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'My father left the entire farm to my brother. What can I do?'

Tuesday, 09 January 2018

"Not being fully included in a will can be a matter of losing your life's Work"     Q. I am a farmer's son and am now in my fifties.

 

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Problem Solver: How do I get my father to let go after handing over reins?

Tuesday, 09 January 2018

Fergal Quinn gives his advice below to a successor on the common struggle of a famiy business Handover.     Q. I am 33 and have been

 

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7 Reasons for Enduring Power of Attorney

Tuesday, 09 January 2018

An Enduring Power of Attorney is a document in which you appoint who should look after your personal and your financial affairs in the event

 

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Playing it straight in family business succession
Thursday, 03 March 2016 12:55


Laying straight your company's line of succession is a generation game that can be won, if you follow a few sensible rules

 

Handing down the family business can be a delicate affair. We've all heard the stories. Parents who won't let go. Children not ready for the job. Dysfunctional relationships both at home and in the office.


The hardest part about having a family business is the challenge of passing it down to the next generation, says Eric Clinton, director of the Dublin City University Centre for Family Business.


He cites research from the Kellogg School of Management near Chicago that about 30 per cent of family businesses will survive from the first generation to the second. Only 12 per cent will survive from the second to the third.


What can families do avoid becoming a statistic? A large part of the answer, it seems, is regular communication about what will happen when the older generation is no longer in charge.


Have the difficult conversations early
"Family businesses are a lot like life, like relationships," says Clinton. "If you want it to work, you have to work at it.
"My advice is to have the difficult conversations and have them early. Have regular communication. Talking over the kitchen table at 8pm on a Saturday night might not necessarily be the healthy way to do it."


Preparing the next generation early on in the process is crucial in case of unforeseen events like a sudden illness, he says. If children have to take over earlier than expected, things "can become very dysfunctional very quickly".


"How do you mentor the next generation into it?" Clinton asks.
"Do they have an adviser? Do they shadow the incumbent? It's not just about giving the next generation power, it's about giving them ownership and control and mentoring. They can't just be thrown into the role."


Clinton teaches families about the "4Ls", which are phases of the family business life cycle: learning business, learning our family business, learning to lead our business, and learning to let go of our business.


The first two phases are about apprenticeship.
Clinton says families might bring in rules or a "constitution" that require the next generation to reach a certain level of education and/or outside work experience before joining the family company.


According to the 4Ls, business owners should "learn to let go" through planning: developing a timeline for retirement, creating management development systems and sticking to the plan.
Succession can actually be a breath of fresh air for businesses, according to Clinton, as long as there is a balance between tradition and change.


"Succession is often a time for innovation because the next generation often comes in with new ideas. The next generation gives energy and lifeblood to the business."

 


Principles of succession


"Succession issues are probably the most difficult topic because there are no black and white solutions. A wide array of issues could arise in one family," says Suzanne O'Neill, a partner at Irish accounting and business advisory firm Baker Tilly Ryan Glennon.
Baker Tilly's client base is predominantly family businesses, and O'Neill specialises in succession planning.
Family businesses need a structured approach to succession, she says. The results of a study by Baker Tilly International, which surveyed 1,650 business owners across 55 countries, were condensed in to eight principles of succession.
They are meant to be a practical guide for families.


The eight principles are:

1. Succession is not retirement

2. Start with readiness

3. Set your goals before the journey

4. Price is not first

5. Harmony is a must

6. Plan early, start earlier

7. Equality of, not equal

8. Ask before you get lost.


Family harmony is an important issue on the list, O'Neill says.
"The whole issue of family harmony certainly comes up in dealing with clients. The key requirement in any succession is harmony and open communication. All relevant parties have to be engaged in the process at an early stage."


She says the owner should bring the next generation on board so they are comfortable with the plan from the start. Owners should also be willing to listen to everyone's point of view. These are ways to avoid "disharmony".


Part of the process is identifying the family member or members who should take over the business and to start handing over responsibility so they have the opportunity to demonstrate their abilities early on.
O'Neill calls these "stepping stones" that should be put in place well in advance of retirement.

Aoife and Paddy Hayes of CST International 'It wasn't a 'someday this will be yours, my daughter' type thing' CST International is a small, Dublin-based market research agency run by Paddy Hayes (69). His daughter Aoife (33), head of client services, will soon take over, and the pair appear to be getting a lot of things right in their succession planning.


