tennant says. "Glass Doctor is always just a phone call or email away; and, without fail, someone there always had the answer I was looking for."

 

En route, there were some hiccups. "The most unexpected challenge was not having the faith to trust in a system that was proven to work time and time again," Tennant says. "In the beginning, I was too stubborn to take all the advice given by Glass Doctor and considered most of it as not applicable in my market. I frequently failed to provide my franchise consultant valuable information concerning my business so he could help me by comparing benchmarks with other franchisees."

 

 

The Tennants' business is now one of Glass Doctor's most successful franchisees. Now, they're "transitioning from growth mode to expert mode," Tennant says. And the advice he offers? It's that potential other franchisees ask themselves honestly if they're ready to implement the franchise system and use it to the fullest, Tennant says. If not, "I recommend you remain an independently owned business.

 

 

 

 

Source: https://www.entrepreneur.com/article/275131

 
5 Misconceptions About Networking
Tuesday, 10 May 2016 10:27

 

A good network keeps you informed. Teaches you new things. Makes you more innovative. Gives you a sounding board to flesh out your ideas. Helps you get things done when you’re in a hurry. And, much more (see my recent Lean In video on how networks augment your impact).

But, for every person who sees the value of maintaining a far-reaching and diverse set of professional connections, many more struggle to overcome innate resistance to, if not distaste for, networking. In my 20 years of teaching about how to build and use networks more effectively, I have found that the biggest barriers people typically face are not a matter of skill but mind-set.

Listening closely to my MBA students’ and executives’ recurrent dilemmas, I have concluded that any one or more of five basic misconceptions can keep people from reaping networking’s full benefits. Which of these are holding you back?

 

 

Misconception 1: Networking is mostly a waste of time.

 A lack of experience with networking can lead people to question whether it’s a valuable use of their time, especially when the relationships being developed are not immediately related to the task at hand. Joe, a Latin American executive in a large company striving to promote greater collaboration, for example, told me that every single co-worker who visits his country asks him to meet. Last year alone he had received close to 60 people, a heavy burden on top of the day job. Rightly, he wonders whether it’s the best use of his time.

 

But, just because networks can do all these things, it doesn’t mean that yours will. It all depends on what kind of network you have, and how you go about building it. Most people are not intentional when it comes to their networks. Like Joe, they respond to requests, and reach out to others only when they have specific needs. Reaching out to people that you have identified as strategically important to your agenda is more likely to pay off.

 

 

Misconception 2. People are either naturally gifted at networking or they are not, and it’s generally difficult to change that.

 Many people believe that networking comes easily for the extroverted and runs counter to a shy person’s intrinsic nature. If they see themselves as lacking that innate talent, they don’t invest because they don’t believe effort will get them very far.

 

Stanford psychologisCarol Dweck has shown that people’s basic beliefs about “nature versus nurture” when it comes to personal attributes like intelligence or leadership skill have important consequences for the amount of effort they will put into learning something that does not come naturally to them. People with “fixed” theories believe that capacities are essentially inborn; people with growth mind-sets believe they can be developed over time.

 

As shown in a forthcoming academic paper by Kuwabara, Hildebrand, and Zou, if you believe that networking is a skill you can develop you are more likely to be motivated to improve it, work at it harder at it, and get better returns for your networking than someone with a fixed mind-set.

 

 

Misconception 3: Relationships should form naturally. 

One of the biggest misconceptions that people have about networking is that relationships should form and grow spontaneously, among people who naturally like each other. Working at it strategically and methodically, they believe, is instrumental, somehow even unethical.

 

The problem with this way of thinking is that it produces networks that are neither useful to you nor useful to your contacts because they are too homogenous. Decades of research in social psychology shows that left to our own devices we form and maintain relationships with people just like us and with people who are convenient to get to know to because we bump into them often (and if we bump into them often they are more likely to be like us).

 

These “narcissistic and lazy” networks can never give us the breadth and diversity of inputs we need to understand the world around us, to make good decisions and to get people who are different from us on board with our ideas. That’s why we should develop our professional networks deliberately, as part of an intentional and concerted effort to identify and cultivate relationships with relevant parties.

 

 

Misconception 4. Networks are inherently self-serving or selfish. 

Many people who fail to engage in networking justify their choice as a matter of personal values. They find networking “insincere” or “manipulative” — a way of obtaining unfair advantage, and therefore, a violation of the principle of meritocracy. Others, however, see networking in terms of reciprocity and giving back as much as one gets.

