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Business Consulting

Helen Cherry

2013-05-29 12:22:34

Q-I am big on marketing my business wondering if a business of under 10 employees could really benefit from "limited runs" on shirts. We use them in store, but also as promotional items. However, having various designs costs quite a bit and I wonder if the payoff is worth the cost?

A-Let's answer the last question first. Yes, it is worthwhile, if you keep the costs down. Choose a vendor that can handle several small runs and does not over-charge for design and set-up. A smaller shop is more likely to work with you on a design strategy that will work for your limited run branding. For those that do not know what we are talking about, let me initiate you into the latest trend in branding--limited edition runs. We all know the value of corporate logo apparel. It creates brand awareness, employee unity, and is a visual sign of company professionalism. It also solves issues of dress code and supports approachability between employees and management. As a promotional item it is your name proliferating into the community. Limited runs do that and more. Limited runs are typically t-shirts which are smartly designed and highly desirable. You create a very limited number of design which increases desirability among your loyal customers. It’s a way to develop and foster good will with a cult following. People love to feel loyal to a business and this is a way to harness that loyalty. Once, the idea of having a series of limited edition custom screen-printed shirts was something reserved for the big companies with deep pockets. Apple for example has done it for years. Today, many of those shirts are not only highly desirable, but also highly collectable. Those with the prized limited run shirts wear them and become a super-fan, and a super brand ambassador. How does that convert for companies that do not have a huge built-in base of loyal devotees? Now that technology platforms support widespread affordability, custom branded clothing is well within the reach of any size business. Smaller companies can shadow the marketing tactics of mega-corporations with ease, and get similar results in creating greater awareness, desirability, as well as employee and community connectivity. It also demonstrates company stability and permanence. We look forward to seeing your creative mark on the community! Good luck.

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Business Consulting

Bill Lee

2005-12-29 14:16:00

Question: What is Generation Convergence?

Answer: If you haven't noticed we now have four generations of employees in the workplace, each with a common set of values and orientations stemming from the different environments from which they were reared.  Each generation has its own mind set and when they all come together at the office a phenomenon known as "generational convergence" occurs.  The generations must work together even though they approach their jobs differently.  If you are involved in designing your office work space you need to pay heed to this "convergence."  The four generations consist of the "Mature Generation" (born 1928-45), "Baby Boomers" (born1946-65), Generation "X" (born 1966-77) and now, welcome to Generation "Y" (born after 1978).  Individual success can be found in equal numbers in all generations but each have their own unique ways of finding it.  Generations have been coming together for a long time but the newest entrants, Generation Y, born after 1978, may exert more influence than even their Baby Boomer parents.  Gen Yers and the Mature Generation generally present the biggest "convergence" in the workplace.  The Mature Generation, born between 1928 and 1945, had a childhood of hard times, war, economic recovery and possess all the traditional values - loyalty, willingness to conform, importance of hard work and faith in the American institutions.  Generation Y, on the other hand, are the children of parents that enacted the helmet laws, spent money on tutors, stocked the house with electronics and coached their kid's soccer games.  This nurturing environment made this generation confident, optimistic and democratic.  They are concerned about individual freedom and equality.  They are team oriented as a result of parents that respected their ideas and encouraged them to express their feelings.  And don't forget, Gen Yers have grown up in an era where technology advances have accelerated - they have embraced it quicker than the other generations and are defining where it fits in the workplace.Baby Boomers share a strong emphasis on individuality, youth and adventure.  They have humanized the workplace, making it comfortable and encouraging innovation at all levels.Generation X is typically very entrepreneurial.  They were raised in times of idealism and equality.  They sometimes lack the social and cultural limitations of their predecessors.So, what's the big deal?  For starters Gen Y will expect a less hierarchical workplace; they believe that achievement and success will require a group effort.  They don't see a place for individualism.  Job descriptions are only guidelines and multitasking is how they go about their job.  Gen Yers expect more training from their employers, seek more benefits and will change jobs more often.  Research has shown that Gen Yers want the workplace to be fun, relaxed and nontraditional.  They don't want to be tied down to a desk.  Instead, they will hold wireless keyboards on their laps while they type and stand outside in the sun on their cell phone.  They will gather around the break room, sip coffee and talk equally about work and personal events.  Those hiring Gen Yers must recognize these characteristics and create office environments geared to attracting and retaining employees.The work environment must respond to the varying needs of each generation - from members of the Mature Generation and early Boomers who need offices that accommodate declining eye sight and hearing, to those in Generation X and Y who want homey, comfortable spaces to lounge through meetings or late-night sessions.  Generation Y will take the lead in deciding how computers and other technology will take hold in the workplace.  Every other generation has had to adapt themselves to how things were done as they entered the workforce.  Now the workforce is adapting itself to Generation Y and the technology expertise they bring.   The design, configuration and furnishing of the physical space in which a group functions can impact the group's identity, behavior and productivity.  The traditional focus of space - on the needs of the individual - may need to shift to the needs of the team.  Doing so will affect the design of the space, furnishing requirements, mobility, adaptability and tool support.

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Business Consulting

Susan Dondlinger

2004-09-01 11:57:00

:  I've been hearing about how empowering employees creates motivated employees, which is something all managers want.   This seems like a good idea, but why would I want to share my hard-earned power with my employees?

ANSWER:  I love hearing about organizations that do extraordinary things. One thing all these organizations seem to have in common is motivated employees. Have you ever wondered how or why that happens? One reason it happens is because credible leaders know that when employees feel strong, capable and significant - they begin to do extraordinary things.Over the years, I have become fascinated with ways to help people give away their power. In the book The Leadership Challenge, Kouzes and Posner explore the archaic notion that power is a fixed sum - if I get more, you will have less. Naturally, people with this viewpoint are reluctant to share. I often give seminar participants a PowerBar to explore the fallacy of this concept. PowerBars are advertised as nutrition bars that provide you with the energy to be great, no matter what the challenge. Sound like a good concept? We explore the power concept by giving away the PowerBars. Are participants empty-handed or have they actually discovered other benefits greater than a PowerBar? If PowerBars were actually power you gave away, what might the benefits be to you? Then there is always the question about the people who receive the power? How are they affected and how do they respond? What is better about their work life?There are several easy and fun ways leaders can give away power and strengthen others. First of all, make sure you are not asking employees to seek unnecessary approval on projects. Don't have too many rules. Make it easy for employees at all levels of work to visit freely. Make sure the tasks you delegate are relevant, "quality-related" tasks - not routine and boring work you did not want to handle. It is not empowering to receive crummy work assignments. Strive to make every employee business literate. Share financial information with them and let them know how they affect company income and profit. Always make an effort to connect employees with important people - through personal introductions, meetings, lunches, and organizations. Introduce employees in ways that make them feel special and valuable. Become comfortable with making heroes of other people. Find ways to shine the spotlight of achievement on others. Publicize the work of your team members. In private conversations, refer to other employees' achievements. Tell people inside and outside the organization what power employees have and what they are accomplishing. In conclusion, if you give away enough power - you will soon be faced with a new problem. You will have free time! Use this time to lead. Do some long-term thinking, strategizing, even mentoring employees.  What a great problem!

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Business Consulting

Derrick Nielsen

2004-08-01 11:51:00

Question:  My wife and I own a successful, local business. For several years I have been thinking about the future of the business - and how it will have to change to survive. At the same time, I believe that we have values and traditions worth carrying on that will continue to make the company successful. What do you think? Are these values I feel so strongly about really important to the future of our business?