"I started the company about 20 years ago, and it's my third business," Paddy says. "So I'm 42 years signing my own paycheck." But Aoife might sign a few before the end of his 43rd year.
While Aoife began helping out at the office as a teenager, she says her path was not laid out for her. She worked in the arts for a few years and then did a master's in project management.
Taking over the business became an option after she went to work there full-time four years ago and saw how she could drive the company forward.


Paddy says it was her call. "It wasn't a 'someday this will be yours, my daughter' type thing. It was very much: go to school, go to college, do what you want to do. And then, if you feel it's something you want, that's grand."
CST specialises in guest feedback for the hospitality industry, and Aoife is now spearheading a new aspect of the business: employee engagement research. CST puts together surveys to figure out how engaged a company's employees are.
"The more engaged you are, the more willing you are to go the extra mile," says Aoife. "We feel like we're providing companies with really useful data that they can use to make their businesses more successful."


Father and daughter talk about the succession regularly, and the handover is about three quarters of the way done. It has happened in stages. This year, for the first time, Aoife went to an important meeting with their largest client without Paddy.
"That was conscious and deliberate," he says. "But that's what you have to do, and that's not easy because I would have loved to be there.


"When you are the founder of a business and you attend these meetings, just by virtue of [your role], you tend to dominate and people tend to address questions to you because you're the founder of the company.


"If you're going to give other people space, then you have to give them space," Paddy adds. "And a way to do that is by not being there.
"She was coming in and working with people who were used to working with me, and that's tricky. And that's something she has managed extraordinarily well. She's extremely good with people . . .

So I think she has a lot of the skills that will be needed to take this business where it can go." Paddy will be available after he steps down, but he says he's ready to move on. His first book, Daphne Park: Queen of Spies, a biography of a British spy, will be published later this year. He is already working on a follow-up.


"Your early 30s is a super time to take over the running of a business," he says. "Why wait until your 40s, 50s, 60s? Do it now . . . You have that great combination of energy and drive, tempered with maturity."

 

 

Source: http://www.irishtimes.com/business/work/playing-it-straight-in-family-business-succession-1.2203869

 
Smart Leaders Make 4 Wise Investments
Thursday, 03 March 2016 10:51

Do you keep a 'to do' list?

If so, there's a pretty good chance that you enjoy checking items off of your 'to do' list?

 

In fact, you may even suffer from a certain disorder (I know that I suffer from it) that causes you to add things you've already done to your 'to do' list so you can check them off.

Tracking activities and marking items off of your list are great habits. However, you need to watch out for the "Busyness Trap". This trap is where you become addicted to being busy and miss the chance to strive for significance.

 

Have you fallen into the 'Busyness Trap"? Perhaps you can relate to one of these scenarios. If so, your busyness alarm should be going off:

Your driving home after a long week at work and think to yourself, I was really busy this week, but what did I accomplish that truly mattered?

 

You are burned out from the tremendous amount of energy it takes just to get through the day. The work is keeping you busy, but it isn't relighting or refueling your fire.
You catch yourself talking a lot about what you are working on, but struggle to identify key things that you have taken over the finish line. Perhaps the line keeps moving...


Busyness can be costly. It consumes time, energy, and motivation with little concern over how these resources are expended. It also steals your ability to invest in four key areas:

 

1. Invest in Pondering

Sometimes you need to stop and put things into perspective. Find a quiet spot and take time to reflect on an issue, project, or goal. Ask yourself questions like

Why are we doing this?
What do we really hope to achieve?
What type of leader do I want to be?

 


2. Invest in Scuba Diving

When you are constantly busy, you often stay at the surface and waterski over issues. You may occasionally go deeper and snorkel, but you never take the time to really scuba dive on an issue. So, you keep addressing symptoms instead of root causes. Ask yourself these questions:

When is the last time you took the time to scuba dive on an issue?
Is there something that keeps resurfacing on your team that you should invest time in problem-solving?
What's the long-term impact of constantly waterskiing?

 


3. Invest in Planning

Putting out fires all the time makes it really difficult to invest in planning. However, one of the reasons you may be constantly putting out fires is because you aren't spending enough time planning. Ask yourself these questions:

Are you spending the appropriate amount of time planning things as opposed to doing them?
Have you invested too much time fixing issues that could have been avoided in the first place?
How good is your team at planning?