 

 

One study discovered that views about the ethics of networking tend to split by level. While junior professionals were prone to feeling “dirty” about the instrumental networking they knew they had to do to advance their careers, their seniors did not feel the slightest bit conflicted about it because they believed they had something of comparable value to offer.

 

The difference came down to confidence or doubt about the worth of their contributions, with junior professionals feeling more like supplicants than parties to equitable exchange. My own research suggests that the only way to conceive of networking in nobler, more appealing ways is to do it, and experience for oneself its value, not only for you but for your team and organization.

 

 

Misconception 5: Our strong ties are the most valuable.

 Another misconception that gets in the way of building a more useful network is the intuitive idea that our most important relationships in our network are our strong ties — close, high trust relationships with people who know us well, our inner circle. While these are indeed important, we tend to underestimate the importance of our “weak ties” — our relationships with people we don’t know well yet or we don’t see very often—the outer circle of our network.

 

The problem with our trusted advisers and circle of usual suspects is not that they don’t want to help. It’s that they are likely to have the same information and perspective that we do. Lots of research shows that innovation and strategic insight flow through these weaker ties that add connectivity to our networks by allowing us to reach out to people we don’t currently know through the people we do. That’s how we learn new things and access far flung information and resources.

 

One of the biggest complaints that the executives I teach have about their current networks is that they are more an accident of the past than a source of support for the future. Weak ties, the people on the periphery of our current networks, those we don’t know very well yet, hold the key to our network’s evolution.

 



Our mind-sets about networking affect the time and effort we put into it, and ultimately, the return we get on our investment. Why widen your circle of acquaintances speculatively, when there is hardly enough time for the real work? If you think you’re never going to be good at it? Or, that it is in the end, a little sleazy, at best political?

 

Mind-sets can change and do but only with direct experience. The only way you will come to understand that networking is one of the most important resources for your job and career is try it, and discover the value for yourself.

 

 

 

Source:https://hbr.org/2016/04/5-misconceptions-about-networking

 
What is Family Business Law?
Monday, 09 May 2016 09:55

Family business law is not a substantive specialty like mergers and acquisitions, securities laws, trusts and estates or federal tax. In fact, a good family business lawyer will probably identify first and foremost as a practitioner in a substantive specialty like one of those, rather than as a family business lawyer.

 

 

Family business law is also not a body of law built around an industry the same way bodies of law have developed around fisheries, restaurants, telecommunications and other specialized industries – although family businesses participate in (and make up large percentages of) nearly every industry.

 

 

Family business law is the practice of business law, whether through corporate, securities, regulatory, estate planning or other substantive areas, with a unique sensitivity to the challenges, goals and values common to most or all family businesses, and absent in most other businesses. A family business has different constituents than just shareholders – it has mothers, fathers, brothers, sisters, children and, hopefully, grandchildren and great-grandchildren. Even when profitable, it is not successful unless it is transmitting the values of the family behind it and preserving its legacy for the generations to come.

 

 

Family business lawyers must excel in their substantive field of practice. But they must also go further. They must understand the family dynamics behind the businesses they are representing. They must appreciate the core values that the first generation wanted to preserve and that the current generation wants to maintain. They must understand the importance of community in any family enterprise, appreciating that family businesses are the bedrock of community and local philanthropy. Finally, just as their clients, they must always be thinking about the future of the business.

 

 

In ordinary businesses, people retire, new people are hired, existing shareholders sell and new owners take over. This is the natural cycle we can rely on if a company is financially successful. In a family business, though, this is not what success looks like. The older generations work hard, not just for financial achievements, but also to see the business they've built carry on in the hands of their children and grandchildren. Family business lawyers work to ensure their family businesses clients can achieve those goals.

 

 

 

 

 

http://www.familyownedbusinessadvisors.com/2014/02/what-is-family-business-law/

 
Celebrating 100 Years And Still Going
Thursday, 05 May 2016 15:25

Great story on a business that is still here today.

 

Rosie Kennar, fourth generation Chairman of Hoburne Holiday Park Group on the family business entered a centenary year and is still going strong.

 

Rosie Kennar is the fourth generation Chairman of the Dorset-based Hoburne Holiday Park Group. She took over the role from her father when he reached the age of 70 in 2002. She is the first woman to hold this position, and, 14 years on, she is relishing her position with the company 

 

 

"My father is a hugely respected and highly successful businessman, and 10 years ago, the idea of filling his big shoes was an intimidating one. However, the company was fit and strong, and as I had had the privilege of working in the marketing department for the previous 10 years and had also sat on the Board for several years too, I had got to know the business really well and had, I believe, earned respect in my own right. Therefore, when the time came for me to take the Chair, I had the unconditional support of our extraordinary management and staff – many of whom I have known for most of my life. With this vital support, we have been able to build on our success together, and I am immensely proud that Hoburne is in such great shape as we have reached our 100th birthday."

