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Family Owned Businesses: A Survival Guide

Family Owned Businesses: A Survival Guide. Presented by: Jeff Savlov, CFBA Family Business Consultant – Blum & Savlov, LLP. Shenandoah University 6th Annual Harry F. Byrd, Jr. School of Business 2014 Business Symposium - March 23, 2014. Family – Sweet & Loving. Family – Sweet & Loving?!?!.

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Family Owned Businesses: A Survival Guide

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  1. Family Owned Businesses: A Survival Guide Presented by: Jeff Savlov, CFBA Family Business Consultant – Blum & Savlov, LLP Shenandoah University 6th Annual Harry F. Byrd, Jr. School of Business 2014 Business Symposium - March 23, 2014

  2. Family – Sweet & Loving

  3. Family – Sweet & Loving?!?!

  4. Family Is Complex All On Its Own… Family

  5. 3-Circle Model of Family Business Systems 2 1 Business Family 4 7 6 5 Ownership/Governance 8 Taguiri & Davis 3

  6. Dynamic Tension • “Conflict” is normal in any family – can be healthy! • Combining family and business (a family’s emotional life and economic life) leads to “dynamic tension” between: • Family and business • Individual family members and other family members • Family branches • One generation and the next • Family in the business and family outside • Working family non-owners and working family owners

  7. Generations Founders of the business

  8. Family/Emotional Life + Business/Economic Life = Complexity

  9. Research • Only 30% of family businesses survive into the second generation (70% “fail”) • 12% make it to the third generation • 3% last into the 4th generation and beyond *Joseph Astrachan, Ph.D., editor, Family Business Review

  10. Research • “Preparing Heirs” (Williams and Preisser, 2003, p.17) • Quote research: 70% of wealth transitions fail • Williams & Preisser looked at REASON for failures! • Collected data on 3,250 families post-transition

  11. Research • 85% of failures are due to: • Lack of COMMUNICATION and TRUST (60%) • Failure to PREPARE the next generation (25%)

  12. Main Points • Emotional life + economic life = great complexity • Dynamic Tension needs to be managed • Be proactive – do not wait until June • Healthy, formalized communication is essential • Prepare the next generation – never too early • Governance = decision-making, rules& roles, accountability

  13. Best Practices – SimpleYetDifficult • Family Meetings • Strategic Planning • Active Board *Joseph Astrachan, Ph.D., editor, Family Business Review

  14. Family Meetings • A voice does not equal a vote • (but having a voice really goes a long way!) • Agenda & parking lot • Working family • Non-Working family • Family owners (Family Shareholders) • Fun family time!

  15. Strategic Planning • Every business benefits • Family Business vs. Business Family • Values, Vision and Mission • Develop the next generation • Challenge, risk • Formal development plans • Mentors (non-family helpful) • Future • Leadership • Ownership

  16. ACTIVE Board/Governance • Culture of accountability and transparency • Fiduciary or Advisory Board • Governance = formalizing decision-making • Create policies • Entering business • Conflict management (dynamic tension) • Process for investing in members’ endeavors • Joint investing – committee to oversee

  17. Help When You Need It:Family Business Professionals • Continuum from technical to process facilitation • Large array of people offering services • Ask friends and professionals for referrals • Ask questions of potential professionals • Can our family be your client? • How do you integrate your technical knowledge with family dynamics? (and vice versa) • Examples of family client engagements that worked out and did not work out

  18. Organizations for Families • The Family Business Network • “By Families For Families” • 6,000 members worldwide • University-based Family Business Forums • Virginia Commonwealth University

  19. Blum & Savlov, LLPFamily Business Consulting Tel: (732) 296-8047 Fax: (732) 284-4257 Email: jsavlov@blumandsavlov.com Jeff Savlov, PrincipalBlum & Savlov, LLP47 Raritan Avenue, Suite 130Highland Park, NJ 08904

  20. Conflict & Context Cousins 50% 50% G4 Sales G5 3 brothers grew up in business

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