ANSWER:  (part two of response, see July ‘04 issue)You will remember that last month I began to answer this question by discussing what core values are and what they are not. It's tempting to dismiss core values as fuzzy, feel-good things that are difficult to deal with at best.  People tend to think that they are too abstract to address effectively.  For a moment, consider this three-step process for introducing core values into your company's strategy.  In fact, if you remember nothing else, remember these three words:  IDENTIFY, SHARE, and ALIGN.  Visionary companies that will continue to succeed long into the future act today to IDENTIFY core values, SHARE them with people both inside and outside of the organization, and ALIGN their personal and organizational activities with them.  We'll go into each of these steps in some detail.Identifying  The first, crucial step is to recognize those core values that exist in your company. Are you thinking you will identify a few creative people in your organization; book a quiet, comfortable off-site room in which they could meet; and then create a nice-sounding, fuzzy-feeling mission statement?  Don't, because you know what that would produce?  A nice statement full of the values that people think they should have, rather than the ones that they actually do have.  Worst of all, if this happens people are justifiably skeptical and cynical about the results.  Studies have proven that visionary companies all have very clear values that guide their operations.  Interestingly, these values all vary considerably between the companies. It appears the content of your company values is not what is most important. Rather, it is how deeply people believe in those values and how consistently they are followed.To help you identify the core values in your business, we emphasize three characteristics:1. Values must be authentic.  They must be real values that are readily apparent in the organization's culture and operations.  Identifying core values is a discovery process, not one of invention or creation.  2. Values must be simple.  Say what you believe clearly, simply and sincerely. No one is inspired or motivated by long statements full of buzz words and consultant-speak.  People respond to values like trust, fairness, integrity and quality.  Long mission and values statements get printed on plaques and hung on walls.  Short mission or value statements that fit on a T-shirt or bumper sticker get remembered -- and therefore acted upon.3. Values should be timeless.  Core values are things that you believe in and will continue to do inside and outside of work.  Quality is a value, not a statement of current strategy or operational tactic. TQM is an operational tactic to ensure that value.  Core values are fundamental beliefs that will not change with current management fads.  They are things that you will continue to do even if the market or the people with whom you deal don't directly reward you for it.  SharingOnce you have identified your authentic, simple and timeless values, share them with employees, customers, suppliers, family members, the community - basically anyone who will listen.  If you have identified truly authentic and timeless values, they can be reinforced continually without fear of overkill or cynicism.  No one wants to read the page-long, boring plaque that's hung in the office daily.  But everyone wants to work for an organization that preaches and practices integrity and quality.  We all want to believe that we are part of something bigger than ourselves.  The sharing of authentic values allows us to do that.There are a number of ways to share core values.  These are but a few examples:1. Develop a mission or vision statement.  2. Find ways to tell your company story.3. Create a company or family "university".  4. Write an ethical will or a legacy letter.  5. Videotape a Legacy Video of your     company's history.AligningUnderstanding the values for which you and your organization stand and then telling other people about them isn't enough.  The final step in the process may be the most important, and difficult part.  You must ensure that your organization's structure, systems and processes are in alignment with and reinforce your core values.  In short, you have to practice what you preach.  Let me tell you a dramatic illustration of practicing what you preach.  In their employee handbook, the Nordstrom company includes a five-by-eight inch card that states:  "Our number one goal is to provide outstanding customer service".  A Nordstrom salesperson once found that a customer had left behind an airline ticket.  From the itinerary, the salesperson realized that the customer must already be on the way to the airport to catch the flight.  First, the employee called the airline and asked them to rewrite the ticket.  When the airline refused, they left their post, jumped in a cab to the airport, and delivered the ticket in person.  Nordstrom later reimbursed the employee for the cab fare.  Now that is customer service! What would an employee in your organization have done?  Would they have taken the ticket to lost and found and called it quits?  Would they have phoned the airline and said that the ticket was waiting at the store?  Would they have delivered the ticket as this person did?  And if they had delivered the ticket, would your organization have rewarded their absence from work?  In the Nordstrom's case, they were living up to the Nordstrom Rules as indicated on the same 5x8 card that is given to all new employees - "Rule #1:  Use your good judgment in all situations.  There will be no additional rules."  That's alignment with core values!  So does Nordstrom really serve customers differently?  Is it different in operation from its competitors?  You bet.  For a start, the company's compensation system rewards its core value of customer service.  The salespeople at Nordstrom, the people directly in contact with customers, generally make almost twice the national average for retail sales clerks.  Nordstrom puts its money where its mouth is. They have done that by making faith and trust in employees the cardinal rule of the company.  You may pick a different value for your company, but you had better align your organization to achieve it just as passionately and effectively as Nordstrom does. In ConclusionI wish I could introduce you to someone I know. About twenty years ago his brother, an equal partner in the business, died unexpectedly. Although my friend could have exercised his right to majority ownership of the company, he instead equalized the ownership to ensure a family partnership for both his and his brother's family - and at a great financial cost. He did this because his family business values preserving the business for a united family to work together. Now that is truly insuring alignment with your core values.

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Business Consulting

Derrick Nielsen

2004-07-01 10:05:00

:  My wife and I own a successful, local business. For several years I have been thinking about the future of the business - and about how it will have to change to survive. At the same time, I believe we have values and traditions worth carrying on that will continue to make the company successful. What do you think? Are these values I feel so strongly about really important to the future of our business? 

ANSWER:  I recently read about a group of twenty-five of the world's oldest business dynasties that meet routinely in Germany. They call themselves Les Hénokiens, after the Biblical patriarch Enoch who was reputedly 365 years old at his death. The group claims to comprise the most exclusive club of its kind in the world. Companies have to be at least 200 years old and still majority-owned by founding families in order to qualify for membership. Interestingly, the member companies seem to share a common genius for transforming and diversifying at key points in their histories, while at the same time preserving traditions of craftsmanship and family values. The values and traditions you ask about (and that the companies in the Henokiens group obviously treasure) are often times referred to as core values - principles or beliefs that guide action.  Core values express the foundational beliefs or principles of a company.  They are timeless ideals that will not be sacrificed for profit or expediency.  In fact, they reflect corporate practices that will continue to be followed even if the market stops rewarding them.Core values shouldn't be confused with particular processes, products or strategies.  They are much more fundamental and basic than that.  Having a Wal-Mart employee greet customers at the door of the store isn't a core value.  Neither is the decision to call those employees "associates."  Those are both operating practices that speak of a much deeper and fundamental commitment.  Sam Walton described Wal-Mart's underlying core value this way:  "We put the customer ahead of everything else….  If you're not serving the customer, or supporting the folks who do, then we don't need you."  Core values explain "why" an organization exists.  In the case of Wal-Mart, Sam Walton created a retail organization that "exist[s] to provide value to our customers."   On the other hand, strategic and operational objectives build on core values to clarify "how" an organization will pursue its objectives.  For Wal-Mart this includes employing individuals to do nothing but greet customers and make them feel welcome and important as they enter the store.  It also means treating employees with respect, for example giving them a title that implies a sense of ownership. Wal-Mart believes that this reinforces the right sort of attitude towards customers.  We all know that companies must continually reinvent themselves to stay successful in today's competitive environment.  While structures, processes, products and strategies must all change, core values should nevertheless remain constant.  Consider for a moment the banking industry.  Many community banks were founded on the core value of trust and integrity.  Historically, many have operationalized this value by providing unparalleled personal service in a neighborhood by creating a "know-your-name" environment.  Now, however, many of the same banks are finding that a younger generation of depositors want to be treated differently.  Rather than paying visits to local branches and personal bankers, they want the convenience of ATMs and internet banking.  To meet these challenges, banks have been forced to rethink what it means to serve their customers with integrity and trust.  While the core values remain, the means to realize them are rapidly changing.Most of us think that great products or great people are the reason that some companies endure over time.  However, recent studies conclude that the companies that last a long time do so because they were built to last, in other words, they are great organizations.  And they do two things simultaneously -   they preserve the core and they prepare for change.In next month's addition, we will give you some tips on how to put core values to work in your organization.

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Business Consulting

Derrick Nielsen

2004-06-01 11:37:00

Question:  We have a family business. My grandfather started it and now my mother is getting ready to hand the business down to the kids. I have two siblings. I am the oldest. We have all been working in the business for several years. I am afraid there is a possibility of problems once things are complete. What do you think?