 


4. Invest in Relationships

When you are busy, relationships often suffer. You may intend to connect with an employee, but you just "can't" find the time. At some point, the inability to connect erupts into a situation that could have been avoided. Ask yourself these questions:

When was the last time you connected with your people?
Is there a relationship that you've ignored that you should tend to?
What's your next chance to connect with someone?
If you have fallen into the "Busyness Trap", here are four things you can do today to get yourself moving in the right direction:

Kill 2-3 items on your current 'to do' list. Don't delay them; cancel them.
Don't fill the space of the 2-3 dead items with more busyness. Instead block the time to invest in one of the four items above. Don't be general; name it and schedule it.
Hold yourself accountable to do it when you schedule it.
Repeat steps 1-3.

 

 

Source: https://www.linkedin.com/pulse/smart-leaders-make-4-wise-investments-patrick-leddin-ph-d-pmp

 
Family Governance
Wednesday, 02 March 2016 16:34

Family Governance is a topic that most families are reluctant to address. It covers two broad topics: governance of the business and governance of the family. Most family businesses, especially in the formative years, take on the characteristics of the founder or founding family. Although this entrepreneurial model works for an early stage family owned business, as the company grows in size it needs gradual evolution to a different model. Boards of Advisors, Boards of Directors, and Professional Management are some of the ways to improve the governance and performance of the business.

 

Family governance is a more subtle topic. Most families find that as they grow there is a need to formally discuss family issues like estate plans, family business leadership transition, and family fairness. Families find that some of the best venues to do this are through Family Councils, Family Retreats, and formal Family Meetings.

 

 

Board of Advisors

When the family business grows so the leader finds that it is beyond his sole expertise to handle all aspects of the business, it is usually time to form a group of trusted peers into a Board of Advisors. A well conceived and run Board of Advisors can be invaluable to a company – many say that the most important step in their company's growth and evolution was the addition of a Board.

 

Professional Management

Although family businesses often desire that key management positions are staffed with family members, sometimes they are not interested, not qualified, or are engaged in other worthwhile vocations. This is the time to hire professional managers who bring their experience and business acumen to the family business. Professional managers often improve overall performance and are also useful in providing "bridge management." For example, when the next generation of family leaders are not quite ready to take on senior management roles, bridge managers can provide a connection between generations of family along with mentoring, guidance, and coaching.

 

Family Council

Family councils provide families with a vehicle to entertain family projects and resolve issues. Some of these include developing Entry Criteria for new family members to enter the business, chronicling the family history, and ensuring that family fairness is considered in family and business decisions.

 

Family Meetings

Formal, scheduled family meetings inform family members of both the status of the family and the family business. Family members can reconnect with one another, and family issues can be discussed constructively rather than being left to fester into larger issues.

 

Family Retreats

Family retreats are conducted over two to four days at off site locations. They provide a neutral venue to discuss family and family business items.

Maybe you don't see answers to your specific questions here. Contact us anyway. It doesn't cost you anything and we will give you blunt, straightforward, heartfelt advice to get you pointed in the right direction. If we can't help you, maybe we have contacts or know someone who can.

 
Climate Change in your Business
Wednesday, 02 March 2016 12:24

As you all are aware, climate change is happening right now and With Mr. DiCaprio using his acceptance speech at the Oscars for best actor to urge the world to reject the “politics of greed”, and support leaders willing to take action against climate change, it is a hot topic at the moment.

 

 Here are several reminder steps that your business can take to help contain or reduce it:

  • Remember the 3 "R"s. Reduce waste, purchase reusable products instead of disposables, and recycle paper, plastic, glass, aluminum and office equipment.
  • Install energy-efficient lighting. Replace incandescent light bulbs with compact fluorescent light bulbs, which last 10 times longer, use two-thirds less energy, and radiate 70 percent less heat.
  • Drive smarter and less frequently. Make sure company vehicles run efficiently and are properly maintained. Keeping tires properly inflated alone can improve gas mileage and every gallon of gas saved keeps 20 pounds of carbon dioxide out of our atmosphere. Also, encourage carpooling among employees
  • Use less heat and air conditioning when possible. Set your office thermostat 2 degrees lower in winter and higher in the summer to avoid approximately 2000 pounds of carbon dioxide per year.
  • Plant trees on your company's property. Photosynthesis 101 – trees and other plant absorb carbon dioxide and produce oxygen.
  • Arrange annual energy audits. This will help you identify areas of your workplace that may not be energy efficient, allowing you to make necessary upgrades.
  • Encourage your employees to conserve. Have someone on your staff gather information about recycling and energy conservation and share it with co-workers.

 

By taking these simple steps to help reduce greenhouse gases, you'll also help your business reduce its energy use and save money.

