This Eagle Scout has a real passion for family business, advising business owners, leadership at successful organizations, and mentoring Next Generation.
The terms "fair" and "equal" are often used interchangeably, however, the two are not synonymous. When I meet with family business owners they often suggest they want to treat their kids equally, when in fact they want to treat them fairly.
But what does this mean when it comes to family assets like a business or farm?
This will be the topic of the webinar I am speaking at on August 18th with the fine folks at The Network of Family Business. This organization is led by Dr. Steven Moyer who is an expert on family business and who will facilitate our webinar.
The session would have been valuable for anyone trying to grow their organization, but it had a particular focus for family business.
Every business wants a unique competitive advantage, but often confuses this with differentiation. In a family business, the family name can be a truly sustainable competitive advantage (unique benefit…sticky…hard to copy).
“Familiness” is a unique bundle of resources a particular company has because of the interaction of the family, its individual family members, and the business with one another.
Why Branding Matters?
Your Brand Promise declares who you are.
Gives clarity and cohesion to the buying experience.
Gives differentiation and positioning.
Lowers sales resistance – speeds up sales cycle.
Can create trust and relationship.
Reflects pricing strategy.
Recreates reputation – brand needs to be reflected in pricing.
Last week my former college roommate Dr. David Hagenbuch and I presented at the Messiah College Business Alumni Association. We called our presentation a “Conversation About Family Business” and the response from the record attendance seemed to confirm the session was value packed.
We started the session with the following statistics about family business:
80% of all businesses in the US are family owned.
60% of total economy in the US is generated by family owned businesses.
75% of new jobs created in the US are started by a family owned business.
It seemed appropriate to have this session in Lancaster County which is one of our nation’s strongholds for family business. Based on the above statistics, it is not surprising that Lancaster County earned a place on Forbes Magazine’s list as one of the Top 10 Places to Ride out the Recession.
One of the most sensitive subjects in a family business is compensation. In fact, I have seen plenty of businesses disrupted (and sometimes worse) over compensation issues. I often hear such phrases as:
“You all are my kids and I am going to pay you an equal amount.”
“Since your sister just had a baby, I am going to be giving her a raise to help cover the additional expenses.”
“Your brother’s wife said they are going on another trip. I bet your father pays him more than you.”
“I have worked here for 20 years and get nothing, while he pays his son way more than me and he has only been here 5 years.”
These conversations take place in many family businesses and left unchecked can become toxic. So what is the right answer when it comes to family business compensation? How much should you pay your son? Should family members be paid more?
Recently, I attended a workshop at the S. Dale High Family Business Center on family charters. Now, I am sure most family business owners think of a constitution as overkill and only useful for large family businesses. I tend to disagree and believe the presentation went a long way to help deepen my belief in the importance of governance in a family business.
Mike McGrann, the director of the Center, did an excellent job of presenting several case studies of family businesses that did not have a governing document. In each of these cases, a conflict surfaced that had not been previously discussed or documented and now caused a major conflict in the family. In one situation, a family member started a new company and the family did not have a conflict of interest policy. What made this even more difficult was this family member was running the most successful division in the business.
Do you realize that U.S. family businesses represent 50% of GDP, 60% of employment, 78% of new jobs created, and 35% of Fortune 500 companies? Family businesses are often your vendors, customers, and competitors.
Anyone that regularly reads my blog knows my passion for family business and that I am slowly (emphasis on slowly) writing a book on the subject with my former college roommate (Dr. David Hagenbuch). Well, now is your chance to hear us both speak on the subject.
We will be leading a discussion about family business on April 20th in Lancaster as part of the Messiah College Business Alumni Association. Please note, you do NOT need to be an alum to attend.
Last week, I had the privilege of speaking at the Harrisburg Regional Chamber & CREDC’s Small Business Seminar Series. I kicked off this four part series with a presentation on “What Does it Take to be Successful in Business?” The session began with a focus on “What does it really mean to work on your business and not just in your business?” This question created a wonderful discussion, enhanced by a handout titled – “Top Ten Keys to Working On Your Business.” This discussion included ideas like:
- Comparative Advantage – entrepreneurs need to focus on doing only those things that have the greatest impact on the company and outsource or delegate the rest. This is often very difficult for new business owners.
Phil Clemens, Chairman & CEO of the Clemens Family Corporation of Hatfield.
Tony Martin, Vice President of Business Information Systems at Martin’s Famous Pastry Shoppe, Inc.
Dana Chryst, CEO/Owner of The Jay Group of Lancaster.
Matt Diller, General Manager of Precast Systems, LLC.
The members of the panel represented various generations and life experiences with each member providing a unique perspective.
One key theme that was mentioned repeatedly related to what is commonly called “Founderitis.” This is a subject I have written about before and occurs when an entrepreneurial founder is not able to turn over control to the next generation. This often has the impact of suffocating next-generation leaders.
My good friend Keith Masser who is CEO of Sterman Masser (previously profiled on this blog) just let me know that they will be profiled on the Pennsylvania Cable Network. On Thursday evening January 6th at 8:00pm, they will appear as the 5th part of a 6 part series of “From the Farms to the Table.”
The program, developed by the Pennsylvania Farm Bureau explores Pennsylvania’s farm, agri-business, and food industries. The “From the Farms to the Table” series will premiere with broadcasts on PCN during the days leading up to the start of the 2011 Pennsylvania Farm Show.
This should be a great chance to learn about Pennsylvania’s rich agriculture base and also see a wonderful family business in action.
No this is not a blog post about losing weight or getting leaner, rather it is about LEAN Accounting. My colleagues over at the LEAN Accounting Blog recently published a great article on Why LEAN Really Matters. Many people do not understand LEAN Accounting and I believe if they did they would be more profitable.
The purpose of LEAN Accounting is to support LEAN practices as a business strategy. It seeks to move from traditional accounting methods to a system that measures and motivates excellent business practices in the LEAN environment. LEAN is a process that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for.