ANSWER: This month's response will be the third and last part of the answer to your question. In April, we discussed obstacles you might face in a joint partnership of your grandfather's company. May's answer took a look at three models for shared leadership that have been successfully used in family businesses. This month we will look at some of the successful ways siblings, spouses, parents, and even non-family managers have dealt with shared leadership positions.TIPS FOR SIBLINGS•  Make an effort to better understand the different "hats" that each family member wears -as an owner, a family member, and a part of the business.  • Discuss expectations with your siblings and your parents as openly and thoroughly as possible.  • Create a shared vision for the future of the business and the family with your siblings.  • Create the appropriate family business structures, especially an outside Board (legal or advisory) and a Family Council.• Agree upon a code of conduct (or code of communications) to guide public and private interactions.  • Plan for the next generation of owners, recognizing that the structures, processes and policies appropriate for them may be different from those that you have used.TIPS FOR PARENTS OF SIBLINGS• Separate out unconditional love and acceptance for your children with a job in the business.• Don't force your kids into the business.  • Put forward the business' best face at home right from the start, including discussions at the dining room table.  • Assume that the business will evolve into a partnership, thereby avoiding promising to one child "that this will all be yours someday".• Remember that what is equal and what is fair may not always be the same.• Be up front with your children regarding your plans for the future and involve them in planning for the next generational transfer.• Remember that what has worked for you and the business during your leadership might not work in the next generation.  Help your kids find out what will work for them and the future needs of the business.• Deal with each child directly. Don't divide and conquer or get involved in disputes that they should settle on their own.• Be patient, letting the next generation make mistakes that are necessary for them to learn.  Provide counsel when asked, rather than continuously.• From their youth, promote your kids' partnership skills, such as listening, communicating, and managing conflict.• Provide opportunities for children to prove their abilities to you, other employees, their siblings and - not least - to themselves.  Consider what educational experiences, training and outside work experience might be necessary in this regard.• Respect your children's choice of spouse and work to make them feel welcome in the family and informed about the business.• Plan for your retirement, including your financial independence from the business, and stick to it.  Cultivate meaningful activities away from the business.TIPS FOR SIBLING SPOUSES•  Expect culture shock when entering your new family and its business.  • Appreciate the challenge that your spouse faces in his or her attempt to work in the family business.  • Don't over-function for your spouse.  Listen to his or her problems with empathy and understanding, but allow them to act for themselves in working out the issues with others.  • Show an interest in the family's business, while remembering that your questions and thoughts need to be raised in the appropriate venues and at the right time.• Work to develop friendships with individuals in the family.TIPS FOR NON-FAMILY EMPLOYEES• Seek to understand the family business system and the different roles that family members play in that system.• Don't get drawn into sibling rivalry.• Don't play one sibling off another or go behind his or her back.FINALLY, when we first considered your family business question in April, we suggested you consider the question posed by Cain:  "Am I my brother's keeper?"   Reframing the question, you as a family business owner might ask, "Am I my sibling's keeper?"  The short answer is YES if you want your sibling partnership to work.  Remember:  Founders can create a business, start a family and even make their kids equal owners, but they can't unilaterally make their kids effective partners.  Siblings will have to choose to work with each other and define their own partnership if they are to run a business together harmoniously and effectively.

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Business Consulting

Derrick Nielsen

2004-05-01 17:17:00

Question:  We have a family business. My grandfather started it and now my mother is getting ready to hand the business down to the kids. I have two siblings. I am the oldest. We have all been working in the business for several years. I am afraid there is a possibility of problems once things are complete. What do you think?

ANSWER:  (continued from last month)Last month, we began answering this question with a discussion of the obstacles you might face as you consider joint leadership of your grandfather's company. This month we will take a look at three of the models family businesses have successfully used for shared leadership. What may work for you and your siblings might be a variation on one of these basic models.WINNER TAKES ALL PARTNERSHIPThis form of partnership most closely resembles a controlling owner organization as one partner - usually a long designated and carefully groomed heir - inherits a majority stake in the family business.  Other siblings receive minority, non-controlling shares.  In this scenario, the designated heir, who is often the only sibling active in the management of the business, exercises absolute legal control.  This results in considerable decision-making freedom.  To sustain legitimacy, however, the controlling partner has to bear in mind and balance the interests, aspirations and opinions of the other sibling partners.  Successful leaders in this mold act as stewards of the collective interests of the partnership as well as the individual interests of the siblings.  As a result, this form of partnership is often referred to in quasi-paternal terms.  The designated heir assumes a role much like a parent in providing for the security and welfare of the other family members.  This form of partnership is stable only as long as all the siblings willingly accept the leadership of the designated heir.  If members of the sibling group seek more active roles in the business, they may come to resent their sibling's dominant position.  Cousins in the next generation may similarly reject the exclusive power exercised by one branch of the family.   Passive shareholders may also rebel if they feel that the designated leader is incapable of providing a fair return on their investment or is unresponsive to their needs.  In winner takes all partnerships, the buck stops with the designated heir who is the appointed leader and majority shareholder.FIRST AMONG EQUALS PARTNERSHIPMany founders equally distribute shares in the family business to their children as part of their estate.  While the children receive the same inheritance, they generally will not have the same interest in or aptitude for operating the company.  Although the siblings will share ownership control, they will likely play different roles in managing the day-to-day affairs of the company.  Some may not even work in the business at all.  They must nevertheless decide how they will jointly direct the affairs of the company as business owners and stewards of the family legacy.Successful partnerships in this mold demonstrate a clear understanding of the various siblings' strengths and weaknesses and accord roles within the business and partnership accordingly.  In many instances, siblings' jobs within the business reflect their very different personalities.  The charismatic, committed sibling may be the natural and mutually agreed upon choice to serve as President/CEO.  The organized, detail-oriented sibling may make an excellent COO, while the numerically astute CPA may be a superb CFO.  Whatever the actual combination of personalities and positions, it is important that the siblings agree on the division of duties and titles, competently execute their respective roles, and find personal and collective reward in the process. First among equal partnerships are on shaky ground if siblings are unwilling or unable to fulfill the roles assigned to them.  Without sufficient humility and self-awareness, these partnerships are prone to politicking and internal dissension, especially if siblings desire the same job.  To avoid infighting and jealousy, siblings should also spell out how each partner will be compensated on the basis of his or her managerial responsibility, demonstrated competence and/or professional qualifications.  Above all, partners must be able to distinguish between equal ownership and unequal executive powers.  First among equal partners understand that equal is not necessarily fair and fair is not always equal.EGALITARIAN PARTNERSHIPIn egalitarian partnerships, siblings combine equal ownership with equal managerial responsibility.  Rather than dividing executive power, these siblings share titles and responsibilities as Co-CEOs or through a rotating Presidency.  Although considered unconventional and risky, such structures are attracting the interest of a growing number of family businesses.  In the right conditions, the egalitarian sibling team is a solid foundation for a unified, energetic management team with an enviable range of skills.  The dangers are equally apparent.  Without a long history of mutual respect and natural cooperation, the lack of a final decision-making authority can paralyze the business, setting up unsolvable feuds that will ultimately scar the family as well.  To avoid this, egalitarian partners must share a set of strong values, possess exceptional communication skills, and demonstrate an unusually high level of trust.  They should also mutually agree upon a tie-breaking mechanism to use as a last resort to prevent decision-making inertia.  To succeed, egalitarian partners must be able to live the motto:  "All for one and one for all."

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Business Consulting

Derrick Nielsen

2004-04-01 13:37:00

Question:  We have a family business. My grandfather started it and now my mother is getting ready to hand the business down to the kids. I have two siblings. I am the oldest. We have all been working in the business for several years. I am afraid there is a possibility of problems once things are complete. What do you think?

ANSWER:  Remember Cain and Abel - the biblical story of one of the most legendary feuds between brothers?  The story is one of jealousy, conflict, and anger and ends with the famous question - "Am I my brother's keeper?" You may have seen a seminar entitled "Cain and Abel, Inc." which focuses on avoiding the potential pitfalls siblings in business have to face and highlighting ways to build successful partnerships. According to a recent family business survey, 68% of family businesses are considering moving to joint leadership structures in the next generation.  While many "business experts" preach against the use of co-CEOs and other joint management structures, many family businesses are actively considering having siblings share leadership in the next generation.  What can be said about these Sibling Partnerships?  Are they destined to repeat the story of Cain and Abel, figuratively if not literally?  Are they likely to be consumed with fights or sibling rivalry to the detriment of the business and their personal relationships?  Not necessarily, but there are significant challenges.Although all family businesses face challenges, the Sibling Partnership may be the most intense and challenging form of family business ownership.  Let's see why:The business is often the founder's "other child".  It bears the personal imprint of the founder and no small amount of blood, sweat and tears.  The inherited business is generally more than a commercial interest; it is a personal and professional legacy of the founder.Parents often stay involved in the business even after they have passed on a controlling stake in the business.  This is especially true when the retired owners' financial well-being is still tied to the business' performance.  Siblings who work together in the business have a long personal history of interaction.  No one understands each other's weaknesses and hot buttons better than a sibling.  Work relationships between siblings often have a personal edge that relationships with non-family members do not.  Sibling partners are usually confronted with the involvement of "outsiders" for the first time - in the form of spouses and in-laws.  The interjection of new family members can have a substantial effect on family culture, personal relationships and group dynamics.As ownership passes to a group of siblings, the number of family members that directly or indirectly relies on the business for support increases dramatically.  While families may grow exponentially, businesses tend to grow linearly.   Siblings face a significant challenge in keeping the business growing to provide for increased family needs.  Ironically, many of the characteristics and qualities that make so many controlling owners successful lead to significant problems in sibling partnerships.  Sharing power and authority in a business is a very different task from running the whole show.  The shoot-from-the-hip, impulsive and charismatic qualities of many founder-entrepreneurs will not work for a group of siblings.  New norms for decision-making and consensus-building must be developed for a sibling partnership to work effectively.There are a number of models that should be considered as starting points to help siblings discover what arrangement may work for them.  What works for a particular sibling group may be a variation on one of these themes.  Some of these options will be covered in next month's edition of the Q&A Times.

