In this issue
In most privately owned family businesses, the chairman of the board is a family member. But for some family ownership groups, an executive from outside the family is the best choice for the chairman's job. Several multigenerational families, for example, have found that a non-family chairman can best manage the boundaries between the family and the business, while meeting the needs of both.
Long-term planning can be a challenge for any company, but family businesses have their own unique set of obstacles when it comes to making plans for the future.
A long-term business plan is both worth the work and critical to continued success. The planning process provides an opportunity for family businesses to become more intentional and principle-driven.
One of the challenges unique to privately owned family businesses is that the longer they're around, the bigger the family gets. And in many cases, as the family grows, so does the number of shareholders.
Family businesses often pass ownership on to family members, of course, which means that by the third generation there can be a virtual sea of family shareholders. In order to satisfy the needs of everyone in the expanded ownership group, the business must grow and continue to be profitable.
Any family business owner can appreciate the marketing and purchasing mindset that buying local is better.
Every family business started as a local company. But staying local is not typically how a business grows.
From the local corner store to publicly listed behemoths like Wal-Mart and Ford, the American family business is the oldest business model we have. This economic powerhouse encompasses at least half of all U.S. companies, employs more than half of U.S. workers and accounts for more than 60% of U.S. gross domestic product.
What should your business be doing differently? How might technology change in the next five years, and how would those changes affect you? What might happen in your markets that would invalidate your business plan? Who will be your next wave of competitors? Should you diversify your holdings? Have you considered all potential growth opportunities? Do you have the right personnel to manage these changes?
When is the last time your leadership team sat down and considered these questions?
Generation of family ownership: Third.
About the company: We have six locations on the East Coast and are the largest independent distributor in our niche [specialty building materials].
Number of employees: 180.
Lawrence Herbert was dining at a restaurant while on vacation in Turkey in 2007 when he received a call from his attorney. Before leaving for his trip, Herbert had accepted an offer from a private equity company for his company—Pantone Inc., a Carlstadt, N.J.-based provider of color standards and technology, including the iconic Pantone Matching System.
In my mind, September will forever mark the beginning of the school year, although my children are grown and my days of being a student are long behind me. Some habits die hard. As we approach the new academic year, I reflect on the wisdom of experts who stress the value of higher education for the next generation. Many of these family business consultants have helped families create employment policies that frequently require higher education as a condition of joining the family enterprise.
Thanks to a new venture called Chasing Paper, consumers can decorate their homes with peel-and-stick removable wallpaper. The two-year-old company has revolutionized interior decorating for renters and commitment-phobes alike. It's also revolutionized its parent company, Kubin-Nicholson, an 89-year-old family business. Chasing Paper's young, entrepreneurial founder, Elizabeth Rees, proved to her father and his employees that embracing technology can open up new markets.