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Will You Succeed at Succession? Green Mountain Business Expo, Stowe
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Will You Succeed at Succession? Green Mountain Business Expo, Stowe

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You are a successful owner. You motivate your employees, manage projects and utilize the resources available to you in your business and networks. You are entrepreneurial, always looking for new ways …

You are a successful owner. You motivate your employees, manage projects and utilize the resources available to you in your business and networks. You are entrepreneurial, always looking for new ways to grow and transform your enterprise. You have a long range vision of success for your business and personal future. Do you also apply these same passions and principles to planning your own exit from the business?

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  • Common perceptions: Mom and pop type storesConflict and fightingMafia
  • 71% of companies have no qualifications for family employment36.7 % have written strategic planOf those staying in family, 85% have selected a family member to lead in next generation54% have shareholder agreements (“buy-sell”)38% have liquidity planMore than 50% have regular formal valuationsBoards in less than 50% cases meet more than once or twice a year
  • Transcript

    • 1. Will You Succeed at Succession?
      Nov 4, 09
    • 2. For today
      What makes family business unique?
      Family Business 101
      The Succession Checklist
      Resources
      Final exam
    • 3. If you learn only two things today…
      Start planning now!
      Involve others.
    • 4. Perceptions…
    • 5. What is a family business?
      Any business where the family has effective control over the strategic direction of the business;
      The business contributes significantly to the family’s wealth, income, or identity;
      Future plans consider succession of the business to the next generation.
    • 6. What makes family business unique?
      Presence of family
      Owners dream to keep in family
      Overlap of
      Family
      Ownership
      Employment
      Unique sources of competitive advantage
    • 7. Unique challenges facing family business
      Unqualified family members in key positions within the company.
      Communication of business issues is difficult enough, however layered with challenging family matters, often communication completely breaks down.
      Marriage and divorce plays a key role in family business success and failure.
      Involvement of family members not employed by the company.
      Family members in ownership versus management positions.
    • 8. Family business facts
      • CONSTITUTE80–98% of businesses in U.S. and other free economies
      • 9. GENERATE49% of GDP in U.S. and more than 75% in most other countries
      • 10. EMPLOY 59% of private sector U.S. workforce and more than 85% of working population overseas
      • 11. CREATED about 80% of all new jobs in the 1980s and 1990s
    • Recent family business surveys
      2007 Laird Norton Tyee “Family to Family”
      2007 American Family Business Survey
      2008 Northwest Family Business Survey
      2009 Barclays “Family Business in Safe Hands?”
      2009 KPMG Family Business Australia
      3-9
    • 12. LNT 2007 Family to Family
      Family businesses are thriving
      Succession issues immanent
      Perception not reality
      All in the family?
      Income diversification
      3-10
    • 13. 2007 American Family Business
      Optimistic about growth
      Lack a sense of urgency about planning
      Selecting women leaders
      Higher ethical direction
      Traditional management toolkit
      Common family values
      Trust of advisors
      3-11
    • 14. 2008 LNT NW Family Business Survey
      Incorporating needs of stakeholders leads to greater success
      Succession planning still needed
      Lack income diversification
      Family business boards add value to the firm
      3-12
    • 15. 2009 Barclay’s “In Safe Hands?”
      Possess certain attributes
      Philanthropy and close relationship with society
      Family relationships are a double edged sword
      External management can be a powerful tool
      Planning for next gen is critical
      3-13
    • 16. 2009 KPMG Family Business Australia
      Structures and mechanisms in place
      Strength & resilience is a “strength”
      Growth & progression is steady
    • 17. 1-15
      Entrepreneurs and Business Owners
      “Business owners make up 17.9% of the population, yet account for 25% of all income and own 56% of all wealth.”
      Source: Quadrini, V. (September 2, 1999). “The importance of entrepreneurship for wealth creation and mobility.” Duke University, Fuqua School of Business.
    • 18. Family Business Facts
      Most current family businesses in the U.S. were formed after World War II. Fully 91% of family business CEO’s are age 42 or older, and 11% are 71 years or older.
      42.7% of family-owned businesses will change hands-to be transferred to other family members or sold to others-in the next five years.