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Business Consulting

Greg Ast

2003-09-01 15:15:00

: We live in an age of greater productivity than we have ever experienced before, yet so much time is wasted.  You would wonder where we would be as a society if people learned to manage their time.  What is the best cure for wasting time?  

ANSWER: It seems that many of us are trying to figure out how to do more with less. Here are three things I would suggest you consider when learning how to manage time.    First, identify what's most important to you! In a recent national survey, Americans were asked to list the three things in life that meant the most to them. The three top vote getters were (in order):  family life, spiritual life and health. Take a moment and make your own list.    Now take a look at that list. Does your list include building a world-class business? Or perhaps improving your community. What about your family life? Most likely your list is a balance of several items (work, home, church, etc.). Are you spending your time in the same order? Could you be wrong about your priorities? Make sure your list reflects your priorities, not what you think you are supposed to list. You can go back and change it now, but chances are you got it right the first time.    If that's true, now use your list to say "no" to the things that aren't high priorities. It's hard to say no to someone. Or positively stated, saying "yes" to what's most important to you enables you to politely decline all those good activities that keep you from your best activities.    Second, set goals based on what's most important to you. For many of us, our first goal is to make sure we meet the basic requirements of our job. We find it harder to establish goals for things that are important to us but never seem urgent - calling on a new customer, designing a new product, taking your children to the zoo.  Many times these activities are things we would like to do but never seem to find the time.  Remember, unless you take conscious control of your decision making, you will usually react to the urgent (important or not) and shun the important (unless it carries a sense of urgency).    Third, schedule activities that will allow you to meet your goals. A newly prioritized sample schedule might include some of the following: 7:30-8:30am (sales calls), 8:30am (new product design meeting), Wednesday PM (dinner with your spouse), Saturday PM (trip to the zoo). I'm sure you get the idea.    Scheduling an activity means three things: 1) write it down, 2) preserve it in your memory, and 3) protect it from conflicts! You'll find protecting activities from conflicts will be the most difficult part of your new time management plan. Does the following example sound familiar? You plan to focus on critical areas today at work. Then you oversleep, your child is sick, the phone won't stop ringing and your best employee is on vacation. Now what do you do?   First, I suggest you handle the important items and not the urgent ones. It seems all phone calls and e-mails imply urgency. However, not all are urgent or important. Schedule a time to review, save, or delete e-mails. Do not view an e-mail each time it pops up on your computer. Our high-tech world seems to imply that we must always take every phone call, answer every e-mail, and read every news flash. This is not the case. Don't forget - just say "no" to the things that aren't high priorities. Say "yes" to what's most important to you. You do not have to explain every time you say no. Simply offer your thanks for the invitation - saying you have a very important commitment to keep.   I recommend you handle each request or incoming item in one of the four following ways: 1) do it, 2) delegate it, 3) schedule it for later, or 4) trash it.  Do it when it's important and urgent. Delegate it whenever possible, making sure you teach others your time management skills. Schedule it for later by actually scheduling items to be handled. Finally, trash it when you can honestly say it's not important and will distract you from being your best.   I believe there are two common risks when learning to manage time. The first risk is avoiding important activities that are just plain "not fun". Sales calls might fall in this category as well as fixing the leaky sink or confronting a poor performer at work. Weigh the time spent today addressing these activities compared to allowing them to fester. Will you cause them to become urgent crises tomorrow by avoiding them today?   The second risk you probably face is getting involved in fun and/or good activities. These activities are best characterized as ones that are not ultimately essential to achieving your goals. The following list of activities might be included in this category: reading trade periodicals, serving on a community board, or participating on the club's social committee. Ask yourself, will serving on the social committee prevent me from being my best for those pursuits that need my focus?   Time management is not doing more things in less time. It is doing more important things in the time that we have. You determine what is important. It's your time and it's your life.

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Business Consulting

Jim Schartz

2003-08-01 13:57:00

: What can a consultant do for my business?  Why would I

Jim Schartz Question: What can a consultant do for my business?  Why would I need one?  Can't I do it myself? 

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Business Consulting

Greg Ast

2003-08-01 11:28:00

: My brother and I started our business 10 years ago. It has turned into a large, substantial business.  During those first 10 years, we hired our spouses and some of our children to work in the business. None of them are getting a free ride. We hold them to the same standards as our other employees.  Nevertheless, as our children get older, we are coming to the realization that we are a family-owned business and the dynamics are different than in other businesses.  We haven't had any major family problems but we realize they could arise. Are there any suggestions or best practices for family-owned businesses that we could follow?  

ANSWER: As you are finding out, there are different dynamics in family-owned businesses.  To keep your family business system healthy, we recommend using the following Best Practices and Strategies as a checklist:     Develop a shared vision for your company.  By doing this you will understand the overall desires of your family members and whether everyone is on the same page and has the same goals for the future of the business.  Remember, the owners' vision will dictate business decisions made in the future.      Conduct family meetings.  Regular family meetings provide an opportunity to share information (business and personal), have fun, and discuss individual and family dreams, aspirations, issues and challenges.  Recently, we facilitated a family meeting when an adult sibling told his family he would like to join the business.  His siblings were shocked by the announcement, thinking he had no desire to work in the business.  As discussions progressed, it came to light he felt a strong sense of stewardship to the business and looked forward to working with his family members.  Without these meetings the brother would not have been able to express his desires.      Establish a Board of Directors or Advisory Board.  It can be a valuable tool for you and your company's future. The Board looks strategically at the future of the company, rather than the day-to-day operations.  Owners are usually amazed at the new perspective a board brings to the business. Board members can also be great mentors for future family leaders.     Define and manage both the leadership and ownership succession process.  Succession is not a one-time event. Rather, it is a continuous process that takes place in the organization. Time and time again, we have seen families scrambling to replace a leader due to an unexpected event or, worse yet, deal with the lack of a clear estate plan.  This creates instability throughout the organization and can put the company as a whole at risk. Succession plans should be developed for ownership and leadership of the organization to enable a smooth, planned transition. Engage in Strategic Thinking and Planning to ensure a thriving future.  It is critical that not only family owners' plan and think of the future, but also involve non-family managers in the process. Strategic Thinking & Planning helps organizations create pictures of what the business is today and what it wants to become in the future.   We have a great example of a family-owned business that reformulated their vision and strategy and became one of the premier boat manufacturers in their industry. This family emphasizes the value of a shared vision and the Strategic Thinking and Planning process.  For a copy of the newsletter that describes this company, please contact us.       Capture family business history and values.  For many family-owned businesses this is a wonderful learning experience - finding out how the business was started and the values the business was built around. It is both a tribute to the work of the preceding generations and a guide for future decisions.  Recording the history of the company is also a great way to communicate family values to future generations.  This might be a great project to work on during family meetings.  Participate in effective communication.  Communication is important at all levels of your family business: the family system, the ownership system and the business system.  It is sometimes difficult to talk to family members about contentious issues that arise in the family business. We often recommend families work on their communication skills together. In many of our workshops we teach families in business how to communicate effectively without blaming or pointing fingers. There are techniques to help manage the difficult topics.   I hope this list of Best Practices has been helpful to you and your family business. If you were to take only one piece of information from this list, I hope it would be to communicate, communicate, communicate!

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Business Consulting

Greg Ast

2003-07-01 16:09:00

: I've been asked to serve on the advisory board for a local company. I'm interested in the position, but I want to know what I'm getting into here. Is there anything I should know about the purpose and structure of an advisory board versus a legal board of directors? 

ANSWER: Let's begin with the similarities. First of all, we believe an advisory board can be a valuable resource to any company. The goals of an advisory board have some commonalities to a legal board of directors. Both boards exist to:  Provide input and feedback that will help ensure the survival and growth of the company,   Independently assess the company's strategic plan,  Promote constructive questioning and open dialogue about the company and the challenges it is facing, and   Provide individual expertise and coaching to assist senior management.   As for the differences, the biggest is that a legal board is elected by the owners and has a legal (fiduciary) responsibility to the owners. Because of this legal responsibility, we encourage anyone considering a legal board of director position to consult an attorney. They will help you understand more about the requirements and risks to being on a legal board of directors.   The advisory board, on the other hand, is selected at the discretion of the CEO and/or owners and is purely advisory. Its effectiveness is directly correlated to how seriously the owners and the CEO consider the input of board members. We have a client, a company president, who takes the advice of his advisory board as if they were a legal board. He values their input and knows they truly represent the long-term interests of the family shareholders.    I would suggest that the most important aspect you consider is whether the board role you are being asked to fill is one of serious intent. Sometimes, we find owners form advisory boards to fulfill ego needs, a reluctant request of minority shareholders, or for purely social reasons. Usually, these boards prove to be less effective to the company.  It would be of value to ask if the advisory board will eventually convert to a legal board. Usually, companies that eventually commit to legal outside boards are serious about effective governance.    If the owner's goal of forming an advisory board is to truly assist the company's leadership in achieving future success, I would recommend you seriously consider the position. You, and the owner, will both benefit.

