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Face the Risks of Suddenly Being Viewed as a Family Business

As specialists in the strategic needs of privately held midsized companies, we naturally interact with lots of family owned businesses.  There has been more than one government study that has said that the owners of 90% of all privately held companies view their companies as “family businesses.”  That’s a lot!  Some owners claim they are “family owned” even when only one member of the family is involved.  No spouse, sibling, offspring, cousin or even an in law employed in the company! WOW.

It makes you wonder what is meant by “family business.”  In some folks’ minds, “family business” means trustworthy, hard working, stable, community minded, friendly, and focused on customer service.

But what does “family owned and operated” mean to prospective employees?  It can mean that their careers will be limited. They may assume that they will never be eligible for profit sharing, could never become an equity shareholder, will never be viewed as a top executive, and will never fully have the president’s ear.   It could mean that they should always be prepared to have some young kid brought in to become their boss. Being the boss’s son or daughter trumps any advanced education, job experience, or longevity with the company they may have.

If your business is family owned, it takes intentional effort to convey your policies about career advancement opportunities, your logic behind hiring and promotions, etc.  It can be difficult to attract top talent if you can’t tangibly demonstrate that you value “outsiders,” are open to having business partners who don’t share the same last name, and use contribution to guide profit sharing rather than genetics.

We were reminded about these kinds of issues recently when a company (now a client) inadvertently slipped into being viewed as a “family business.”  The president had needed some help with the firm’s marketing and had asked his very capable wife to help. He couldn’t figure out why his key employees were acting funny, seemed defensive, were suddenly worried about their futures, questioning his decisions, etc. He knew he was still the owner and their boss. But the key employees had assumed the premise of the business had changed.  If your company is a “family business,” make sure you know why and address the negative implications as well as the positive.  If not, be careful you don’t inadvertently slip into becoming one.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. Ambler is in the process of launching her 8^th enterprise. All of her current service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, and search) help privately held midsized companies achieve accelerated growth with sustained profitability®. 2012 is Ambler’s 8^th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com

 

Prevent Slipping into Reactive Management as 2012 Begins

At the risk of sounding like I am channeling my inner Jean Dixon, here are a few of my predictions for 2012:

• The world economy will have another significant setback in 2012 sparked by disappointments about the pool of candidates for the US Presidency, a few large scale unsettling scandals, increased unrest in the Middle East, and major corporations continuing to hang onto their cash.
• More Baby Boomer business owners will move past the inertia of 2009 – 2011 to acquire, merge, or sell their businesses.
• Google’s purchase of Motorola will pay off as APPLE’s growth slows.
• Since the days of Nostradomus in the 1550s, this year has been the focus of doomsday thinkers.  Unfortunately, too many people will over-react with each natural disaster in 2012.
• The transition of leadership in North Korea, the instability in Iran, and the nuclear capabilities of both will increase in importance in 2012.
• The “War on Childhood Obesity” will gain momentum in 2012 as more schools embrace Rachel Ray’s menu and First Lady Michelle Obama’s advice.

A few may seem obvious to you.  A few may seem uninformed or just wrong. If my predictions prompt you to think, this blog has provided a service to you. I wonder what impact these and other developments could have on your business strategy and contingency planning for 2012. Should you conclude that you should be the bold acquirer or a reluctant seller? Will you increase your emphasis on wealthy or impoverished people?  Knowing that true wealth has always been traced back to times of stress and recession, will you be an industry leader or drop below the radar?  Does your executive team need to do anything different to prevent your company from becoming too reactive in 2012?

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. Ambler is in the process of launching her 8^th enterprise. All of her current service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, and search) help privately held midsized companies achieve accelerated growth with sustained profitability®. 2012 is Ambler’s 8^th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.TheGrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com

 

2011 Was a Tougher Year for the Owners of Midsized Companies and Recent Retirees than the News Media Portrayed

Deep down, we all know that broadcast and print media have some biases.  (No kidding.)  During election years, some media outlets are compelled to emphasize progress being made, jobs being created, and consumers spending more around the Holidays. Following recessions with particularly long periods of uncertainty (NOW), some reporters play the role of consumer advocate to help unwitting buyers beware of high profile crooks. While the US Congress and President Obama took different stands on raising the debt ceiling in 2011, the media focus seemed quite partisan.

So why am I reminding you about media bias?