 

 

The policy that this family-owned business has adopted over the years has been one of continual investment to provide impressive facilities, accommodation and service for families and couples at the seven popular holiday parks in the south and south-west of England.

 

"In the current economic climate, families appear to be increasingly looking for holidays they can trust to give them great quality and value. Many are looking to relive the simple family breaks they remember from their childhood – time spent together with a bucket and spade on the beach, or picnicking in the countryside – and our aim is to provide a great base from which to do just that, along with good quality leisure and entertainment facilities for when they want them."

 

Hoburne has seen holiday booking figures increasing year-on-year since 2008, and was named the KPMG Company of the Year in the 2011 Dorset Business Awards in November.

 

"What a fantastic start to our centenary year! I was so proud to collect our Award in front of around 600 local business colleagues. The Award went to the company that demonstrated all-round business excellence, and we were competing against all other business types, not just tourism-based ones, so it is a great accolade to our extraordinary Hoburne team."

 

At the core of the Hoburne brand are values such as integrity, value and warmth, and Rosie and her senior management team work tirelessly to ensure these values come through in all they do. Rosie is also an enthusiastic promoter of the caravan industry and believes it to be a great British success story; one of which Britain should be proud.

 

"Britain can boast some really beautiful parks in breathtaking locations, and manufacturers offer a vast range of models from budget to state-of-the-art. We are incorporating increasingly stylish design and technology into our top-of-the-range models, and we are always delighted by newcomers to our parks who are almost shocked by the high standards they find."

 

The Hoburne Holiday Parks story began on May 7 1912, when Rosie's great-grandfather John Burry, a tenant farmer, purchased 'Hubborn Farm' in Christchurch.

 

Eight years on in 1920, he bought nearby Naish Farm – 100 acres on the cliff top at Barton on Sea, with stunning views across the Solent. In such a fabulous location, it is perhaps not surprising that one by one people applied for permission to put up temporary holiday homes, including disused railway carriages and old buses, around the edge of the fields.

 

By the time he died in 1947, there were some 400 holiday homes at Naish, and with following generations purchasing more Parks and investing heavily in them, the rest, as they say, is history.

 

"Hoburne has always been part of my life. My earliest memories of the Parks are walking through a field of kale opposing Hoburne Park at Christchurch, and of Mr. Punch the carthorse, who lived and worked at Naish. My first work experience in the 1960s was picking up litter and working in the coffee shop at Bashley in the New Forest. I'm not quite sure how I escaped the toilet cleaning duties that fell to my sisters!"

 

Today, where old railway carriages once stood, there are now spacious timber lodges and stylish caravans, and this year sees the first luxury lodges with first floor sun decks being constructed at Hoburne Naish.

 

"What a long way we have come in 100 years – who knows what the next 100 years will bring!

 

 

 

 

Source: http://www.familybusinessunited.com/news/celebrating-100-years-and-still-going-strong/

 
Succession planning among business owners’ top concerns
Thursday, 05 May 2016 09:55

Deciding on a succession plan often falls down the list of things to do in busy growing businesses, but new research suggests it is causing headaches among business owners.


The Close Brothers Asset Management survey revealed that issues around succession planning make up four of the top ten worries keeping family business owners awake at night.


Unsurprisingly, maintaining profitability was top of directors' concerns, but that was followed closely by management succession planning.

The top ten concerns also featured issues including:

 

(4) planning for later life (pensions, IHT, transfer of assets and so on),

(5) engaging and developing the next generation, and

(6) ownership succession and developing responsible future owners.


In many ways this research is encouraging, showing that despite the pressure to deliver short term results, SMEs do have one eye on the long term.

 

 

Careful planning needed


Penny Lovell, Head of Private Client Services at Close Brothers Asset Management said: "UK SMEs face a multitude of challenges and family-owned small businesses can have an especially hard time navigating regulation and adapting to changing policy while remaining loyal to their unique set of family values.

Beyond that, all this must be done while running a profitable business.


"Succession planning is naturally a significant concern for family businesses and requires careful consideration. Not only must owners consider developing their replacement, and ensure family values are adhered to, they also must plan for their own retirement.

Taking advice early and developing a personal financial plan is crucial to alleviating anxiety and meeting long-term goals."

 

 

 

 

Source:  http://www.smeinsider.com/

 
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