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Business Consulting

Stephanie Tooke

2003-07-01 10:56:00

: Why does it seem that employees are no longer loyal to their companies anymore?  

ANSWER: One of the reasons that it appears that employees no longer show allegiance to their employers and companies is that the basic employment contract has changed dramatically  over the past 10-15 years. Until the early 1990's, new workers followed the example of their parents. That model was one where they graduated college and went to work for a company with a good reputation and benefits. They might change to another company or possibly two while they are trying to find their niche but once they discovered a company that they liked and that liked them, they usually stayed there until they retired. That model resulted in employees who were loyal to their company and in turn the employers were loyal to their long standing employees.    The current reality is much different. In recent years people have begun to jump from job to job to find what works best for them, what has the best pay, what has the best benefits, etc. In addition, companies have gone through so many cycles of layoffs that no one feels their job is truly safe anymore particularly in some of the more beleaguered industries such as aerospace. These changes in the job and economic climates have resulted in companies having a lessened sense of loyalty to their employees and vice-versa.    That being said, there are some concrete things that you as an employer can do to help retain good loyal employees. If companies expect loyalty from their employees then they must show some to their employees so they don't want to leave at the next best opportunity.   Start by implementing a rewards and recognition system that rewards employees in ways that are important and unique to each individual.    Insist that your employees take the time to create a good work/life balance and make it a priority. Be clear that while you expect them to work hard, you also expect them to spend time on things outside of the workplace. Show by your own example that things outside the cubicle walls are also important and valued. Show your support when important things happen in your employees lives such as a child's graduation or wedding.   Encourage involvement with family, friends and in community activities. Have your employees take on a civic improvement project as a group and reward and recognize them for their success. Encourage them to draw their families into the activity.   Have frequent picnics and other outside activities. These can be as simple as a group covered dish event where everyone brings their favorite dish for all to sample. Invite a guest speaker in to talk about topics of importance to the employees. Many speakers are willing to come to speak for little or no cost to you.   If your employees begin to feel like a close knit team that really believes you have their best interests at heart, they are much more likely to stay with you rather that climbing the fence to find greener pastures.

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Business Consulting

Stephanie Tooke

2003-05-01 11:00:00

:  I am 64 years old.  I grew up in my father's business.  One of the things he prided himself in was keeping commitments he made to others, regardless of the size of the commitment.  Today it seems as very few business people and employees do what they say they will do, when they say they will do it.  To me, this seems to be one of the greatest assets a business can have.  Am I wrong?  What has led people to be this way?  What can be done to instill a greater respect for commitments?

ANSWER:  You are absolutely correct. Honoring commitments in your business and  personal life can mean the difference between success and failure. Many years ago, in the days before written contracts, your word was your bond. Honoring your commitments was a reflection on the family honor. In bygone days when there were a lot fewer people, in towns all across America, people knew who you were and who your parents were. Therefore, how you honored your commitments reflected on your entire family. In today's faster paced society with larger and more transient populations, you often do not know the person with whom you are doing business. This has led to a more impersonal approach in business that allows people to not feel bad when they don't keep their promises since they really don't know the person they are dealing with anyway.     In business, if you honor your commitments you will build a clientele of loyal customers who trust you and that trust is a big component of successful business. People really do prefer to do business with someone they have come to know and trust and honoring your commitments to your customers is a very important way to build your clientele.     I think that the way we learn to honor our commitments goes back to the example we set for our children in our homes. We should not only teach them, but show by example, that your word is the most important thing you can give someone. Children see daily examples of people who get rich quick by cheating others. On the news every day they see stories of executives making hundred of millions of dollars and yet not honoring their commitments to their own employees. They need to see their parents operate in the business world using ethical values and operating to a high ethical standard. This way they learn by example. We need to set the model for our children so they will grow up to know that honoring your commitments is important.      We also need to make our employees accountable when they promise something to a customer. Accountability here is the key. If you say you will do something, make sure that you can deliver. If a problem comes up, keep the customer in the loop and do everything you can to keep the promise, whatever that takes. Most customers understand that sometimes unforeseen circumstances can happen. But if they are kept up to speed and feel that you are really putting in that extra effort to honor your commitment they will work with you and still come back to you for future business.

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Business Consulting

Stephanie Tooke

2003-02-01 14:16:00

:  I am a small business owner. We do off-site shipping, receiving, storage and delivery for larger companies in the area. I have 9 employees. We have frequent meetings because the companies we serve make lots of changes. We cover each of these changes verbally in our meetings and then post them in a 'blue book' we use for operations, yet we are always having mistakes for the first couple of weeks with any change. Invariably the reason... someone didn't listen to the changes in the meeting. Short of firing... then recruiting... then hiring... then re-training... do you have a suggestion?

ANSWER:  The type of business you are in can be very hectic. As a result of the high level of activity it can be challenging for workers to remember changes talked about in meetings even when they do write things down. I would recommend you do several things to improve the situation.First your employees need to know where in the process the mistakes are occurring. Keep a record of the errors and if possible do a simple Pareto chart of the types of errors you are seeing. Make sure the analysis has no names attached to it so that your employees do not feel that you are trying to assign blame. In other words, focus on the problem, not the person. This quick analysis will clearly show which of the process steps are resulting in the most errors. If you focus your improvements on the top 3 problem areas as shown in your analysis, you will be able to have the biggest impact in the shortest time.At those areas where there are problems, post any changes at the work stations where the work is actually performed. For example, when there are changes in packing requirements, post each customer's packing requirements directly above the work station. This way the packer can see the up-to-date requirements instead of having to consult the ‘blue book’. While keeping a record of the changes required in the ‘blue book’ is a good practice, if those changes are not directly in front of the person doing the work it can lead to errors no matter how hard the workers try to remember. It also has another benefit. If a person is out sick and someone else has to fill in, the work requirements are right in front of them. It is important to make sure these work instructions are updated regularly each time there is a change.Additionally you might want to consider assigning each of your employees the responsibility for a certain group of customers. That employee can be responsible to be the "expert" on that group of companies and their requirements. They would be responsible for knowing all the ins and outs of those customers. In this way you can instill a sense of ownership in your employees. You might even want to consider involving that employee in interactions with the customer. This approach can empower your people and can go a long way towards eliminating process errors. As you proceed with your improvements, don't forget to monitor how successful you are in reducing your error rate. As you reduce the errors, make sure you show your employees how this change is impacting them (improved customer relations, less process time, less labor to rework errors). Reward your employees for their success as the error rates decline. This will help motivate them to continue on the process improvement path.

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Business Consulting

Greg Ast

2002-11-01 14:20:00

QUESTION:  I am a non-family manager working for a family-owned business and I need some advice.  We have not been doing too well for the last several months.  I'm pretty sure this business is going to fail unless the family begins taking advice from outside the family circle.  While they are all great people, I just don't feel the second generation owners have their fingers on the pulse of what's going on.  Do I wait for the inevitable, butt-in and take my chances on getting fired, or just jump ship?