 

 

Source:

http://www.examiner.com/article/7-ways-your-business-can-help-reduce-global-warming

 
PwC's Next generation Survey 2014 - Key Findings
Wednesday, 02 March 2016 11:40

Some interesting findings by PWC below:

 

 

Managing succession well is key for family businesses. In our 2012 family business survey, 41% of participants said that they were looking to hand the business over in the next five years.

Our latest research, of 207 next generation family business leaders, identifies three gaps that family business need to bridge in order to manage the transition process effectively – the generation gap, the credibility gap and the communications gap.

 

The generation gap
The world has changed in the last 30 years and family firms can struggle to keep pace, especially with global megatrends like demographic shifts and digital technology. The current generation is not always confident that their children are ready and able to take over, and more family firms are bringing in external CEOs.

The next generation can no longer assume they'll run the business one day: 73% of those likely to take over the business said they're looking forward to doing this, but only 35% thought it was definite, and as many as 29% thought it only fairly likely at best.

At the same time, 86% of the next generation want to do something significant when they take over, and 80% have big ideas for change and growth. Many of the next generation see the need to 'professionalise' their family firm, by introducing better governance, and more rigorous processes in areas like finance.

 

The credibility gap
88% of the next generation say they have to work harder than others in the firm to prove themselves, both with colleagues and customers: 59% consider gaining the respect of their co-workers as one of their biggest challenges.

Many of the next generation have worked in another business first, as a way of establishing their credibility: only 7% went into the firm after school – 31% went to university, and 46% worked elsewhere, often as part of a structured development plan.

 

The communications gap
Family businesses have to manage personal as well as professional relationships, and this brings with it the possibility of conflict: 22% of the next generation are concerned about working with family members, and understanding the family dynamic.

As management shifts from one generation to the next, the older generation has to understand the difference between 'influence' and 'control': 87% of the next generation think their parents have confidence in them, but as many as 64% think the current generation will find it tough to let go – the 'sticky baton' syndrome.

 

The key is clarity of roles and responsibilities, and openness in communication, especially in relation to succession planning, where an independent mediator can help bridge the gap, and ensure the next generation are prepared to succeed.

 

 

Source: http://www.pwc.com/gx/en/services/family-business/family-business-survey/next-gen/key-findings.html

 
How to prevent ownership disputes in family businesses
Wednesday, 24 February 2016 15:16

Most family businesses are faced with the same challenges that other businesses face, yet the more personal relationships that exist within family business create different considerations – especially when things go wrong...

 

Click here to read more on key causes of serious disagreements in Family Business and how to prevent these from happening: 

http://www.theguardian.com/small-business-network/2013/sep/02/ownership-dispute-family-business

 
Contaminated Property Makes for Costly Inheritance
Tuesday, 23 February 2016 10:01

Inheritors Be aware of future assets....

VICKI TEMKIN, a lawyer in suburban Los Angeles, inherited a few pieces of property when her mother died in 1999. But she was also left with the responsibility to clean up several acres of land that had been polluted by tenants over the decades.

 

She spent the better part of the last decade and about $1 million in cleanup fees, and that does not count the additional $1 million or more in lost rent.

 

"No one was happy about having to clean it up," said Ms. Temkin, who, with her sister, inherited half of the property. (The other half went to the children of her father's business partner.)

 

Inheriting any property is more complicated than receiving securities or cash. If it is a family home, sibling rivalry can wreak havoc. If it is an income-producing apartment or commercial space, someone has to manage it. Or some heirs might want to cash out their share.

 

But inheriting contaminated properties, even if the deceased owner had nothing to do with polluting the land, is in a category all its own. Known as "toxic succession," a property passed on with environmental liabilities could end up costing the inheritor more than it is worth.

 

Kevin Daehnke, a senior partner at the Daehnke Cruz Law Group and an expert in toxic succession, said the best remedies needed to be taken before the property is left to an heir, but most of the time no one knows the liabilities are there.

 

In Ms. Temkin's case, the contaminated land had originally housed a gas station but had also been leased to a chemical manufacturer and a storage facility. She said it had been a major source of income for her family until about 2003, when a buyer approached her. As part of the deal, she had to get an environmental report, which turned up serious pollution.

 

The buyer walked away, but she and the other owners were put on notice to clean up the property if they ever wanted to sell it. (She declined to specify the city other than to say it was outside of Los Angeles.)

 

"We decided we'd just rent it and take the loss and not sell it," she said.

 

But the amount she could charge in rent was half what it had been, since the tenant could not use the contaminated part of the property.

