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Thursday, 12 May 2016 10:13 |
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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.”
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Wednesday, 11 May 2016 15:31 |
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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!
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Tuesday, 10 May 2016 11:17 |
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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
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Tuesday, 10 May 2016 10:27 |
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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 psychologist Carol 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
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Monday, 09 May 2016 09:55 |
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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/ |
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Thursday, 05 May 2016 15:25 |
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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/
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Thursday, 05 May 2016 09:55 |
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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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Tuesday, 03 May 2016 10:26 |
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Small businesses depend on talent: finding it, nurturing it, and retaining it. But what does that mean, exactly? In honor of National Small Business Week, we spoke with a few successful entrepreneurs to learn about their team-building strategies.
As more than one founder told us, getting the right people is just as important as having a compelling vision and making sure the bank account has enough to cover payroll.
"I believe the CEO of a small-to-medium business has three major duties: to make sure there is money in the bank; to get the right people in the right roles; and to guide the long-term vision for the company," said Nick Gray, the founder and CEO of Museum Hack, a team-building company in New York City that counts major brands, including Facebook, among its customers. "After that, I try to get out of the way and let our team do their best work."
In fact, we found a few common themes among these entrepreneurs.
First: Make sure you hire the right talent. Second, create an environment of mutual trust and respect, so people can do their best work. And third, invest time and thought into developing processes to help those people (and your growing company) accomplish things as efficiently as possible.
Here's what these business owners told us about each of these principles:
Hire the right talent.
When you have a small team, each new person has a proportionally large impact on your company and its trajectory. Whether you're talking full-time employees or contractors, you need to find the people who can best help your company grow.
For Holly Cardew, the CEO of photo editing company Pixc, "always be hiring" took on new meaning when she started her company.
"I thought I needed money [first] to hire key players, however, in fact, I should have been making a list of amazing key players that I wanted to have on the team, ready to hire as soon as we grew." If you don't do that, she said, you waste too much time once you do have an opening: Recruiting, vetting, interviewing, and deciding. You can move much faster if you already have some amazing candidates in mind.
Hiring to address shortcomings in your current team's skill set is an ongoing process, not just something you do when you have enough cash to open a new position. Even if you're not going to hire staff, you can contract out work.
Sometimes that means making judgments about what the current team is capable of -- and what it's not so good at. "I'm not afraid to say if we aren't good at something and we need to call in someone to support our needs," said Nicole Snow, the president of Darn Good Yarn. Darn Good Yarn won last year's Community Excellence Award presented by the US Chamber of Commerce, so Snow is definitely doing something right.
And that brings us to our next point.
Empower your team to make decisions.
Once you have talented players, you want to give them the freedom -- and the respect -- they need to do their best work and to bring in others when they need to.
Snow told us about a "magic question" she makes a habit of asking her staff: "How can I help you right now?" Asking this has empowered her team to evaluate and uncover issues she would otherwise have not known about. "It's a great time to stop the bus and take a step back. From there a business owner can help empower an employee to evaluate the root cause of an issue and come up with a system to catch it from occurring again. Thanks in part to this approach, Darn Good Yarn's revenue jumped by 170 percent in 45 days this year.
Michael Branco, the CEO of Fireminds, a software development and IT shop, underscored the importance of trusting staff with the most critical aspect of a business: The relationship with customers. "The success of our business is dependent on our staff," Branco said. "It may sound cliché but great staff and great customer care are the key to success."
"Quality people keep a company alive," Chris Huntley, the founder of Huntley Wealth & Insurance Services, a small, independent life insurance agency, told us. "Without their talents we would cease to exist. So I cannot emphasize enough how important it is to create an environment of mutual trust and respect."
Invest in people and processes.
Once you have the right people in place, and you have entrusted them with their missions, you need one more piece: Process.
Even the most talented people get frustrated if they have to solve the same problem over and over. And well-defined processes are the key to growth, because they make it easier to get new contributors on board and up to speed.
Nate Ginsburg, the founder of Onset Interactive, an ecommerce and manufacturing business, said that nailing down processes was essential to maintaining growth once the company gained traction. "Once we started to get some traction, in order to continue to grow it has been essential to get processes down to manage our main business tasks. After the processes are in place, filling the roles to manage those processes has allowed us to continue to grow and grow faster," he said.
Cardew, of Pixc, echoed these sentiments, speaking from the experience of someone who didn't get on the "process" bandwagon quite as quickly. "I wish someone told me about all the tools and processes that I should be mapping and using along the way," Cardew said. "It would have saved a lot of time."