ANSWER:  Unfortunately you are in a difficult position, but one that is not uncommon.  Statistics indicate that only 33% of companies will successfully transition each generation.  Lack of planning and poor successor leadership are two of the reasons a transition fails.  Therefore, I believe that to do nothing is not a good option.  Although anyone would understand why you might leave the company in this situation, I strongly encourage you to take a proactive stance and pursue one of several options:  confront the owner(s) with your evaluation of the situation; approach the board or other company advisors with your concerns and suggestions; or, recommend hiring a family business consultant.  Let's look at these options in more depth.Confront the owner/leader with a well-thought out presentation identifying your concerns and possible solutions.  This option assumes you have a strong enough relationship with the owners and/or family business leader to gain an audience and his/her attention.  As you present your ideas, I recommend you be candid and specific.  When you identify possible solutions, I encourage you to find a way for all family members to "win" - especially if you suggest they are not capable to lead.  This approach works best when owners or leaders are already concerned about their situation, but not sure how to respond or are afraid of conflict.  By identifying specific steps to take, and the expected measurable outcomes, you can hopefully convince them to take action.  As an example, you might recommend the hiring of a non-family chief operating officer (COO) to successfully execute the right changes.If you are not able to influence the owners, then request a meeting with the company's key advisors or board members and tell them of your concerns and recommendations.  Like the first option, this will require you to build a convincing argument for why change must occur for the business to succeed.  Most importantly, you are expecting that your knowledge and insight can be complemented with the advisors' objectivity and privileged confidant position.  Although you may risk being perceived as "working behind the scenes," it could be all the information they need to confront a situation they have already become concerned with.Finally, suggest the owners/leaders retain an experienced family business consultant.  Family business consultants typically work with family owners and leaders to identify critical issues that must be addressed in order to successfully continue a family business.  The consultants will review the overall financial and operational status of the company, interview key managers (family and non-family - probably including you), and provide objectivity in helping owners/leaders make difficult decisions or changes.  A good firm will be candid and direct with the owners regarding their recommendations and convey the necessary sense of urgency for dealing with issues.  They are also experienced in handling the difficult family dynamics that can be present.There's an old adage that says, "Shirt sleeves to shirt sleeves in three generations."  This notes the sad reality that many family businesses are unable to establish strong management teams and structures to ensure a business succeeds to future generations.   And although you would not be the first non-family manager to flee a sinking family business ship, you could very well become the agent of change that's needed in a dire situation.  You are in a unique position to see the situation from several angles, and I encourage you to act.  Remember that there are professionals that understand the dynamics of the family business and are trained to assist.  If you need additional information on available resources, don't hesitate to give me a call.

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Business Consulting

Greg Ast

2002-09-01 10:07:00

QUESTION:  For years, our family business has rescued my older brother and given him a job.  Lately, with the downturn in the economy, there is a great deal of tension in the office concerning his ability to function on the job.  I'm concerned we'll lose some key employees over this issue.  Do you have any ideas?

ANSWER:  I'll bet you wish you could wave a magic wand and find the right answer for both your brother and the business. The good news is - you are not alone.  Many family businesses find themselves in a struggle like yours - family first or business first? Historically, we've found that you do not have to pit one against the other to resolve your dilemma. Ask and resolve the following two key questions and you will probably find an answer that will satisfy both your brother and the business.  Question:  Is your brother in the right role?  Answer:  Sometimes a family member evolves into a job that does not fit their interests and talents.  This person "puts in their time"  - with a mediocre performance the end result. Career assessments and coaching often help family members find more meaningful roles in a different position within the company.  Sometimes, a family member decides their true desire is a career outside of the family business.  In these instances, the family (and the business) can often encourage the transition to a more fulfilling job.  Question: In either case, the second question to pose is to ask how the family goes about expressing their concerns with a family member and finding an answer that meets both family and business needs.Answer:  The process to unlocking these answers has two key considerations.  First, establish a means of communication that allows all individuals a healthy discussion on the issues.  Second, keep at the communication process until the issues have been resolved and decisions have been made.  Often, families in business develop certain patterns of communication that neither allow for open dialogue for all parties or the communication process is stopped at the first sign of "trouble" and people don't go through the difficult, but critical, discomfort of dealing with hard issues.  I would suggest you even consider using a facilitator or "communications expert" that is familiar with family business dynamics.Unfortunately, there are those instances where family members are truly disruptive and even detrimental to the business interests.  In these cases, it's critical that the family recognize when the business is at risk because of a family member's behavior and deal with it directly, yet compassionately.  This may mean telling a family member that they need to seek employment elsewhere.  Or it may mean that the family provides resources to help an individual deal with issues hindering their performance in all areas of life (i.e. addiction treatment, marriage counseling, etc.).   Remember, it is critical to make sure your business remains healthy, even if it means an uncomfortable discussion with your family members. Your company is too important for you to ignore the obvious. The risk of not confronting negative behaviors that put your business in jeopardy is too great! We only have to look at the family that owned Adelphia to see the darkest side of family businesses. In that case, the poor behavior of family members has helped lead the company to bankruptcy.

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Business Consulting

Jim Schartz

2002-09-01 09:27:00

:  Some months back I read an article in your paper about a lady whose parents were in an assisted living facility and were getting ‘eaten up’ on prescription costs.  Could you please reprint that article for me?

Jim Schartz Question:  Some months back I read an article in your paper about a lady whose parents were in an assisted living facility and were getting ‘eaten up’ on prescription costs.  Could you please reprint that article for me?Answer:  Yes we can.Question:  While reading your newspaper, I thought I would ask you a question, because I don't know where else to find the answer.  I have recently (within the last month) moved my parents into an assisted living facility.  The cost is out-of-sight.  Anyway, my question is, if my parents make just a little over the medicaid level, but do have medicare and a supplemental insurance plan, where do I go, or write to find out who I should contact about getting prescriptions at a VERY reduced cost. The pills must be bubble-packed and very few pharmacies will do this without an extra fee.  My question is who provides a $0 cost or minimal cost for prescriptions.  They have no Rx's from Pfizer, so that's not an option.  If you have any questions or answers, please advise.   Answer:  Your folks' situation is like many throughout the country.  Unfortunately there is not a program where one can get free prescriptions.  Even the Medicare Supplements that are available that will pay for prescriptions after a deductible and then only up to a limit based upon participation by the insured are probably not only cost prohibitive in your folks' case, but they would not qualify for these because they already need a lot of prescriptions.  It's kind of like borrowing money.  The only time you can borrow it with ease is when you don't need it.  The only time you can qualify for Medicare Supplement plans H, I and J (which pay for some of the cost of prescriptions) is when you aren't taking any now. There is however another avenue that can significantly reduce the cost of prescriptions.  It would be to join what is called a group association.  There are a handful of these associations throughout the country.  Some are marginally beneficial and some are most beneficial.  One in particular is where you pay a one-time fee to join and then a very modest monthly fee.  As a member, you are entitled to a host of significant discounts on a wide range of goods and services, including prescriptions where one can receive as much as a 25% (or more) discount off wholesale prices, which can end up being a significant reduction in price... depending upon the prescriptions.  Other services include appreciable discounts on eye wear, travel, dental, legal, and discounts off services from your doctor.   While this plan is available on a direct basis to everyone, it is also achieving rapid growth throughout the corporate culture as a very exciting, low cost, employee benefit.  Perhaps one of the best parts is that there is no underwriting.  Regardless of your health you can apply and be accepted.

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Business Consulting

Jim Schartz

2002-08-01 12:08:00

:  What is a Premium Conversion plan?

Jim Schartz Question:  What is a Premium Conversion plan?Answer:  Also known as a Premium Only plan, or a POP, a premium conversion plan is a type of Section 125 plan where the only benefits accorded the pre-tax treatment are the employees contributions toward health life, dental, vision care, prescription drugs and disability, although the wisdom of including this last type is debatable. A Premium Only Plan (POP) is one of the easiest cost savings measures to implement. The employees do not pay federal income tax or FICA taxes on their contributory share of the premiums, and some states also exempt the contributions from state income tax. The employer gains increased employee awareness and appreciation of the benefits portion of their compensation package, is excused from matching FICA taxes and state and federal unemployment taxes, and is not required to take on significant additional costs or burdensome procedures.

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Business Consulting

Greg Ast

2002-08-01 10:47:00

QUESTION:  Five years ago, I became the third generation owner of our well-established family business.  This last year has just been horrendous.  Our business has been off 50%, the bank is getting anxious and I'm not sure what to think.  Please suggest where and how to start?  Our company has never faced a situation like this.

