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Your retirement and your stakeholders

by Rick Baker
On May 1, 2012

According to a recent poll1 of small-business owners, 24% have a succession plan for their retirement.

When asked about how the business would be handled at the time of retirement:

·         23% of the owners said they would simply close the business

·         20% of the owners said they would sell the business to a 3rd party

·         18% expected to transfer the business to a member of the family

·         12% said the business would be sold to a partner or employee

·         27% were not sure what would happen to the business 

It seems that 3-out-of-4 owners of small businesses either (1) see no need to set a succession plan or (2) see a need for a succession plan but don’t get around to creating it. About 1-out-of-4 owners intend to simply close the business so they do not see much need for a succession plan. About 1-out-of-4 owners don’t know what would happen to the business…apparently they can tolerate the ambiguity. The remaining 2-out-of-4 owners – 50% of owners – anticipate the formal transfer of their business either to a 3rd party, a family member, a partner, or an employee.

Putting this into a few perspectives:

 ·         For employees of small businesses: If you work at a small business then the odds are 1-to-1 [even money] that the owner of the business expects to sell or transfer the business to someone when he or she retires. And, the odds are 3-to-1 ‘against’ there being a plan in place to cover that sale or transfer. 

 ·         For clients of small businesses: If you buy products or services from a small business then the odds are 1-to-1 [even money] that the owner of the business expects to sell or transfer the business to someone when he or she retires. And, the odds are 3-to-1 ‘against’ there being a plan in place to cover that sale or transfer. 

 ·         For suppliers to small businesses: If you sell products or services to a small business then the odds are 1-to-1 [even money] that the owner of the business expects to sell or transfer the business to someone when he or she retires. And, the odds are 3-to-1 ‘against’ there being a plan in place to cover that sale or transfer.  

 

Footnote:

1.    TD Waterhouse’s early October 2011 Business Succession Poll of 609 small business owners

Tags:

Entrepreneur Thinking | Family Business and CFFB | Succession

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Tom Deans visits our Centre For Family Business (CFFB)

by Rick Baker
On Apr 5, 2012

"To Gift or Not To Gift", that was the question...at CFFB's March breakfast.

At our breakfast event, Tom Deans explained why gifting a family business is generally not the best course of action. And Grant Robinson, of event sponsor BDO, provided some opposing thoughts...creating a friendly debate on the topic of family-business transition, succession, and exit.

Tom described himself as a contrarian who tends to challenge people. He has owned and operated a family business. And he explained, he sold it at the right time and at the right price. He planned ahead. He spent the better part of 5 years 'working his plan', then he sold his family business.  Tom Deans has entrepreneurship in his blood. His great grandfather ran an East Coast tire distribution business. His grandfather was a chemist, who founded what became a $100,000,000 publicly-traded enterprise. Tom's father created a plastics business, the largest employer in Orangeville. 

Tom's ancestors never, ever 'gifted' their businesses...they sold them!

Tom recommended all owners of family businesses consider that option: rather than gift family businesses to relatives, sell the family business. That's the gist of Tom's message to the owners of family businesses. In his book, 'Every Family's Business', Tom provides 12 important questions...designed to help families consider the best course of action for business 'transition or exit'.

Quoting Tom, "I am offering, in a way, permission for business owners to take care of themselves."

Tom understands the feelings of guilt family business owners can experience when they think about selling their businesses. He cautions, those feelings are often followed by business failure. The fact is most family businesses do not survive for generations. For a family business to survive for generations, each generation must sacrifice something...just as the founder did before them. Gifting the business to the next generation often results in business failure and loss of the wealth that existed in the business and the family before the gifting. 

Tom explained...

"This issue is very important in Canada because we have never had so many aging business owners."

"Banks are doing due diligence on how well prepared family businesses are for transition."

Summing up Tom Deans' contrarian view, using his words:

  • "A family business is a set of ideas and values that you pass on to your kids."
  • "Pursue the longevity of wealth and family...but not the business itself."
  • "Teach your children to love commerce: to love business...not to love a business."
 Well said Tom!
 
..and, thank you Grant & BDO for sponsoring this entertaining and educational CFFB event.

Tags:

Entrepreneur Thinking | Family Business and CFFB | Succession

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Family Business Success Story - Menno S. Martin

by Rick Baker
On Mar 29, 2012

As soon as you enter the offices of Menno S. Martin Contractor Limited, you will notice it is a comfortable place. That was my first impression, the first time I visited.