And for Fireminds' Branco, focusing on metrics is what helps him manage his business successfully. Branco constantly reviews the sales pipeline, monitors the profitability of each ongoing project, and tracks a few key performance indicators (KPIs) such as customer call response times and customer satisfaction ratings.
Bring it all together.
When you're starting a business, it takes a while to figure out what combination of products and services, what pricing, and what processes will work best.
Ginsburg told us that identifying what works and acting on it quickly was essential. "When you find something that works, move as fast as you can to blow it up as much as possible. Business can change quick," Ginsburg said.
And don't forget about the big picture.
"Think about how you, as a business owner, want to impact the world," said Darn Good Yarn's Snow, who has made it her mission to create opportunities for other people and small businesses within her supply chain. "A small business is an amazing way to serve and leave an impact on the world you live in."
Source: https://www.entrepreneur.com/article/274500 |
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Tuesday, 03 May 2016 09:43 |
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WILLS – OR SOMETIMES their absence – are a bone of contention for many families.
Most of us have heard stories of families falling out over who gets what when a relative dies. It can create permanent divisions and deep wounds.
The Law Reform Commission is currently asking for submissions on Section 117 of the 1965 Succession Act. It leaves a legal window open for children who feel they haven't been given their fair share of inheritance.
Following on from this, we asked readers to get in touch with their own experiences of problems encountered, and families divided, due to wills and inheritances.
Below is a selection of your stories. All names have been changed to protect people's identities.
'We will never speak again'
Almost €12,000 was taken out of my father's bank account in the six months before he died. He was ill and unable to withdraw the money himself. We only copped that money was being taken out of his account when we saw a letter showing how much was left.
My father was not eating or sleeping the Christmas before he died, yet he 'spent' €4,000.
My sister moved into my father's house two days after the funeral and locked the rest of the family out. She was painting the house before the will was out.
She had previously fallen out with my father but reconciled before his death, and became the executor of his will within the last year of his life.
Based on our experience, the law protects a person who manipulates an elderly man and takes his money, and then can hide behind the executor position.
What's stopping any horrible child taking advantage of their parent? This has had a devastating effect on our lives.
I'm not someone who's down on a sister because she got a house, we want to highlight what she has done.
My sister is laughing all the way to the bank. We don't speak at all. We will never speak again. All our siblings feel the same.
- Mary
'My grandfather was pinned to a wall with a pitchfork at his throat'
My great grandfather and great grandmother lived in the house which had a bit of land attached, with their three youngest sons.
When my great grandfather died in the 1940s he left the house and land to his eldest son: my grandfather.
He and my grandmother moved into the house. After my great-grandmother died a year later, my grandfather asked his brothers to move out.
A huge argument over the issue became violent.
My grandfather was pinned to a wall with a pitchfork at his throat by one of his brothers.
This incident has rippled through the generations and the people involved rarely spoke, except at funerals.
My own father carried this during his life and made a point of being in a position to lower his uncle's coffin into the grave when he died (the one who held a pitchfork to his father's throat).
I eventually inherited the land. There is still bitterness about the original will from cousins and other family members.
It was never really resolved but I sold the house. The house accidentally burnt down soon afterwards, something relatives blamed on the sale.
- Michael
'My mother would have crawled out of her grave'
My mother died a few years ago. My parents were legally separated and my father had been living abroad for some time.
Shortly after my mother's death he contacted me to say that, as they never divorced, he was entitled to a share of the family home.
He told me to sell the house and arrange for the proceeds to be split equally between him, me and my brother.
The deeds to the house were solely in my mother's name.
My mother would have crawled out of that grave rather than have him benefit from her estate.
My solicitor confirmed that my father was entitled to nothing.
He wasn't happy about this and feels my brother and I have stolen from him.
He has cut us off, both from his will (which I care nothing about) and his life. The day I lost my mother I also lost my father. All because of an inheritance.
He said some really awful things to me about myself and my mother.
It really interfered with my grieving process.
He called me a gold digger and said my mother had conned the family home from him. He told me he has no children and that we would never see him again ... He said he'd rather die in agony than see me again, that I disgust him and that I am his enemy.
In response, I once told him I wished he was dead instead of my mother. It was not my finest moment.
I am sad that he won't be in my future but I'm even sadder that the man who had always been hero and my protector has become a horrible, bitter man who I'm ashamed of.