In the midst of all of the political infighting and fussy stories about progress, the personal portfolios of owners of midsized companies and recent retirees took a disproportionate hit during the summer of 2011.  For many, 2011 was as bad as 2008. That fact got lost in the media coverage.  So if you lost a lot of money in 2011, you could be wondering if you were cheated somehow instead of feeling “normal.”

Imagine if your investment portfolio of $10 Mil dropped 30% in 2008 to $7 Mil and then it dropped another 30% in 2011 to under $5 Mil.  People in that position thought they could stop working and turn their family businesses over to the next generation but now feel compelled to continue to work to replace lost money. Folks who retired from corporate management positions after 30+ years now wonder if they can afford to keep the house at the lake. Instead of investing in real estate, businesses, new products, and nice vacations, these people are worried and frozen.  This has a direct impact on job creation.

I also mention media bias because many of the people who lost large sums of money in 2011 (maybe you) wonder if you did something wrong, have lost some trust in your advisors, and feel stranded.  That combination of emotions stifles economic recovery.

If my words resonate with you, give your financial planner a call. Get explanations.  Revisit your personal financial plan. Base your decisions on real information rather than just worry.

Isn’t it interesting that a strategist who helps companies grow is suggesting that you request an appointment with your personal fee only financial planner. Mental attitude in one arena impacts the other.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her current service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability™.  Ambler is wrapping up her 7^th year hosting a weekly peer-to-peer-to-peer on line talk show at www.Business.VoiceAmerica.com and www.growthstrategistshow.com  which  features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses are being emphasized in 2011. Ambler is in the process of launching her 8^th enterprise. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.  

 

What to Do About Drift, Scope Creep, Unfinished Projects & Ineffective Messaging

Don’t feel bad if your company has drifted away from its strategic plan. Tough economic times can do that. Recessions invite worried sales people to agree to whatever price they can get any prospect to accept. Uncertainty can lead product development initiatives down several paths only to end up with unfinished projects. Insecurity cues marketing messages to become broad based, safe, generalized and ineffective. Service minded employees trying to accommodate today’s demanding customers quickly leads to scope creep on contracts and reduced profitability.

The operative words are worry, uncertainty, insecurity, and accommodate. That mindset leads to drift, reduced effectiveness, scope creep, and lowered profitability. If you are experiencing this phenomenon, you are normal…and the good news is that it’s curable.

Convene your management team to review updated data about the various subgroups within your customer base. Your company’s “sweet spot” may have inadvertently shifted.  Maybe in the past, your company was most effective and generated the best profit from small business accounts. Perhaps now, you should focus on medium sized businesses.  Maybe in the past, you could handle five distinct industries; and realistically, you now need to drop one and focus on four. Maybe the range of products/services just needs to be brought back into a smaller range so you can be more efficient, handle the risk, and feel a sense of accomplishment.

These “Let’s Get Re-Centered” sessions need to happen more frequently during tough economic times. What’s going on in the European economy does impact customers in North America. The politics of the Middle East influences decisions in South America and Asia. Technology in Australia matters to companies in Africa.

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her current service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability™.  Ambler is wrapping up her 7^th year hosting a weekly peer-to-peer-to-peer on line talk show at www.Business.VoiceAmerica.com and www.growthstrategistshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses are being emphasized in 2011. Ambler is in the process of launching her 8^th enterprise. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com. 

 

Should You Assume That ALL of Your Customers are Uneasy?

A pattern has been surfacing recently from the interviews we conduct prior to on-site strategic working sessions for/with the clients of my growth planning/strategic advisory firm. We are hearing from our clients’ customers that they:

• want to be contacted BEFORE a question would even come up
• don’t like the expectation that they will do the traveling for appointments
• don’t want vendors to get defensive or take their questions too personally
• want more one-on-one interaction and more individualized services/products
• expect more understanding, compassion and empathy
• are not very interested in the vendor’s feelings, needs, personal life or goals
• need bright vendors but won’t tolerate arrogance

It’s no longer enough to say that your firm is responsive and brag that you return customer calls quickly. They don’t want to have to call you. They want and expect you (and me) to PREVENT their ignorance, concerns, and uneasy feelings.

