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Family Owned Businesses: A Survival Guide. Presented by: Jeff Savlov, CFBA Family Business Consultant – Blum & Savlov, LLP. Shenandoah University 6th Annual Harry F. Byrd, Jr. School of Business 2014 Business Symposium - March 23, 2014. Family – Sweet & Loving. Family – Sweet & Loving?!?!.

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family owned businesses a survival guide

Family Owned Businesses: A Survival Guide

Presented by: Jeff Savlov, CFBA

Family Business Consultant – Blum & Savlov, LLP

Shenandoah University

6th Annual Harry F. Byrd, Jr. School of Business

2014 Business Symposium - March 23, 2014

3 circle model of family business systems
3-Circle Model of Family Business Systems

2

1

Business

Family

4

7

6

5

Ownership/Governance

8

Taguiri & Davis

3

dynamic tension
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
generations
Generations

Founders of the business

research
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

research1
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
research2
Research
  • 85% of failures are due to:
  • Lack of COMMUNICATION and TRUST (60%)
  • Failure to PREPARE the next generation (25%)
main points
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
Best Practices – SimpleYetDifficult
  • Family Meetings
  • Strategic Planning
  • Active Board

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

family meetings
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
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
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
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
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 llp family business consulting

Blum & Savlov, LLPFamily Business Consulting

Tel: (732) 296-8047 Fax: (732) 284-4257 Email: jsavlov@blumandsavlov.com

Jeff Savlov, PrincipalBlum & Savlov, LLP47 Raritan Avenue, Suite 130Highland Park, NJ 08904

conflict context
Conflict & Context

Cousins

50% 50%

G4

Sales

G5

3 brothers grew up in business