When another chance to sell came their way in 2006, Ms. Temkin and the other owners decided to take it and clean up the property. That took until 2013. In addition to the cleanup costs and lost rent revenue, she said, they had to accept 25 percent less for the two-acre parcel.

 

And even though they received a certificate from the city saying the case was closed, Ms. Temkin said she and her partners could still have to do more.

 

"If pollution should be discovered in that area, we're on the hook to clean it up," she said. "I don't think any of us realized we'd be on the hook for life, no matter what. I don't know if we'd have agreed to sell it if that had been known to us."

 

In this instance, at least, Ms. Temkin's parents and then she and her sister — not to mention the other half of the partnership — benefited from the property for three decades.

 

That is not always the case. Sarah, who agreed to talk on condition that her last name be withheld because she fears future litigation, inherited a piece of property in Southern California when her father died in 1986. She was 18, and the property and other assets were held in trust for her benefit. The next year, the trust cleaned up the property, which had a dry cleaner on it, and sold it.

 

But then, 25 years later in 2012, Sarah was named in a lawsuit claiming that residual contamination in the soil had sickened dozens of people who worked in a building constructed on the land. Her mother was named in a separate suit.

"They said the toxic waste had percolated through the ground water and caused all kinds of diseases," said Marshal Oldman, a trust and estates lawyer who had worked on behalf of the family. "It was a fishing expedition."

 

It may have been. But Sarah said responding to the suit cost her more than $500,000 in legal fees and two and half years of worrying about the suit's validity before a court dismissed the case. She estimated that her mother's legal fees were double what she paid.

 

"I felt bad for these people, but I didn't do it," she said. "I was being punished for the sins of my dad. It's frustrating. There was nothing I could do."

And in this case, Mr. Oldman said, it was the tenant, not Sarah's father, who had polluted the land.

 

Mr. Daehnke, who also worked on the case, said such lawsuits were more common than it might seem, particularly when plaintiffs identify what they think is a deep-pocketed former owner — in this case Sarah's trust.

 

In instances of environmental contamination, any one in the chain of title can be held liable. But those without any money essentially are skipped. The people who have the means can then be sued and will ultimately pay for the cleanup.

 

"Even if someone only owned 5 percent of the property, they're still liable," said Canaan Crouch, an environmental engineer and a partner at Landmark E&S Insurance Brokers. "You could be responsible for 100 percent of the cleanup if you're the only viable economic entity."

 

Still, these properties were contaminated, and someone needs to pay to clean them up. While that cost varies from tens of thousands of dollars to millions, the issue for many inheritors is how long someone can be held responsible for the damages.

 

If the property is thought to be contaminated, there are several solutions, Mr. Daehnke said. It could be sold in the owner's lifetime, since any future liability would end with that person's death. Or it could be put into a separate trust with a corporate trustee to administer it. That puts distance between the beneficiary and the person suing and limits a litigant's access to other assets.

 

If the severity of the contamination is known, Marty Babitz, senior resident of the Hawthorn Institute, which is part of PNC Family Wealth, said the easiest solution might be for the inheritor to disclaim the property. Everyone else in line to inherit could do the same and the property would end up going to the state.

 

"I'd have nine months to ascertain if the property might be more trouble than it's worth," Mr. Babitz said.

Yet most of the time, contamination issues do not become known until someone tries to sell the property and an environmental test is ordered.

 

Once the contamination is found, there is insurance to cover future liability, even in cases that might seem uninsurable. Mr. Crouch pointed to a plant nursery in the San Francisco Bay Area where heavy metals were found in the soil and a nearby stream. The owners paid seven figures to clean it up before selling the land to someone who wanted to put a preschool on it.

 

"The location was important, so the buyers stuck in there," Mr. Crouch said.

 

Given what is on the land now, it is not hard to see how some parent might sue the preschool or the land's previous owner. So the previous owners bought an insurance policy to cover such possibilities as the environmental regulator reopening the case or someone suing the previous owners for missing a spot in the cleanup or saying there was pollution on an adjacent property that harmed a child.

 

"It all comes down to money," Mr. Crouch said. "Unless there is some sort of money at risk, 9.9 times out of 10, people have no concept of environmental issues."

 

And not paying attention to those could turn a windfall inheritance into a money pit.

 

 

 

Source:http://www.nytimes.com/2016/02/20/your-money/contaminated-property-makes-for-costly-inheritance.html?ref=topics
 

 
Why female leaders thrive in family businesses
Thursday, 18 February 2016 11:40

Interesting read from the Australian Business Review:

 

 

There's more evidence to show women are assuming important leadership positions for family businesses all around the world. It's a welcome development, and another sign that family business continues to be a wonderful engine for social change.