This extended period of uncertainty following the recent recession has had an adverse impact on just about every market.  The obvious sectors include construction, real estate, banking, and wealth management firms.  But uncertainty has been unsettling to customers in other industries.  We feel it. Even our most ambitious clients now want to review the details of our research findings, request multiple presentations of our recommendations, and need repeated fact based reassurance.  Some would like to demand guaranteed revenue growth and net profit levels.

If your business is related in ANY manner to the shifts in the economy, stock market, political winds, etc…take a fresh look at the tone and frequency of your communication with clients/customers.    

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her current service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability™. Ambler is wrapping up her 7^th year hosting a weekly peer-to-peer-to-peer on line talk show at www.Business. VoiceAmerica.com and www.growthstrategistshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses are being emphasized in 2011. Ambler is in the process of launching her 8^th enterprise. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com

 

Envision Something Well Beyond Your Means

Then Share the Vision w/ People Who Have Money

Visit www.Natirar.com and you will see photographs of a 500 acre estate with lovely rolling hills, a winding river, and beautiful foliage. And you will also read information about the 90 Acres Restaurant, the farm that provides organic produce for the restaurant, the culinary center, the wine cellar, the refurbished mansion, and the planned SPA. I am not sending you to the site just to enjoy the pretty photographs. NATIRAR is a lesson in joint ventures and marketing.

The history is fascinating. The original owner was a wealthy Quaker woman whose will required that the mansion be used as a convalescent home for women for at least 50 years following her death.  Go to the “our story” section of the site to read how Bob Wojitowicz envisioned something better for the 100 year old estate. Read how he reached out to Sir Richard Branson (yes…The Virgin Airlines Branson) to become business partners to purchase the 500 acre estate from the Royal Family of Morocco. Read why and how they now have a 99 year ground lease with Somerset County for the 90 acre parcel that includes all of the buildings.

Are your visions larger than your own resources? I hope so. The best projects involve other peoples’ money.

This week I participated in a reunion of NJ300 (a group of very influential women) at NATIRAR. Bob Wojitowicz shared the history and plans and then provided a tour of the mansion, restaurant, culinary center and wine cellar. Our private dinner included paired wines and culinary delights.  I am certain that several NJ300 members will be returning to NATIRAR. Some will host client events there. Some will wait until the SPA opens. Some may suggest NATIRAR to their daughters when they start planning their weddings. A few will take cooking lessons at the culinary center.  And most will return to dine at the restaurant.

Are you hosting events for prospective customers who have the resources to utilize your products and services?  As influential as they/we are, the members of NJ300 have busy lives. The majority of the NJ300 members had not heard of NATIRAR; but they/we know about it now.

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her current service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability™. Ambler is wrapping up her 7^th year hosting a weekly peer-to-peer-to-peer on line talk show at www.Business. VoiceAmerica.com and www.growthstrategistshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses are being emphasized in 2011. Ambler is in the process of launching her 8^th enterprise. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com             

 

Create an Optimally Sized Business Instead of Fretting About Succession

If you are the majority owner of a business and feel yourself shutting down when the subject of succession comes up, consider the following layers:

1. YOU – Reflect first on the results of appointments you (and your significant other) have had with your personal financial planner, physicians, estate attorney, and accountant.  When will you want to retire or reduce your workload? What is your life expectancy? What income will you need? Where will you want to live? Will you have caretaker responsibilities and expenses? Do you have long term care insurance? How much could your other income sources produce? How much do you need, want, deserve from the business? (These may well be 3 entirely different numbers.)
2. THE BUSINESS – Reflect second on the future of the business. In many ways a company is a living breathing entity. Think about the economy, the customer base, product life cycle, momentum, etc. What will the company need to be resilient? Profitable? Significant? (These too may be 3 entirely different answers/numbers).
3. PEOPLE – Reflect third on key individuals who drive the resilience, profitability, and significance of the business. What reward have they earned? What return have they been promised? What help will they need as you step back and some money is paid to you?
4. THE COMBINATION– What would  the optimum size of the business be to:
   • pay you what you deserve
   • ensure that the business is resilient, profitable, and significant
   • provide key people what they have earned and been promised
   • have leadership and skill sets in place to handle transition
5. HOW – What strategies would achieve optimal size, resilience, profitability, significance, and fulfillment of obligations to key people (including you)? Maybe you should consider acquiring a complementary company? Maybe you should consider merging with a competitor?  Will the company need to hire a President? Would an ESOP retain key employees? Perhaps improved marketing would be sufficient.