ANSWER:  First of all, assume that the next twelve months WILL be the SAME as today.  Take note:  managing in tough times is much different from good times.  Be prepared to stretch your thinking and be challenged in many ways. DON'T expect sales to increase and wipe away your challenges.  Your challenge as a small company will be to survive the downturn while still making money.Start by getting a handle on your short-term future by utilizing these steps:1. Develop an eight-week cash flow projection that identifies your expected cash revenues (NOTE: actual revenues, NOT sales) and your necessary cash expenditures.  Divide the cash expenditures into three categories:  "A" items that must be paid to keep the doors open (rent, utilities, critical vendors, etc.); "B" items necessary to serve most customers but could be delayed; and "C" items which are those expenses that could be cut if necessary.  Review and update your cash flow projections on a weekly basis (keeping them eight weeks out).  Managing your cash flow is obviously critical.  These projections will be very helpful for timing difficult expense cuts. 2. Review your most recent monthly financial statements. (IT'S CRITICAL THAT YOU RECEIVE CURRENT STATEMENTS!).  Identify what we call  fundamental performance indicators (i.e. gross margin, inventory turns, profitability).  Determine the trends or "red flags" of these indicators (i.e. Are margins declining? Are accounts receivables growing?).  Determine your "break-even" if sales continue at current levels, increase 5% or decrease 5%.3. Identify the costs that must be cut.   Probably, you cannot make significant cuts without eliminating  positions.  a. Let key employees know that they are staying and that you need their help.  b. Lay out a plan and work it diligently.  c. Categorize your cuts:  First cut those items that won't significantly affect customer service or employee morale.  If forced to, then make cuts that will not affect your ability to serve key customers, but will likely affects employee morale and increases the demands on key personnel.  If these cuts still don't get things turned around, then consider what we call survival mode cuts.  4. Meet weekly with your key managers and review:· Sales activities· Cash flow projections· Expenses, inventory levels, and accounts receivables· Critical issues and progress on action plans to address them (i.e. expense reductions, new customer contacts, etc.)· Activities and expected results for the next weekMake sure you involve or update other owners, your key managers, and your banker.  We recommend you develop a well thought out and realistic financial plan that you can present to your banker.  Keep him or her aware of the actions you are taking to restore profitability.  After addressing the painful but critical issues to restore a profitable business, we suggest you engage in a business planning effort with your management team.  Tough times should challenge your managers to identify new markets, products, or other opportunities to get your business back on a growth track.  We predict your business will not "go back to what it used to be."  Rather, your future success will depend on these three things:  1. a prompt response to the current business climate2. making clear headed, difficult decisions to position you for survival and3. the involvement of your managers in a team-planning process to take advantage of the market changes.  Although managing through this difficult period will be perhaps one of the greatest challenges in your business career, history tells us that good leaders will seize the day and be back on top when the business cycle turns up.

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Business Consulting

Greg Ast

2002-07-01 10:41:00

Question: My wife and I have a construction business. We have done pretty well. We are in our early 70's. While we would like to keep it in the family, we don't feel our children would be as committed to the business as we have been. We feel we would realize more, as would they, from us selling the business.  Then, they would all get their share from the estate. We feel if we don't do it this way, without their focus, there may be nothing for anyone. Is this good thinking? How do we best determine the value of our business?

Answer:  Your situation and thought process is increasingly common in today's world.  There are several issues and possibilities in the situation that you have just described.  Let me try to explore several of those possibilities.  First, plan a family meeting. Begin the meeting by asking family members what they would like to see happen for themselves, the family, and the business.  It may be that your children are not truly interested in running the business in the future, and the best option is to pursue a sale.  On the other hand, there may be one or two of your children that would like to participate in the business, while the rest would like to pursue other interests.  A family meeting to identify individual desires and issues to address can help guide you in your decisions.Next, make sure you and your wife are financially secure for the remainder of your lives. If you are not yet financially independent from the business, your best option may be to "sell" the business to your children.  The perspective of having to buy out Mom and Dad can easily determine a next generation member's commitment to the business.  Even if you are financially secure, asking your children to discuss a buyout can identify real issues, concerns, and interest levels.  I often challenge parents and children to look at an ownership transition as if they were making an arms-length, non-family transaction.  What do the current owners want to achieve from a sale?  Would they sell to anyone, or do they want assurances regarding the future of the company, employees, commitment to the community, etc.  Would the children invest in this business if it were not in the family?  Would they choose to be in partnership with their siblings?  Do they want to be equal partners, or allow one to have a majority? Get answers to two tough questions: First, are the children committed to the business? Second, are they willing to make the effort to define guidelines for working with their siblings? Often, family members indicate they want to continue the business, but they have not defined the rules for how they'll work and be co-owners with their brothers and/or sisters.  Siblings need to define policies on compensation, perks, defining roles, admitting family members as employees (spouses or their own children), dividends, conflict management, etc.Your concern about your children's commitment to the business is a very real issue to explore with them.  Successful sibling partnerships require more than a commitment to the business. They require a commitment to a partnership!  One alternative is that your children own the business, but have non-family members that lead and manage the company.  Regardless, both issues must still be discussed.If, after all these steps are completed and 1) your children still have a desire to take over the business and 2) you are financially independent from it - I would encourage you to allow them the opportunity. Successfully running a business is never easy. But as you well know, it can be a very rewarding experience, probably more so than selling out. Get them started with your best wishes and your blessing!However, if all family members have agreed that selling to an outside party is the best alternative, I encourage you to seek assistance from expert advisors.  Valuing and selling a business requires unique skills and activities that must not distract you from maintaining a healthy business.  Contact your attorney or accountant regarding experts that can value the business and assist you in seeking a buyer and negotiating the deal.  Alternatively, contact us and we will refer you to the appropriate professionals. Do remember there are several viable solutions for your situation.  

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Business Consulting

Greg Ast

2002-06-01 17:41:00

Question:  We are a local Sedgwick county machine shop doing approximately $5 million in annual sales.  We are about to purchase another machine shop specializing in other types of work doing approximately $4 million in sales.  All in all we should have around 60 employees when the purchase is complete.  We want to be sure we handle things in a seamless fashion, but we do not want to miss anything.  Is there any type of checklist we need to be aware of from an administrative perspective?

Answer:  Studies indicate that most mergers/acquisitions fail for two reasons: culture and "people issues."  Managing change well during the acquisition process is critical to the success of your merger. Your desire to anticipate these potential problems is important as you "close the deal."  I would recommend that you immediately create an integration team responsible for focusing on two important areas of the acquisition process.  The team would create and administer two plans: a change management plan and a communications plan. CHANGE MANAGEMENT PLANA simple change management plan would have six columns: (1) department functions/processes; (2) current way of doing business for your company; (3) current way of doing business for the acquired company; (4) variance in processes, people or policies; (5) desired new way of doing business; and (6) action steps to move from the current way of doing business to the new plan.  Levels of change will vary greatly. Combining operations creates a greater need for assimilation of people, processes and policies.  If the acquired business is remaining separate, your focus may be more on purchasing, accounting, or other administrative areas.  However, I still encourage you to do this exercise across the entire company.For example, ask your controller to describe the current payroll processes for both companies  (columns 2 and 3), the differences between the two (column 4), and the expectation for the new way of doing business (column 5).  This allows you to identify potential changes to timecards, payroll periods, etc. and policy issues such as benefits, vacation pay, etc. Remember, the goal of a change management plan is to allow for employee input and employee understanding of "where we want to be" when the combined company is successfully operating.  When difficult decisions arise regarding overlapping roles and the elimination of positions, make sure these decisions are handled in a well-thought out manner. COMMUNICATION PLANUse a communication plan to help you anticipate communications requirements. I would suggest the following five columns: (1) message; (2) audience; (3) medium; (4) sender and (5) follow-up or frequency. Have two goals: the identification of changes and the messages that need to be communicated. Relating to the example above, you might create a plan for communicating payroll processing changes (column 1) to supervisors, employees, banks or payroll processing companies (column 2) through face-to-face meetings, memos, paycheck inserts, letters, or phone calls (column 3), handled by the controller (column 4) and probably a combination of the above for supervisors and employees (column 5). Make sure the CEO/president is supportive of both plans and that these plans are in place before the deal closes.  Ideally, your team will include people from both companies and will be held accountable to the board of directors.  Do remember that a good integration process takes time - at least a year.

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Business Consulting

Jim Schartz

2002-06-01 14:59:00

Question:  What is a section 125 plan?

Answer:  A Section 125 plan, also legally known as a "cafeteria plan", allows health contributions and deposits to flexible spending accounts to be made with pre-tax dollars, within guidelines established for such plans in Internal Revenue Code Section 125.7.  Question:  What are the requirements for Section 125 plans? Answer:  The principal requirements to qualify under Section 125 are to adopt a written plan document, all participants must be employees, contributions must be made through salary reduction agreement, and the plan must meet the nondiscrimination, election and enrollment requirements specified under the Code. In addition, an annual IRS Form 5500 must be filed for the plan.Question:  What are the nondiscrimination requirements under Section 125?Answer:  A cafeteria plan must pass three types of discrimination tests: eligibility, benefits and concentration.-  Eligibility test: Plan will be considered nondiscriminatory if 1) the plan uniformly benefits all employees in the classes designated as eligible to participate, and is not found to discriminate in favor of highly compensated employees; 2) the "waiting period" for eligibility cannot be longer than 3 years and the waiting period is the same for each employee; 3) the effective date for coverage is no later than the first day of the plan year beginning after the satisfaction of the eligibility waiting period.-  Benefits test: Under the safe harbor rule for cafeteria plans covering health benefits, a plan is not discriminatory if the employer contributions, including salary reductions, on behalf of each employee equals 100% of the health benefit cost for the majority of highly compensated participants; or 75% of the cost of the most expensive health benefit coverage elected by any similarly situated participants.-  Concentration test: A cafeteria plan is nondiscriminatory if the nontaxable qualified benefits provided to all employees under the plan is at least 75% of that provided to key employees. This calculation can be based on the premium value of the coverage provided, rather than on actual benefits or reimbursements received.Question:  What are the election requirements under Section 125?Answer:  Benefit elections must be irrevocable for the duration of the plan year, with an exception made for specific changes in family status. The qualifying changes in status are: Marriage; Divorce; Death of a spouse or a child; Birth or adoption of a child by the employee; Termination of a spouse’s employment; Commencement of a spouse’s employment; Change from part-time or full-time employment, or vice versa, by either the employee or the employee’s spouse; The taking of an unpaid leave of absence by either the employee or the employee’s spouse; A significant change in the employee’s or the spouse’s health coverage that is attributable to the spouse’s employment. Question:  What are the enrollment requirements under Section 125?Answer:  Participant elections (enrollment in the benefits of their choice) must be made prior to any taxable benefits under the plan becoming currently available. This usually means before the beginning of each plan year.