 

A collaborative study by Kennesaw State University and Ernst & Young found that global family-owned or controlled businesses have a far higher percentage of women in leadership positions than other types of companies. Results were published in Fortune magazine in July last year.

 

Private businesses were only eligible for the survey if the family controlled at least 50 per cent of shares and voting rights. The focus was large and broad: 25 of the largest family businesses in nearly two dozen large global markets, with the average firm bringing in $US3.5 billion in sales ($A5.09bn) and boasting 12,000 employees. Among those surveyed, 22 per cent of top management teams were women. It's still a small number, but it's already nearly double the 12.9 per cent figure reported in 2013.

 

More impressively, nearly 70 per cent of surveyed family businesses were considering a woman as their next chief executive; just 5 per cent of non-family, publicly traded companies had female chief executives in a 2015 study. The most equal boards were found in Norway (35.5 per cent female board members) while the least equal were in Japan (just 3.1 per cent).

 

Lesa France Kennedy is chief executive of International Speedway Corporation, the sporting giant that controls 12 NASCAR series events, and also serves as NASCAR's vice chairperson. She has recently been named the "most powerful woman in sports" by an independent panel (actually the second time Ms. Kennedy has won this distinction).

 

Kennedy wields influence with a soft touch and a behind-the-scenes profile. She started working with the International Speedway Corporation in 1983 immediately after earning degrees in economics and psychology from Duke University. "She has the ability to marshal people and resources in a very effective way," brother Brian says of Lesa.

 

Emma Hill: 30 years of jewellery, romance and soul

 

Closer to home in New Zealand, international jeweller Michael Hill International recently announced that Emma Hill will take over aschairwoman. She succeeds her father, founder Michael Hill, and received support from independent members of the board after the announcement.

 

There had been some concern about the chairmanship being passed on to the family, particularly a daughter. To his credit, Michael Hill took those concerns head on, saying "it's important to keep the company going as a family business so it's not a clinical, big business without romance and soul".

 

Emma Hill's story is familiar to those who follow family business successions. She worked within the company for years, often under the direct tutelage of her father, to be groomed for leadership. Her career in jewellery now spans more than three decades, starting as a floor worker when she was a teenager. She had previously served as deputy chair in 2011. The Hill family did it the right way.

Sabrina Chao: third-generation daughter and proven executive

 

While Emma Hill took over Michael Hill International in an organised and planned succession, Sabrina Chao of Hong Kong-based Wah Kwong Maritime Transport Holdings had a much rougher transition. Operational responsibility for the company passed to her in 2010 when, at the young age of 30, Ms. Chao's father suffered a stroke. Living in a culture steeped in traditional, male-dominated Chinese values, Chao had to prove herself from the get-go.

 

In January 2013, after years of profitable stewardship, Chao was named chairwoman of Wah Kwong's board. By that time Wah Kwong had 30 ships and $200 million in revenue. She has already navigated several downturns in regional and global shipping markets by sticking to the basics and not trying to shine too brightly at once. "It's been about having the right assets and the right customers," says Chao. "Most importantly, it's about having the right people and focusing on the detail at every level of the organisation."

 

Looking forward: female leadership in Australia

 

While Australian politicians and big business grapple with reasonable representation of women, family businesses are leading the way. The NSW Bar Association published a report in January about the NSW Labor Party, finding it rife with misogyny, sexism and harassment. The report included that "there was a tendency to give women a chance when everything else had gone wrong."

 

Women, by contrast, are taking the lead role in family business. As I've pointed out before, family business structures benefit women and women benefit family businesses. Women owned 33 per cent of family businesses in Australia in 2015, up from just 2 per cent in 1994. The female leadership model is alive and growing.

 

 

Source: http://www.businessspectator.com.au/article/2016/2/12/economy/why-female-leaders-thrive-family-businesses

 
10 Things to Consider When Starting a Family Business
Wednesday, 17 February 2016 16:17

Family businesses require the same kind of legal, financial, and strategic set-up as other businesses, but there are several unique issues in family businesses.

Have you ever thought how great it would be to start a business with your spouse, sibling, or best friend? Maybe you want to start a business that can provide for your children after you retire. If so, you've probably imagined fun days at the office together, brainstorming over coffee or happy hour, and the joys of working with someone you care deeply about.

