Family Owned Businesses:
A Survival Guide
Shenandoah University
6th Annual Harry F. Byrd, Jr. School of Business
2014 Business Symposium - March 23, 2014
Presented by: Jeff Savlov, CFBA
Family Business Consultant – Blum & Savlov, LLP
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Family – Sweet & Loving
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Family – Sweet & Loving?!?!
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Family Is Complex All On Its Own…
Family
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3-Circle Model of Family Business Systems
1
Family
4
6
Taguiri & Davis
2
Business
7
5
Ownership/
Governance
3
8
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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:
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–
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–
–
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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
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Generations
Founders of the business
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Family/Emotional Life + Business/Economic Life =
COMPLEXITY
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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
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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
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Research
• 85% of failures are due to:
• Lack of COMMUNICATION and TRUST
(60%)
• Failure to PREPARE the next generation
(25%)
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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
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Best Practices – Simple Yet Difficult
• Family Meetings
• Strategic Planning
• Active Board
*Joseph Astrachan, Ph.D., editor, Family Business Review
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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!
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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
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ACTIVE Board/Governance
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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
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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
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Organizations for Families
• The Family Business Network
– “By Families For Families”
– 6,000 members worldwide
• University-based Family Business Forums
– Virginia Commonwealth University
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Blum & Savlov, LLP
Family Business Consulting
Tel: (732) 296-8047
Fax: (732) 284-4257 Email:
jsavlov@blumandsavlov.com
Jeff Savlov, Principal
Blum & Savlov, LLP
47 Raritan Avenue, Suite 130
Highland Park, NJ 08904
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Conflict & Context
50%
Cousins
50%
G4
Sales
G5
3 brothers grew up in business
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