This sequence may seem obvious, but it is NOT what most people do.

Many business owners end up with a scramble of facts and emotions about themselves and other people.  Loyalty. Fear of the future. Legacy.  Entitlement.  Guilt.  Disappointment.

Especially during uncertain economies (NOW), many owners approach succession – related analysis from a pessimistic almost cynical viewpoint. I have seen owners work themselves up into horrible resentments based on arguments they have had with themselves in their own minds.  Without assistance, they never reach question # 4…let alone question # 5.

The optimally sized business meets its obligations to the owners, its key stakeholders, and its future. When there are honest answers to questions 1-3 , the optimal size becomes self evident and can guide strategic decision making focused on the market place, product differentiation, productivity, etc. with far fewer negative assumptions, resentments, and fear.

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her current service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability™.  Ambler is wrapping up her 7^th year hosting a weekly peer-to-peer-to-peer on line talk show at www.Business. VoiceAmerica.com and www.growthstrategistshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses are being emphasized in 2011. Ambler is in the process of launching her 8^th enterprise. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.

 

Would Licensing Cannibalize Your Sales?

If you have an established service firm, you undoubtedly realize that you need to invest time and money to create a system (maybe even proprietary software).  It’s part of the ongoing process to be less labor-intensive, become more efficient, reduce training costs, and improve quality and consistency.

Once you do that, inevitably, someone in your firm comes up with the bright idea that your company could have another revenue stream if you license the use of your proprietary software or system to smaller niche businesses. You can’t reach every customer out there and the licensees will pay you for the privilege of increasing visibility of your product/system/ software; which strengthens your positioning as an industry leader.  But you pause because the licensees could actually become direct competitors to you and cannibalize your results.

Some business owners freeze at this point and pull back from the licensing option.  It pays to not freeze. A sales executive and/or informed contract attorney can create territories and spell out the rules to maintain the WIN/WIN situation.

Plus, here’s something else to think about. Could the licensees later become candidates for acquisition when you are ready to expand geographically or accelerate growth? You would be familiar with one another.  Your licensees will have experience utilizing your system which would reduce post acquisition “learning curve” costs. Your firm could represent a marvelous exit strategy for hard working Baby Boomers who enjoyed being your licensees.

For more information about achieving synergies between licensing, acquisition, and strategic alliance strategies, go to www.GrowthStrategistShow.com to download my (date) interview with Robert Digby, CEO of PAY CHOICE.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability.™ Ambler is wrapping up her 7^th year hosting a weekly peer-to-peer-to-peer on line talk show at www.Business.VoiceAmerica.com and www.growthstrategistshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses are being emphasized in 2011.   Ambler is in the process of launching her 8^th enterprise. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com

 

The “Piggyback” Strategy

It’s funny.  Most business people can see when other businesses have created new revenue streams or new companies by “piggybacking” or “spinning off” but can’t seem to see those opportunities for themselves.

An example of “piggybacking” is probably best illustrated by the stores that surround a major shopping mall.  The Container Store®, Men’s Wearhouse®, Marshalls®, Barnes and Noble® all benefit from close proximity to malls.  Frankly, so does Burger King®. Those companies don’t have to pay the premium price for mall space yet they benefit from the mall’s marketing (and often its parking spaces as well).

One of my favorite examples of piggybacking is a strip shopping center in Cherry Hill, New Jersey that included a bridal shop, a tuxedo rental store, a travel agency, a caterer, and a divorce attorney.

Piggybacking involves observing which noncompeting companies are attracting the customers you want to serve and figuring out how to be there when the customers go there. These days, “there” does not necessarily involve a bricks and mortar physical location.  Hey, there are HR consultants, accountants, and M&A attorneys buying advertising space all around my weekly on line broadcasts and blogs. DUH. They want increased access to executives of midsized companies.

It pays to ask yourself if your marketing is too focused on attracting customers from a cold start. Where does your message need to be so it reaches decision makers when they are already demonstrating an openness to investing time and money, learning and trying related things?

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability™.   Ambler is wrapping up her 7^th year hosting a weekly peer-to-peer-to-peer on line talk show at www.Business.VoiceAmerica.com and www.growthstrategistshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses are being emphasized in 2011. Ambler is in the process of launching her 8^th enterprise. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.