If you have the kind of relationship where you love spending every second together and you have complimentary skills, family businesses can be ideal. You get to work together, often travel together, and spend your days with the people you enjoy most in the world. However, even in those idyllic relationships, working together can be challenging. Here are some things to consider if you're thinking of starting a family business.

 

  • All the traditional rules of business still apply. Whether you start the business as a hobby or expect it to provide full-time income, it's still a business. You still need legal protection, solid strategies and business plans, operational systems, and competent partners. You also need it to make money. (Nothing ruins the fun of a family business like financial worries!)
  • It WILL affect your relationship. You're changing the existing dynamic of how you relate to each other, so for good or bad, you can't expect things to stay as they are. Learning to have good boundaries and nurturing your relationship outside of work are crucial for long-term success.
  • Someone has to be in charge. Even if you plan to share decision-making, someone needs to have the final say. Disagreements are inevitable, and if you're going to operate a real business (as in, not just a hobby), everyone needs to know who makes the final decisions.
  • Just because it's your dream doesn't mean it's theirs. You will most likely have different levels of commitment to the business. Whether one (or more) of you is supporting the other's dream, or you're all excited about the mission at the start, things change. Don't expect anyone else to feel the way you do about your business; they're not you and it's unfair to expect them to be. This is especially true if you intend your business to be the legacy you pass on to your children.
  • Traditional roles (CEO, CFO, COO, etc.) may have loose or unclear boundaries. If daughter #4 is the best choice for CEO but she's the baby of the family, it may be difficult for her to manage older siblings or parents who are in support roles. Conversely, it may be difficult for the older siblings or parents to find themselves in subordinate roles.
  • The learning curve may be huge. If you're assigning positions based on potential or need instead of experience and expertise, there will be a bigger learning curve. You also may find people are in positions that don't suit their skills and personalities, such as having a family member who hates accounting in charge of finance ("to keep it in the family").
  • You will need time off. If business is the main topic of conversation every time you're together, you may find that you lose sight of why you enjoyed the relationship in the first place. Make sure you spend time together (and apart) pursuing hobbies and interests that are not work-related. Consider banning work talk at the dinner table or on date night (if you can!).
  • Your existing baggage will be magnified in times of stress. If you've fought for years about how your brother shows up to everything late, what will happen when he shows up late to an important meeting? Instead of a simple disciplinary review, you may find yourself in the same knock-down, drag-out fight you've had since childhood. Try to leave the past in the past and focus on the present and the future.
  • Mutual respect and clear communication are critical. In a non-family business you can go home and complain to your spouse about your lousy boss or frustrating employees. In family businesses, you those stressors are often at home with you. Calmly and respectfully dealing with issues when they arise (instead of letting small things build up into giant problems) helps maintain an atmosphere of professionalism that your entire company will benefit from.
  • It will be fun... and it will also be hard. Have strategies in place to handle conflict, challenges, and tough decisions. If you plan for the tough times, the rewards will be that much sweeter.

 

Source: http://www.inc.com/ariana-ayu/10-things-to-consider-when-starting-a-family-business.html

 
How One 90-Year-Old Business Is Preparing To Turn Over The Reins To The Family's Fourth-Generation
Wednesday, 17 February 2016 14:27
 
Trucking firm A. Duie Pyle has been in business for more than 90 years. Alexander Duie Pyle and his wife, Mary Ellen, started the business in 1924 with one truck. He was the mechanic and driver while she handled dispatch and bill collection. In 1945, they asked their son-in-law, Jim Latta, who had earned a scholarship to Wharton and had just returned from World War II, to join the then-$450,000 (sales) Pennsylvania firm. Latta figured he’d come onboard temporarily, intent on going into insurance, but he stayed for life.
 
 
Today Jim’s sons, Peter, Duie and Jimmy Latta, run Pyle, which now has $325 million in sales, mostly in the Northeast, where the company faces a highly competitive industry in a congested part of the country. But what concerns the brothers at the helm of Pyle just as much as external forces is the internal pressure. They are gearing up to hand over the company to the fourth generation but worry about the odds: Just 12% of family businesses make it to the third generation and only 3% make it to the fourth generation and beyond.
 
 
“We looked at the statistics and risks, and put in policies that attempt to mitigate those risks,” says Peter Latta, who is Pyle’s chairman and CEO.
 
 
To start, the family has an employment policy that ensures there is no lax standard for relatives: Anyone interested in joining the firm from the family must have at least three years of experience outside of the business and be evaluated by an independent board — his or her immediate family members can’t make the hiring decision. Contrary to the way many family-owned companies are run, members of the fourth generation like Hans Latta, now general counsel, weren’t allowed to work at the business at all while growing up.
 
