Copyright © 2014 - Blum & Savlov, LLP Family Owned Businesses: A Survival Guide Presented by: Jeff Savlov, CFBA Family Business Consultant – Blum & Savlov,

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


Family – Sweet & Loving


Family – Sweet & Loving?!?!


Family Is Complex All On Its Own…

Family


3-Circle Model of Family Business Systems

Family

Ownership/Governance

Business12

3

4

56

7

8Taguiri & Davis


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


GenerationsFounders of the business



Family/Emotional Life + Business/Economic Life = COMPLEXITY


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


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


Research

• 85% of failures are due to:

• Lack of COMMUNICATION and TRUST (60%)

• Failure to PREPARE the next generation (25%)


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


Best Practices – Simple Yet Difficult

• Family Meetings

• Strategic Planning

• Active Board

*Joseph Astrachan, Ph.D., editor, Family Business Review


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!


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


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


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


Organizations for Families

• The Family Business Network– “By Families For Families”– 6,000 members worldwide

• University-based Family Business Forums– Virginia Commonwealth University


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


Conflict & Context

50% 50%

Sales

3 brothers grew up in business

G4

G5

Cousins

Documents

Copyright © 2014 - Blum & Savlov, LLP Family Owned Businesses: A Survival Guide Presented by: Jeff Savlov, CFBA Family Business Consultant – Blum & Savlov,