- Jane
'Dad's new wife got everything'
Dad remarried after our mother died. There was only my brother and I, both married with families of our own.
Dad promised us at the time that his second marriage would not change our inheritance. He had inherited the remnants of our mother's business. He had a few years of happiness and we accepted his new wife and enjoyed many family occasions together.
Unfortunately he got cancer and died last year. He changed his will one month beforehand.
When we inquired about the will we received a letter from our father's wife's solicitor stating that we were not mentioned in it.
We received professional advice and were told we had no case unless we discredited our Dad by proving that he did not provide for us.
Our love for our dad did not die even though he dismissed us. Our only consolation is that possibly he did not quite understand what he was signing.
- James and Susie
'The legal bill was just under €100,000′
My wife's family fell out over an inheritance. Her father had land and didn't have a great relationship with his two other children, one of whom is quite wealthy.
He was of sound mind when making his will.
The majority of the inheritance was left to my wife who planned to make sure the other sibling was looked after – until she received notice of court proceedings, citing Section 117, from both.
My sister's wealthy sibling withdrew their claim when it came to providing proof of assets.
The case continued and the legal bill was just under €100,000 when we were advised that it would be easier to make a settlement.
Section 117 is an archaic law that means any spiteful sibling can bring a case against the main beneficiary, even if they've no real grounds. The legal profession seem to be the main people who benefit from it, making large sums of money.
Now I ponder how I can possibly write my will and make sure my wishes are respected.
- John
Source:
http://www.thejournal.ie/families-falling-out-over-wills-2736330-May2016/ |
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Thursday, 28 April 2016 10:46 |
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Trust is an integral part of all organisations and in particular family businesses. Once established, trust must be nurtured as explained by Catherine Faherty, PhD research scholar in DCU Centre for Family Business.
A little girl and her father were crossing a bridge. The father was kind of scared so he asked his little daughter: "Sweetheart, please hold my hand so that you don't fall into the river." The little girl said: "No, Dad. You hold my hand." "What's the difference?" asked the puzzled father.
"There's a big difference," replied the little girl. "If I hold your hand and something happens to me, chances are that I may let your hand go. But if you hold my hand, I know for sure that no matter what happens, you will never let my hand go."
Often, as researchers in the field of family enterprise, we are challenged to succinctly summarise what makes family businesses different from other forms of enterprise— what is it that makes these businesses a special kind of business? Family businesses don't have it easy.
The role of CEO is very different when the company was founded by your father, and when your mother and siblings sit around the boardroom table, just as they sat around the dinner table. But these intimate connections can constitute a major advantage for these firms.
Family enterprises draw special strength from their shared history, commitment, and stewardship of the business. When key managers are relatives, their traditions, values and priorities draw from a common source. Yet, with that being said, if we were compelled to boil the differences down to a single concept, a single word, the
one thing that underlies all of the competitive advantages and idiosyncrasies of family businesses, the word would have to be "trust".
No single variable so thoroughly influences interpersonal and group behaviour as does trust. It is the foundation for long-term thinking, commitment, loyalty, stewardship, and much more.
In the form of a definition, trust involves the willingness to take a risk and be vulnerable to the actions of another. Trust, or lack thereof, can be found in all relationships. Its salience in the business environment— between superiors and subordinates, among executive teams, with suppliers or customers—is undeniable.
When families become involved in business, relationships are often distinguished by greater trust than is available to mere business associates alone. Emotional bonds built through kinship, familiarity and shared histories can lead to higher levels of trust within family enterprises.
Obviously, not every family business is characterised by trust. But even those that are fortuitous to carry this key ingredient sometimes take it for granted. So it is important for leaders to understand how trust is nurtured in a family business. Behavioural scientists offer a useful roadmap toward accumulating trust.
They offer three main drivers involved in establishing the trustworthiness of another individual. They are:
1. Integrity:
This refers to an individual's reputation for honesty and truthfulness. In other words, if you say you're going to be there, you're going to be there.
2. Competence:
Does the individual possess the ability, or technical knowledge, required to get the job done? Can they do what they say they are going to do? This particular factor is situation specific, meaning, for example, that you may trust the Marketing Director to develop the annual marketing plan for the organisation, but you might not trust her or him to fix the engine in your car.
3. Benevolence:
This involves evaluating the individual's desire to do good to others. Does he or she genuinely care about me?
Source: http://www.dcu.ie/sites/default/files/centre_for_family_business/Ezine%20Article%20-%20A%20Matter%20of%20Trust%20Final.pdf |
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