 
While Peter, Duie and Jimmy, who are in their late fifties and early sixties, worked at Pyle from a young age, they decided their kids couldn’t, pushing them to learn business skills outside of the company before joining.
 
 
The family has also long followed a practice, first implemented by Alexander Duie Pyle and the original Jim Latta, of using generation-skipping trusts to protect the family's stake in the company. Nearly 80 percent of Pyle is held in these trusts — the third generation, which has run the company for decades, owns less than five percent; even the next generation of owners only holds 18 percent directly.
 
 
They also brought on Steve O’Kane as president in 2006, the first non-owner, non-family member to hold the title. The move gave Peter more time to focus on leadership transition and also prepared the company for the future, when day-to-day operations may not be led by a family member.
 
 
It was around this time that they began to hold annual family business meetings. They also have quarterly conference calls for fourth generation Pyle owners and their spouses, during which the two fourth generation family owners who work at Pyle, Hans and his cousin Frank Graniere (who is director of process improvement), update the other fourth generation owners on what is going on at the company. They hear from two board observers as well, who are elected by the fourth generation to sit in on board of director meetings and report back. The overarching theme is clear: It’s important to foster communication between the different factions of Pyle leadership and ownership.
 
 
“The idea is to have a regular communication process. We don’t want to wait until there’s an inevitable issue and then start communicating,” says Hans. “There’s a graveyard of trucking companies that just didn’t make it.”
 
 
In 2012 they began the process of shifting the composition of the board itself. For much of Pyle’s history, its board was composed of seven members: three independent directors, one non-family company executive and the three Latta brothers. In 2012, Peter spent six months with two fourth generation owners to hash out a plan to usher in the new generation of leadership. The ultimate result will be a 12-person board, made up of four independent directors, two non-family company execs, three fourth generation owners who are employed by Pyle and three fourth generation owners who do not work at the company.
 
 
So far they have added the extra company exec and one non-Pyle-employed fourth generation owner. When Jimmy retires later this June, the company will elect a fourth generation owner/employee to the board. When Peter or his brother, Duie, retires, the board will elect both a fourth generation owner working at the company and a fourth generation owner not working at the company (and will repeat the process when the final brother retires). The family was careful to ensure equal representation on the board between company owners working for the firm and those who aren’t — a strategy they mirrored when arranging their share classes so that the owner groups each have 50% voting control of the company.
 
 
Ultimately the number of owners not working at the company will be larger than the number of owners working there, says Peter, but they determined that a 50-50 balance fits their needs by giving both groups a chance to have their voices heard.
 
 
While the Lattas have worked to be inclusive of spouses, allowing them to participate in family business meetings and granting them the ability to serve on the board in place of direct family members, spouses are prohibited from owning any equity in the company.
 
 
“Oftentimes in a family business they welcome everyone — including the in-laws and the outlaws — and it creates mediocrity instead of promoting meritocracy,” says Peter.
 
 
The family recognizes that domestic disputes can threaten a company’s well-being, so they set up a policy that encourages Pyle shareholders to enter into marital property agreements that prevent company stock from being considered community property jointly owned by spouses. This eliminates the possibility of Pyle shares leaving the family in a divorce. Those who don’t enter into such agreements, or terminate them later on, can have their stock repurchased by the company. This isn’t meant to exclude spouses from the company, Peter says, but to do what’s in the best interest of all of the shareholders.
 
 
As the transition occurs, Pyle continues to expand. In 2013 the company launched A. Duie Pyle Custom Dedicated, a service where Pyle takes over trucking responsibilities for businesses with their own fleet of trucks but whose core business is not managing trucking operations. Though the business is in its infancy, Pyle already expects revenues from this segment to be $15 million in 2015. The company also operates more than 2 million square feet of warehouse space across 9 facilities in Pennsylvania, Massachusetts, Delaware and New Jersey, where shippers can store goods closer to their final destinations, leading to faster order processing and transit times.
 
 
Expect A. Duie Pyle to remain wholly owned by the Latta family for the foreseeable future (“Why bring in Wall Street?” says Hans when asked about a potential IPO down the road). The Lattas believe that family ownership has been a key component of Pyle’s success over the past 91 years, and that a strong succession plan will protect the family and keep the company focused on what’s really important: continued long-term growth.
 
 
“We try to make decisions that impact lifetimes — not financial quarters,” says Peter.
 
Source:
 
 
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