Original article from the Flevy business blog can be found here:
http://flevy.com/blog/family-business-owners-dream-big-but-also-consult-a-finance-expert/
“Many family business owners who come to us for help complain that they always have a scarcity of time and money,” according to leading family business expert Don Schwerzler. “In fact, that is why many family businesses never achieve their true potential. They get so caught up in the ‘tyranny of routine’ that they fail to ‘Dream Big!’ When that happens, it is a type of ‘entrepreneurial burn-out,’ where the business is no longer producing the intellectual satisfaction for the business owner,” says Schwerzler. “The business is no longer fun…”
That could be a major reason why so many Merger & Acquisition firms seek out family businesses for investment. They know that family businesses tend to be “under-performing assets.”
One of our goals when we start working with a family business client is to understand what would be required to grow the business quickly and significantly. What we discover in this process is that the business has many potential growth opportunities–many of which are “low-hanging fruit” that inspire strategies that can be quickly executed and produce excellent results. To get started we pose this question: if the family business owner were to identify the factors he/she perceives are constraining the growth and profitability of the business, what would result? Some of the usual answers include:
Expand the work space to be more efficient.
Purchase new machines and upgrade their transportation fleets.
Expand the customer base and territory (by acquiring other businesses).
Install an ERP system to better understand and manage the business.
Hire executives who have experience in exponentially growing a business.
Develop strategic partnerships for horizontal and vertical integration strategies.
According to Schwerzler, it doesn’t take long for the family business owner to start getting excited about his/her business–a re-invigoration that comes with “dreaming big.”
How to make those dreams a reality?
unwanted pregnancy Kit [+918133066128] Abortion Pills IN Dubai UAE Abudhabi
Family Business Owners, Dream Big! But Also Consult a Finance Expert
1. Family Business Owners, Dream Big!
But Also Consult a Finance Expert
Contributed by Don Schwerzler on May 19, 2015 in Management & Leadership
“Many family business owners who come to us
for help complain that they always have a scarcity
of time and money,” according to leading family
business expert Don Schwerzler. “In fact, that is
why many family businesses never achieve their
true potential. They get so caught up in the
‘tyranny of routine’ that they fail to ‘Dream Big!’
When that happens, it is a type of
‘entrepreneurial burn-out,’ where the business is
no longer producing the intellectual satisfaction
for the business owner,” says Schwerzler. “The business is no longer fun…”
2. That could be a major reason why so many Merger & Acquisition firms seek out family
businesses for investment. They know that family businesses tend to be “under-performing
assets.”
One of our goals when we start working with a family business client is to understand what
would be required to grow the business quickly and significantly. What we discover in this
process is that the business has many potential growth opportunities–many of which are
“low-hanging fruit” that inspire strategies that can be quickly executed and produce
excellent results. To get started we pose this question: if the family business owner were to
identify the factors he/she perceives are constraining the growth and profitability of the
business, what would result? Some of the usual answers include:
Expand the work space to be more efficient.
Purchase new machines and upgrade their transportation fleets.
Expand the customer base and territory (by acquiring other businesses).
Install an ERP system to better understand and manage the business.
Hire executives who have experience in exponentially growing a business.
Develop strategic partnerships for horizontal and vertical integration strategies.
3. According to Schwerzler, it doesn’t take long for the family business owner to start getting
excited about his/her business–a re-invigoration that comes with “dreaming big.”
How to make those dreams a reality?
One of the resources many family businesses do not have as part of their professional
service team–a family business financial expert. I am not talking about an investment
advisor to help manage the owner’s portfolio. I am talking about a financial expert who
understands how to apply new capital (money and expertise) into a business–and who has
the contacts in the investment and banking communities to match the needs of the family
business.
At a recent family business roundtable attended by a group of family business owners,
Schwerzler led the discussion about capital needs that many family businesses may require
to grow and to remain successful.
In years past, family business entrepreneurs tended to rely on family and friends to raise
money to start and operate their business. Many were immigrant families, where their
financial “bankroll” was sweat equity– long hours and hard work !
4. As the family’s business grew, some were able to use a local community bank to get a loan or
a line of credit. But, as the local banks were swallowed up by the larger regional and national
banks, banking relationships for many family businesses became more formal and less user
friendly.
Going back in time, traditional banks had a terrible reputation after the Great Depression
when so many small businesses, farms and ranches were forced into foreclosure or
bankruptcy.
Those family businesses that survived the depression and those family businesses started
afterwards were usually very risk averse when dealing with the financial aspects of their
business–a paranoia that many business owners had about the security of their livelihood
that became part of the family’s DNA and passed down to future generations!
As the business took root and became profitable, the growth of the business tended to be
financed internally – purchases came from cash flow, not money borrowed from the
bank. “Do not borrow money” became part of the process for passing on “wealth and
wisdom” to the next generation.
5. “Not having access to capital created a glass ceiling for many family business,”
said Schwerzler, “they never were able to achieve the true potential of their business.”
Research indicates that only about 30% of family businesses successfully transition to the
second generation; about 12 % successfully transition to the third generation; and only
about 3% make it to the fourth generation.
“One of the major problems – not being able to deal with the financial issues associated with
the unique and complex issues that confront a family business dealing with succession
planning and succession management.”
Schwerzler began studying and advising family business entrepreneurs in 1967 – a career
span of nearly 50 years. He is the founder of the Atlanta-based Family Business Institute
and their web organization Family Business Experts.com
Like the Bob Dylan song, “the times they are a-changin” said Schwerzler. As family
businesses are being readied for the transition to the Nexters , financing is becoming more
crucial to the on-going success of the family business.
6. Family businesses now tend to consider a wide range of alternative business loans ,
including factoring and equipment leasing programs .
About Don Schwerzler
Don Schwerzler is one of the world's leading family business experts. He is the founder of the Atlanta-
based Family Business Institute and the Family Business Experts website ; and has been featured in the
Wall Street Journal. Don Schwerzler began his career as a family business consultant in 1967 and
founded the Family Business Institute in the mid 80s. The Atlanta-based Family Business Institute is
nationally recognized for pioneering the multi-disciplinary consulting protocol that has proven highly
successful in dealing with the unique and complex problems that confront and confound families in
business together. If you have any questions about family business, you can ask him here .
7. Flevy (www.flevy.com) is the
marketplace for premium documents.
These documents can range from
Business Frameworks to Financial
Models to PowerPoint Templates.
Flevy was founded under the principle
that companies waste a lot of time and
money recreating the same foundational
businessdocuments. Our vision is for
Flevy to become a comprehensive
knowledge base of business
documents. All rganizations, from
startups to large enterprises, can use
Flevy— whether it's to jumpstart
projects, to find reference or comparison
materials, or just to learn.
Contact Us
Please contact us with any questions you
may haveabout our company.
• General Inquiries
support@flevy.com
• Media/PR
press@flevy.com
• Billing
billing@flevy.com