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Business Consulting

Greg Ast

2002-05-01 15:03:00

:  I am 72. I need to be doing something about planning for my business to go on, but I am having a problem figuring out how to take care of all of the kids…those who want to be involved and those who don't. My son is active in the business but my two daughters are not. How do I take care of all of them… fairly… in my planning?

Greg Ast Question:  I am 72. I need to be doing something about planning for my business to go on, but I am having a problem figuring out how to take care of all of the kids…those who want to be involved and those who don't. My son is active in the business but my two daughters are not. How do I take care of all of them… fairly… in my planning?Answer:  Without knowing other details of your situation, I'll make a few assumptions when offering recommendations.      The first (and most important step) will be to ensure your own financial security. I'll assume you have a plan in place that provides sufficient funds to address your needs over the remainder of your lifetime. Until you have been taken care of, it will be difficult to hand over business authority or to transition ownership of assets.      Second, you will need to understand your children's desires and needs. Do they want the business to continue in the family? Do your daughters have children that may be interested? Do your daughters want ownership in the business? I would strongly encourage you to communicate with your children regarding their interests, needs and concerns. Through constructive dialogue, several options may emerge that meet most needs.      Finally, it's important to recognize that the health of the business is likely to ensure future opportunities for all family members. Any plan will need to protect the viability of the business. If you were to pass on equal ownership to all three, would your son be able to effectively lead (assuming he's the leader)? Do you have a board of directors - preferably with some outside, non-family directors - to protect the interests of all owners?     Also remember, "fair and equal" are not the same. If your two daughters have no interest in business ownership, what other assets might be considered in your planning? Treating your three children fairly may mean your son receives majority business ownership and your daughters receive other assets. Of course, there are often grandchildren to consider, as well as your personal philosophies regarding gifting, trusts, use of funds, etc. If you are like many business owners, most of your wealth is tied to the business. In that case, there may be a way for those interested in the business to eventually purchase your interest or those of other family members.Your desire to begin planning is to be commended. I encourage you to build on this first step by communicating with your children, as well as utilizing professional advisors that can help identify the many estate and business planning options that exist.

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Business Consulting

Jim Schartz

2002-05-01 15:03:00

:  While reading your newspaper, I thought I would ask you a question, because I don't know where else to find the answer.  I have recently (within the last month) moved my parents into an assisted living facility.  The cost is out-of-sight.  Anyway, my question is, if my parents make just a little over the medicaid level, but do have medicare and a supplemental insurance plan, where do I go, or write to find out who I should contact about getting prescriptions at a VERY reduced cost. The pills must be bubble-packed and very few pharmacies will do this without an extra fee.  My question is who provides a $0 cost or minimal cost for prescriptions.  They have no Rx's from Pfizer, so that's not an option.  If you have any questions or answers, please advise.  

Jim Schartz Question:  While reading your newspaper, I thought I would ask you a question, because I don't know where else to find the answer.  I have recently (within the last month) moved my parents into an assisted living facility.  The cost is out-of-sight.  Anyway, my question is, if my parents make just a little over the medicaid level, but do have medicare and a supplemental insurance plan, where do I go, or write to find out who I should contact about getting prescriptions at a VERY reduced cost. The pills must be bubble-packed and very few pharmacies will do this without an extra fee.  My question is who provides a $0 cost or minimal cost for prescriptions.  They have no Rx's from Pfizer, so that's not an option.  If you have any questions or answers, please advise.   Answer:  Your folks' situation is like many throughout the country.  Unfortunately there is not a program where one can get free prescriptions.  Even the Medicare Supplements that are available that will pay for prescriptions after a deductible and then only up to a limit based upon participation by the insured are probably not only cost prohibitive in your folks' case, but they would not qualify for these because they already need a lot of prescriptions.  It's kind of like borrowing money.  The only time you can borrow it with ease is when you don't need it.  The only time you can qualify for Medicare Supplement plans H, I and J (which pay for some of the cost of prescriptions) is when you aren't taking any now.     There is however another avenue that can significantly reduce the cost of prescriptions.  It would be to join what is called a group association.  There are a handful of these associations throughout the country.  Some are marginally beneficial and some are most beneficial.  One in particular is where you pay a one-time fee to join and then a very modest monthly fee.  Then, as a member, are entitled to a host of significant discounts on a wide range of goods and services, including prescriptions where one can receive as much as a 25% discount off wholesale prices, which can end up being a significant reduction in price... depending upon the prescriptions.  Other services include appreciable discounts on eye wear, travel, dental, legal, and discounts off services from your doctor.       While this plan is available on a direct basis to everyone, it is also achieving rapid growth throughout the corporate culture as a very exciting, low cost, employee benefit.  Perhaps one of the best parts is that there is no underwriting.  Regardless of your health you can apply and be accepted.

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Business Consulting

Greg Ast

2002-04-01 16:17:00

Question:  What are the most important issues to consider in managing succession for a family business?

Answer:  This is a critical question for family businesses to address.  The answer depends, of course, on the situation.  For example, the easiest transition is usually from one 100% owner to another 100% owner (i.e. daughter or son).  This type of transition has the easier financial, legal, and even emotional aspects to it.  But today, most family businesses are transitioning to multiple siblings or family branches.  The more important issues to consider in all transitions (even for privately held companies) would be as follows:Financial Security - Are the retiring owners financially independent, or will they become financially secure in the process of transition?  It is very difficult, if not impossible, for an owner to pass the leadership baton (in other words, power and control) if he or she still relies on the business for significant financial returns or income.  Just wait until tough times to see who takes control!"What's Next" Planning - The other question for the retiring generation to answer is "What do I do next?"  Playing golf and travelling is not the usual answer to this question.  It rather involves better defining the role of Chairman, the community contributions they can make, or even the company contributions they can make, within defined parameters (i.e. key customer contact, R&D, etc.).Leadership Development and/or Selection - At least two years before transition, a process should be put into place to select and develop the future leadership of the business.  This includes not just the president, but also senior managers that will need to be developed.  Many family businesses are now considering a non-family leader as the interim or permanent president of the company.Partnership Guidelines - If multiple siblings or family members will be owners, they need to reach agreement on critical ownership issues.  The earlier these issues are discussed and guidelines established, the more likely it is they'll avoid problems.  Issues might include:  commitment to future ownership, shared business vision, exit or liquidity strategies, requirements for entry into the business, employment prerequisites, rights and responsibilities as owners, perks, etc.Ownership Planning - The actual ownership transition needs to be carefully planned and executed.   Owners should think through issues such as the following:  (1) Will stock be sold or gifted? (2) Will family members own stock equally? (3) Will there be different classes of stock? (4) Can spouses own stock? (5) What happens to stock if owners die or get divorced? (6) Is there a buy/sell in place? (7) Are there funding mechanisms in place?Communication - Families in business face many challenges and the strength of their communication is critical.  There will be differences and disagreements.  The key is to establish appropriate forums for communication and continued development of communication skills.  Family members should conduct family meetings to discuss individual desires and interests and address family conflicts.  These discussions should not take place in the management meeting, or the middle of the manufacturing floor.  Business issues should be the focus of regular management meetings.  A good board of directors or advisory board can also be an invaluable structure for facilitating dialogue on key ownership and business issues.The important thing for all families in business is to take a holistic approach to the issues and requirements of a successful transition process.  Just completing estate-planning documents does not address all the issues for stewardship of the business assets to the next generation.  Of course, even the best intentions will also be fruitless if the legal and financial planning is not executed as agreed.  Many owners in their 80's are still waiting for some point in the future to address these issues.  As in many endeavors, the earlier you start planning, the greater your odds of success.  Good Luck!