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February 2011

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Promoting Business Succession with Retirement Plans
Bob Louis
My client Jim struggled for years over the decision when to give up his ownership of and active involvement in the family business.  He was ultimately satisfied with a promise from his son and the company to pay him a retirement income from the earnings of the business, but this is not always acceptable.  Some business owners are confident in their own abilities but not those of their children, so a promise of an income stream from the company won't be worth much.  What many owners want is an independent source of income, so that they are not dependent on the fortunes of the family business.  The solution to this concern might be a qualified retirement plan.  (Read more from Bob Louis and add comments.)

Family Philanthropy:  Benefitting the Community and the Family
 
Marvi Ricker
There are two elements to family philanthropy - the benefits that accrue to the community from the generosity of wealthy families and the value that accrues to the families themselves.
 
This paper will look at some of the advantages derived by family members when the family's giving is organized through an effective granting program and delivered through a family foundation.  (Read more from Marvi Ricker and add comments.)
How a Sizeable Distribution of Family Wealth Can Affect the Next Generation 
Steve Rosenbaum
Imagine that you have known about considerable family wealth for a number of years and now you are about to receive a good share of it. A fortunate position but what are the ramifications now and for the future and how prepared are you?
I believe that there are a number of issues that need to be considered, monitored, articulated and planned if this transition is to go through smoothly with no horrible immediate side effects and unpleasant surprises in the future.
When did you find out about money?
If you have only found out in the last year about the family's wealth, how have you digested this new information? Have you known about the wealth for decades and now it's time to receive a share, and you may feel it's too late? There is a need to articulate and understand your own feelings and attitude to the wealth and come to terms with the impending event.  (Read more from Steve Rosenbaum and add comments.)
Greetings!

The month's newsletter has to win the prize for spanning the entire
scope of family business challenges...
  
As Leslie Dashew notes, a strong family business is founded on a shared vision. David Bork goes on to tell us in a video interview that understanding and respecting boundaries is a key to long-term sustainability. 
  
Marvi Ricker advises us on the role of family philanthropy when the family business has been successful, and Steve Rosenbaum notes the challenges of distributing wealth to the next generation.
  
Closing the cycle, Bob Louis describes how retirement plans can facilitate business succession, Richard Snebold advises on the importance of developing an exit plan, and Dennis Kessler provides guidance on how to avoid "flunking retirement."
  
But even that's not the end!  Finally, Harry McCabe reminds us that all of our living and planning takes place in the midst of turmoil in the family and in the outside world.  It's no wonder that family businesses require special attention!
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Next month's newsletter is a special edition devoted to recognizing the Movers and Shakers in the field of family business.  You will surely recognize, and join us in expressing appreciation for, these leaders who have helped to create the field of family business as we know it today.
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Our December newsletter was a special edition focused on Women in Family Business.  In conjunction with that newsletter, Family Business Wiki hosted a global teleconference on Women in Family Business.  Click here to listen to the panel discussion. 
Thought Leader Blog:  Leslie Dashew 

Shared Vision:  The Critical Success Factor for the Future of a Family Business

 

Leslie DashewAs a family business advisor for close to 30 years, I have worked with family businesses of all sizes, shapes and levels of conflict and crises.  As I reflect on those families and enterprises that flourish (including those that make the transition from one generation to another with family in tact and prosperity in the business and that face crises and work through them effectively), they all share one important factor:  a shared vision for the future.
 
When I meet a new family client and assess the situation, I listen for their hopes and expectations for the future.  When we can discern that there are threads of a shared vision for the family and its assets, then there is hope that whatever challenges they are currently facing, they have something to work towards together.  The elements of a common goal create incentive to work on the issues facing them. (Read more from Leslie Dashew and add comments.)
FBWiki TV:  David Bork 

Family Business Boundaries

 

David Bork

In this video interview, David Bork contends that most family business disruptions arise from an inadequate understanding of and respect for boundaries.

 

The segments of the video (and start time for each segment) are as follows:

 

0:00  Introduction

0:31  Best ways to respect and observe boundaries

Boundary Issues

1:08  Compensation

2:30  Succession

3:20  Siblings

4:09  Spouses

5:00  Non-family executives

5:46  Spouses of family members

7:20  Confidentiality

 

Click here to see the video.  Run time 8:07.

Dennis Kessler 

Don't Flunk Retirement

 

Dennis Kessler

So your client's wife wants him to retire so they can travel. His kids want him to retire so they can get a chance to run the business "their way". But he is not ready mentally. What do you do? You tell the client "retire and you can do all the things you always wanted to do" but he replies "I am doing what I always wanted to do - run this business." He adds; "I know too many people who retired in good health only to be dead in twelve months."

 
So who is right and how can you help the family and the business move forward?  (Read more from Dennis Kessler and add comments.)

Harry McCabe 

Planning in Turmoil

 

Harry McCabe

Planning in turmoil - both internal and external brings families to their knees. Prayer, perhaps, for harmony and peace as the year gets underway.  Buckling under the fiscal policy weight of too much federal gov't spending and outside pressure like law changes to income, employment, and death taxes.


Questions adding to the turmoil: 1) unemployment. Which generation will end up on the fuzzy end of the lollipop? Gen X and younger with high tech skills yet limited or no experience in the job market; or displaced baby boomers on a perpetual job search using old methods.


2) Will the housing collapse begin to rebound in 2011?  3) Can this country increase GDP at a sustainable rate?

 

Enough about macro economic questions.  (Read more from Harry McCabe and add comments.)

Richard Snebold 

The Benefits of an Exit Plan

 

Richard Snebold

Someday, you will be "selling" your business. It may be for cash, or as a gift, but you will "sell" it. Will an insider or outsider buy it? Will we get a premium, full value, or pennies on the dollar? Who will control the process-YOU or someone else? Most of the entrepreneurs I have worked with in the last 35 years feel more comfortable if they have some semblance of control in running their business. Are you one of those? Why is it then that over 60% of the owners of family businesses do not have a written exit strategy? Where should an exit strategy be in the list of priorities? What are the benefits of having one? What if you put it off until it is too late? What will be that cost? In this article, I will attempt to answer some of these questions.   (Read more from Richard Snebold and add comments.)

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