Copyright © 2014 - Blum & Savlov, LLP Family Owned Businesses: A Survival Guide Presented by: Jeff...
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Transcript of Copyright © 2014 - Blum & Savlov, LLP Family Owned Businesses: A Survival Guide Presented by: Jeff...
Copyright © 2014 - Blum & Savlov, LLP
Family Owned Businesses: A Survival Guide
Presented by: Jeff Savlov, CFBAFamily Business Consultant – Blum & Savlov, LLP
Shenandoah University6th Annual Harry F. Byrd, Jr. School of Business2014 Business Symposium - March 23, 2014
Copyright © 2014 - Blum & Savlov, LLP
3-Circle Model of Family Business Systems
Family
Ownership/Governance
Business12
3
4
56
7
8Taguiri & Davis
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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
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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
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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
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Research
• 85% of failures are due to:
• Lack of COMMUNICATION and TRUST (60%)
• Failure to PREPARE the next generation (25%)
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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
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Best Practices – Simple Yet Difficult
• Family Meetings
• Strategic Planning
• Active Board
*Joseph Astrachan, Ph.D., editor, Family Business Review
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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!
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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
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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
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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
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Organizations for Families
• The Family Business Network– “By Families For Families”– 6,000 members worldwide
• University-based Family Business Forums– Virginia Commonwealth University
Copyright © 2014 - Blum & Savlov, LLP
Blum & Savlov, LLPFamily Business Consulting
Tel: (732) 296-8047 Fax: (732) 284-4257 Email: [email protected]
Jeff Savlov, PrincipalBlum & Savlov, LLP47 Raritan Avenue, Suite 130Highland Park, NJ 08904