Spring 2009 Toolbox

Nine Elements of Family Business Success

By Allen E. Fishman
McGraw Hill, 2009
278 pp., $24.95

Allen Fishman is the founder and CEO of The Alternative Board (TAB), a franchisor of peer advisory board services and business coaching. His son-in-law Jason Zickerman is TAB’s president and chief operating officer. Based on their experiences working together, plus those of family companies he and his TAB organization have helped over the years, Fishman offers this compilation of family business advice, a follow-up to his 2006 book Seven Secrets of Great Entrepreneurial Masters. (Though he mentions the names of several TAB facilitator-coaches, the family business owners whose cases he cites are pseudonymous.)

Fishman credits his daughter Michele (who works at another one of their family’s businesses) with helping him to shape his newest book, which includes a laudatory foreword by Stephen R. Covey, author of The Seven Habits of Highly Effective People. Fishman states that his aim is to “provide an arsenal of tools for family business success—tools that allow everyone connected to a family business to better understand the often difficult dynamics involved.”

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Fishman’s “nine elements,” each discussed in its own chapter and summarized with a checklist, are: creating personal vision statements; hiring and firing family employees; compensating family employees; selecting the family successor; grooming the successor; aligning the family business culture with the company vision; addressing spousal business partners’ role challenges; recruiting and retaining non-family employees; and transitioning ownership to family members. The chapters feature lists that shed light on each “element”: seven reasons for family members’ compensation happiness, eight succession roadblocks, 12 spousal business conflicts, and so forth.

For those readers who have worked with family business advisers, attended family business forums or read other books (or articles) on sustaining a family enterprise, Fishman’s advice will be familiar, although some of his approaches incorporate unique elements. He recommends developing a vision for the business that all key family members can buy into, frequent strategic planning with judicious follow-ups, creating policies to cover potentially contentious issues, learning to communicate effectively with family members and other wise initiatives. The book likely will be most helpful to founding entrepreneurs who are beginning to think about succession.

Included among the exhibits at the end of the book are his son-in-law’s personal SWOT (strengths, weaknesses, opportunities and threats) analysis, created in 2001 as Fishman and Zickerman were discussing the possibility of Zickerman’s joining TAB. Zickerman identified as a threat, for example, the “potential for major displeasure and resistance from both franchisees and current TAB employees to position appointment with their thinking that the appointment is strictly the result of nepotism without first viewing my ability to perform.” Fishman writes that Zickerman “was prepared for the resentment. It was there. He faced it and overcame it.”

Though many family business owners are reluctant to designate in-laws as successors or even to allow them to join the family firm in any capacity, Fishman is proud to work with his son-in-law. “Enormous psychological reward and real joy come to me from watching Jason approach business challenges using some experience I have shared with him during our shop talks,” he writes. Interestingly, TAB’s family employment policy prohibits nieces and nephews from working there, though such blood relatives are welcomed into most family companies. “I do not want to deal with hard feelings about their pay level or advancements,” Fishman states.

To resolve family communication difficulties, Fishman recommends what he calls the “TABenos process,” facilitated exercises aimed at breaking down communication barriers and developing ground rules for family discussions. A sample TABenos exercise is provided in an exhibit.

In his foreword, Covey praises the chapter on building a happy family business culture. Yet this reviewer found the most value in the chapter on transitioning ownership, which focuses on financial sticking points: percentage split of ownership, purchase price and financing terms, income to support retirement lifestyle, gift and estate taxes, buy-sell agreements, personal loan guarantees and other issues that too many business owners neglect to consider fully in their zeal to pass their companies on to their children.

When a founder is running an entrepreneurial venture, he or she tends to focus on building the business and meeting day-to-day challenges. The issue of perpetuating the enterprise may not come to the forefront until the founder nears retirement. Fishman’s book provides a good overview of basic family business issues for those just starting to realize their company has the potential to become a family business.

 

 


 

A book of ‘quick hits’
and commonsense advice

The Little Red Book of Family Business

By David Bork
Sampson Press, 2008
115 pp., $12.95
www.davidbork.com/redbook

To resolve many nettlesome family business issues, you’re likely to want a detailed account of what has worked for other families, and how you can adapt it to work for you. But sometimes all you need are a few bullet points.

David Bork, who has advised more than 400 family businesses—including some of the world’s largest—provides a selection of these “quick hit” tips in his Little Red Book. The pocket-sized book, written on the suggestion of one of Bork’s clients, is divided into 28 alphabetized sections, each containing several morsels to ruminate over (from “Attitude” to “Wills, Testaments, Bequests,” plus a section listing “10 Keys to Success in Family Business”).

“If the business does not prosper, the family will not be prosperous,” reads one entry. “Money is a tool, but it should never be used as a hammer,” says another.

Though each point is brief, not all of them are fortune-cookie length. One of the longer entries, for example, describes the purpose of a family constitution; another explains “criteria-based decision-making.”

Several of Bork’s tips will be most valuable as conversation-starters with family members. (Example: “If the family ownership is used in marketing, then it is important for all family members to practice the values the family claims to have.”) Others might spark some solitary soul-searching. (From the section on wills: “Don’t try to legislate from ‘the other side.’ Nobody wants to see your bony hand pulling the strings.”) Space is provided for readers to jot down notes should one of the points spark an idea.

Bork’s red book doesn’t provide a solution to every problem, nor does it claim to. “This is a little book, not a big one,” he writes. But if a pithy phrase will do the trick—or if you’re looking for a quick, easy and enjoyable read that will also make you think—you may want to invest a little time to check out the Little Red Book.

 

 


 

A video documents the challenges
facing small family businesses

The owners of four small, multigenerational family enterprises discuss their struggle to sustain their businesses in a new documentary.

James E. Howard, the creator of Legacy: Generations of Family Business, has a background in organizational development. He presents a program that includes a screening of the 30-minute film followed by an open forum “during which audience members participate in brainstorming ideas and actions that we can take as a society to help strengthen these precious institutions,” he says. A colleague takes notes on the discussions; Howard plans to analyze the ideas offered and present them to families “for use in their business and marketing plans, and staff training.”

Howard, an admirer of filmmaker Ken Burns, shot the video as a series of still photographs with narration from the owners of Jacobs Shoe Repair (a third-generation cobbler in Santa Fe, N.M.), Edmunds Hardware Stores (a fourth-generation business in Henniker and Antrim, N.H.), Naranjo Family Potters (an enterprise in Santa Clara, N.M., whose founding family have been potters for six generations), and Great Brook Farm (operated by the ninth and tenth generations of the Graves family in Walpole, N.H.). “I wanted to combine my love of photography with a meaningful venture,” Howard says.

Howard, who has residences in both New Hampshire and New Mexico, received five grants from non-profit funding organizations to help create the video. For information, contact Howard at pjhowards@aol.com.

About the Author(s)

Barbara Spector

Barbara Spector is Family Business Magazine's editor-at-large.


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