Centers at UNH and elsewhere provide helpful resources and networking
Like many industries in the United States, retail fuel delivery and HVAC service are dominated by companies that are family-owned and operated. FamilyBusinessCenter.com reports that family-owned businesses account for 64 percent of U.S. gross domestic product, generate 62 percent of the country’s employment, and account for 78 percent of all new job creation.
The family businesses that form the backbone of the heating oil and propane industries can benefit by proactively managing the unique challenges and opportunities that occur when family members collaborate in a business enterprise. Oil & Energy recently discussed family business concerns with with Barbara Draper, Director of the University of New Hampshire Center for Family Business.
The UNH program is one of several in New England that provide guidance and resources to help family businesses thrive. “Our mission and goal is to support family businesses, which constitute 80 percent of the businesses here in New Hampshire,” she said. “We want to help them succeed and harmoniously transfer their businesses from one generation to the next, if that is their goal.”
Founded in 1993 with support from the MassMutual insurance company, the UNH center provides outreach to family businesses in the region, mostly in the form of events and a network of business advisors and consultants. Companies pay an annual fee to join the program, which grants them access to all the center’s events and resources. Draper says the center works with experts all the major fields that families need to be successful, including legal, accounting, banking, business valuation and family relations.
This year’s Center for Family Business agenda features four workshops focused on business issues, as follows:
- Strategic Planning That Works for Family Businesses (October 7, 2015): A workshop that provides family business owners with an easy-to-implement eight-step process, and helps them learn the process by working on a case study with other family business owners.
- Deterring and Detecting Fraud: A Discussion of Financial and IT Controls (December 2, 2015): A session focused on cyber security, financial reporting, fraud and embezzlement risk that will include recommendations for the detection and deterrence of such risks.
- Do You Have a Question About Gifting, Buy-Sell Agreements or Business Valuations (March 2, 2016): This program will examine key elements in a successful transfer of ownership of the family business, including lifetime gifts, buy-sell agreements and business valuations.
- The Challenges Facing Next Generation Leadership (May 11, 2016): This program is designed to have different generations in the same room to discuss developing human capital. It will empower the next generation by providing them with various tools of personal ownership: self-assessment, a values-based definition of success, and career planning. For the senior generation, it will help them to convey the business issues they face to the next generation.
The center will also host a session that brings together the members of the Center for Family Business with UNH’s CEO Forum, as well as the Annual Dinner.
You’re Not Alone
“Families find the program very worthwhile,” Draper said. “It provides an opportunity to be in a room with other people who are going through the same issues they are and see what others have done to address those issues. It’s encouraging and refreshing, and it keeps whatever topics the family needs to deal with in their minds.”
While the issues vary from business to business, one that topic that comes up consistently is succession from one generation to the next. Company leaders need to figure out who is going to be the leader in the next generation and when to turn over control. Many factors come into play. Is there a suitable leader in the next generation? Are they ready to lead the business? If not, will the company bring in leadership from outside the family? How will the business support the current owners after they enter their retirement years? How can members of the next generation bring their ideas to bear?
To smooth the process, it is essential for family businesses to create a formal succession plan, according to Draper. “Having a plan can often make the difference between disaster and a smooth transition,” she said. The senior generation usually takes the lead and decides when they will be ready to pass the reins of ownership and leadership. The first step is to answer the big-picture questions about how the transition will look. Then it is time to work with experts like the lawyers, accountants and business valuation specialists to craft a written plan. (For more on this, read John Nardozzi’s article Do You Need a Shareholder Agreement?)
Draper believes every company should also have a strategic plan that spells out the family’s vision for the company and its mission. “If they can handle the governance, the communications and the succession parts and they have common goals and a mission and vision, it’s a lot easier,” she said.
Hiring Family Members
Another topic that comes up in many family businesses is how to bring family members into the company and onto the payroll. Draper has seen a lot of companies settle this issue by creating a very specific set of standards. Family members might be required to attain educational degrees, to work for other companies first, and then to apply for openings that match their skill sets.
Families often hope that new leadership will emerge in the next generation but then find that they need to go outside the family to find the particular skills and qualities that the job demands. “Often, the companies have been around for a long time and they need to be reinvigorated,” Draper explained. “They need to reinvent themselves, and they just might not have the depth of talent within the family that the need to take the company to the next level.”
One of the keys to success in family business is communicating effectively. “Families that talk and communicate well will have much less tension and stress,” she said. (See related article, Page 28.)Communications can become particularly challenging in the second and third generations, because family members get married and find themselves working with cousins and in-laws. The connections are not as close as they were when the company leadership was shared primarily among siblings whose values might have been more closely aligned.
Other family business program in New England include the Institute for Family Businesses, in Portland, ME; the Richard E. Dyke Center for Family Business at Husson in Bangor, ME; the UMass Amherst Family Business Center, in Amherst, MA; the Center for Family Business at Northeastern University, in Boston, MA; the Family Business Initiative at the University of Vermont, in Burlington, VT; and the Center for Family Business at the University of New Haven, in New Haven, CT.
To learn more about the UNH Center for Family Business, visit www.familybusiness.unh.edu.