    • 19. 1-17
      Good news…bad news…or just news?
      In their first 5 years of operation, approximately 85% of entrepreneurial and family-owned companies disappear
      Among those that survive, only 30% are successfully transferred to the second generation of the founding-family owners
      Only 12% survive under current ownership to the third generation
      Less than 45% make it to the 4th generation
    • 20. The Three Circle Model
      Vermont Family Business Initiative
    • 21. The Developmental Stages of the Ownership System
      Cousin
      Consortium
      Sibling
      Partnership
      Controlling
      Owner
      Vermont Family Business Initiative
    • 22. The Next Generation
      • More than 34 percent of U.S. family firms surveyed report that the next CEO may be a woman.
      • 23. 25% of senior generation family business shareholders have not completed any estate planning other than writing a will.
      • 24. 20% of current owners are not confident of the next generation’s commitment to their business.
    • Women in FOB’s
      Roles are finally changing to allow opportunity for females to assume to roles of leadership and ownership.
      More than 34 percent of U.S. family firms surveyed report that the next CEO may be a woman.
      They do more with less….
      Source: The Center for Women’s Leadership at Babson College Women in Family-Owned Businesses Research Report
    • 25. Why are family businesses important?
      Vermont is primarily made up of small businesses, many of which are started by entrepreneurial families.
      Family businesses are deeply embedded within the social and economic fabric of their surrounding community.
      Family businesses are committed to continuity.
    • 26. Oldest family business in the U.S.?
    • 27. Oldest family business in US
      Oldest family business still operating in the US: Zildjian Cymbal Co., Norwood Mass.
      Founded in 1623 in Constantinople.
      Moved to the US in 1929.
      Currently in 14th generation of ownership.
      Craigie Zildjian is the first woman to lead her family’s business.
    • 28. Largest family business (revenue)
    • 29. 1-26
      Examples of Family-Controlled Businesses
      Wal-Mart
      New York Times
      Wall Street Journal
      Washington Post
      American Greetings
      Bigelow
      Anheuser-Busch
      L. L. Bean
      Gap
      Timken
      Ford Motor
      Fidelity Investments
      Marriott
      Hallmark
      Levi Strauss
      Kohler
      Nordstrom
      Perdue Farms
      Smucker’s
      SC Johnson
    • 30. Some family businesses in Vermont
    • 31. Goals – Business owner
      Time line
      Financial consideration and reality
      Lifestyle choices
      Manage the plan.
    • 32. Goals – Business leader
      Employees
      Partners/investors
      Business continuity
    • 33. Clearly define stage of business
      How does it relate to owners exit goals?
      Early/founder – planning tool
      Growth – Added value and contingency
      Mature – Continuity and legacy
      Decline – Graceful exit
    • 34. Business Valuation
      Provide honest information
      Choose an accredited valuation analysis
      Cost - $5,000 - $10,000
      4 - 8 weeks to complete
    • 35. Assemble your transition team
      Professional advisors
      Family
      Peers
      Boards of advisors
    • 36. Explore options
      Keep in family
      Gifting
      Trusts
      Buy-sell
      Outright sale
      Internal sale
    • 37. Contingency plans
      Death
      Disability
      Key-person
      Loss of business value
      Failure to secure sound management or transition team
    • 38. Identify successor & future management
      Key positions
      Tools needed to succeed
      Develop skills
      Ample time
      Communicate plans
    • 39. Develop actual plan – written & documented
      Stick to goals and time line
      Share with others
      Manage the plan
      Personally
      Professionally
    • 40. What will you do when you exit?
      EXIT!!!
      LEAVE!!!
      GET OUT OF THE WAY!!!
      OR….
    • 41. …START A NEW BUSINESS!
    • 42. FINAL EXAM
    • 43. TWO THNIGS
      START TODAY
      INVOLVE OTHERS
    • 44. What is the Vermont Family Business Initiative?
      Founded in 1996 in the UVM Business School.
      Provides a series of family business forums throughout the state.
      Currently 30+ member business in Vermont, from Bennington to Newport.
      Family owned and closely held.
    • 45. Additional resources
      Family Business Daily Feed
      www.twitter.com/fambiz2point0
      Family Business Wiki
      www.familybusinesswiki.org
      Family Business Town Square
      www.familybusinesswiki.ning.com/
      Family Business Magazine
      www.familybusinessmagazine.com
    • 46. Contact
      Dann Van Der Vliet
      www.uvm.edu/familybusiness
      802-656-5897
      Daniel.vdv@uvm.edu
      www.facebook.com/vbc.vfbi
      www.twiiter.com/fambiz2point0
      Presentation is available at:
      http://www.slideshare.net/dvdv

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