Here are ideas from our current issue that may be helpful in running your family business. Subscribers can access the full text of these articles in the Spring 2008 issue of Family Business or in our online archives. Visit our online circulation office to order a subscription.

 
• Developing a stewardship culture    • Preparing for a private equity deal    • How to turn in-laws into team players    • Strategic planning for the family enterprise   

Developing a stewardship culture

Stewardship means caring for a resource that is not fully possessed, but nurtured so it endures and grows and can ultimately be shared with generations to come. The most important requirement of a steward is knowing enough about the company and its strategies to make the right decisions when required.

Entitlement —the feeling that I “deserve” dividends because of a “birthright” — leads to careless passivity about the quality of management, and unwillingness to reinvest in new initiatives, because dividend checks might not be so stout. When a buyout offer comes along it is too late to begin doing the hard work that ownership requires.

—From “Business owners’ motivation: Entitlement or stewardship?,” by Ellen Frankenberg, Family Business, Spring 2008.

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Preparing for a private equity deal

First of all, you should — if you don’t already — have your financial statements audited or at least reviewed by a CPA firm to make sure they’re accurate and comply with generally accepted accounting principles.

Next, you should tighten your operating and financial controls so a buyer can be assured that the tools are in place to drive the company to still higher levels of prosperity.

A third preparatory step should be to identify any areas for potential cost savings. Even if you don’t make any cuts now, a buyer will appreciate knowing where savings can be realized. You may also want to consider dropping any lines of business that are unprofitable or are otherwise acting as a drag on your bottom line.

—From “Seeking private equity funds: It’s wise to be proactive,” by William J. Battison, Family Business, Spring 2008.

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How to turn in-laws into team players

Here are some actions that can work to turn in-laws into team players and, where appropriate, can help you deal with in-law terrorists.

1. Initiate a family business council to facilitate family communication on general business matters.

2. Princes and princesses should tell their betrothed about the family business council and let them know that they will be included after the wedding. Parents should do the same. This information will mean more coming from the prospective mother- and father-in-law because it expresses welcome, inclusion and respect.

3. Within the family business council, parents should forthrightly but respectfully address any perceived meddling or rumors by starting with, “We heard you had a question.” Let it be known immediately that all issues will be discussed and there will be resolution in an open forum. Insist that the family communicate directly, and don’t tolerate any emotional hand grenades.

4. Initiate a board of directors rather than concentrating total responsibility with the business owner.

5. Parents must recognize the autonomy and independence of their children’s new family. Give advice only when solicited.

6. Princes and princesses should hold both their parents and their spouse accountable for respect and giving one another the benefit of the doubt.

—From “Team players or terrorists? The influence of in-laws,” by Loyd H. Rawls, Family Business, Spring 2008.

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Strategic planning for the family enterprise

• Concentrate on one or more natural markets in which the company can marshal the necessary resources to make winning as likely as possible, and in which winning is worthwhile.

• The process must be rigorous, disciplined, scientifically grounded, fact-based and driven by best practices toward clear objectives and goals.

• The process should be open and inclusive to stimulate broad discussion of the alternatives and resolve any disagreement through objective analysis.

• Implementation should focus on aggressively executing strategies in the market or markets in which the company has the best opportunity to win, with the resources required to succeed.

—From “Two plans for the family-controlled enterprise,” by Peter von Braun and Richard Narva, Family Business, Spring 2008.

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