As you get to know the people at Menno S. Martin you will learn about the fabric of their business, as woven by their founder 70 years ago. The fabric consists of: forethought, fair deals, hard work, mastery, loyalty…and stories.

Founder Menno S. Martin is remembered with fondness. The fabric of Menno’s values, his character, and his business lives on. His sayings and stories are retold with fondness and admiration. Menno S. Martin created a business where people want to work. Several people have worked there for over 25 years.

Here is a Menno S. Martin picture that is worth much more than a thousand words.

 

I was touched and impressed when Laverne Brubacher gave a copy of this picture to me. I was touched because this document from the early days of the company is clearly a special gift. The original and copies are proudly displayed in the offices at Menno S. Martin. I was impressed because this picture illustrates the best of strategic planning: a single page, chock full of Vision, Mission, Values...and communication.

Clearly, Menno S. Martin practiced principle-based leadership. Quoting Laverne, “Three things were important to Menno: his faith, his family, and his business – in that order”. The above picture illustrates that and it links everyone at Menno S. Martin to the founder they honour.

Menno S. Martin passed in 2005. His legacy of work and leadership lives on.

“Family is first.”

That quote captures a big part of Menno’s wisdom and legacy. It applies to the people who work at the company. It applies to the people who do business with them. The people at Menno S. Martin incorporate ‘family is first’ when they do projects for their clients. If you check out the testimonials at the company website then you will see ‘family is first’.

Loyalty – that’s a word both Laverne Brubacher and Art Janzen used several times when they spoke about their business.

Laverne joined Menno S. Martin on his 21st birthday in 1965. Menno trusted Laverne enough to offer him shares of the company in 1968. The trust and loyalty between these two men remained solid throughout the rest of the time they worked together. Laverne took over from Menno in 1976 and Menno retired in the early ‘80s. However, Menno was a regular visitor at the offices long after he retired.

Laverne and Menno had a very special relationship. The men shared values: forethought, fair deals, hard work, mastery, and loyalty. In addition, Laverne was a willing student of business and Menno was a willing teacher of business.

This mentoring of business know-how is a key facet of Menno S. Martin’s success story.

Laverne talks about Menno, “Menno had a built in sense of business ethics. Honesty, care, loyalty, trust – all came naturally to him. He was an entrepreneur – and he seemed to come by that naturally. His quiet enthusiasm was contagious.”

And, Laverne has shared his education with another generation of Menno S. Martin leaders, Art Janzen and Trent Bauman. He shared the key lesson - 'treat your people well and they will be loyal'.

In anticipation of his retirement, Laverne led a thorough transition planning and implementation exercise, which included selling his shares to Art and Trent...over a comfortable period of time. Now, Laverne has eased out of his operating role and Art and Trent run the business.

And now, like Menno before him, Laverne stills shares his time and expertise, at the office, with the fellows he mentored.

Laverne, Art, and Trent have kept alive the legacy of Menno S. Martin’s business leadership - covering the important things like Vision, Mission, and Values. To these things each of them has added a personal touch…personal talents and strengths.

This allowed smooth transition to a new generation of owner-leaders.

From Menno

To Laverne

To Trent and Art

  

Smooth transition of ownership – well, that’s good for all involved: it is good for families, owners, employees, clients, allies, and community.

That’s the Menno S. Martin legacy.

A Family Business - Well Done!

Tags:

Family Business and CFFB | Leaders' Thoughts | Succession | Values: Personal Values

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Family Business Success Story - Flanagan Foodservice Inc.

by Rick Baker
On Mar 15, 2012

Flanagan Foodservice Inc. is another local family business success story. 

The members of our Centre For Family Business, CFFB, got to learn some of the amazing Flanagan story when Dan Flanagan, Flanagan's President, spoke at our February breakfast event.

Here are some of the Flanagan-facts that caught my attention when Dan spoke:

Dan showed the most-amazing sales chart I have ever seen. The Flanagan family business has had 34 consecutive years of sales growth and profitability! From zero to almost $400,000,000 in 34 years! The Flanagan's sales chart spoke loudly about growth...direction...consistency...planning and perseverance. 

Dan talked about the early days when his father Joe left a secure position at a local grocery store called HiWay Market in 1977 and started his own business.  Joe worked at expanding his business within north Waterloo and Woolwich township...he added trucks and vans.

Flanagan's moved its main operation to Kitchener in 1983. That's where the Flanagan family business story gets really interesting. In order to finance the building of a 2,500 square foot freezer at its new location, the company sold shares to its employees and selected outside investors. The company sold blocks of 20 shares at $50 per share and the new shareholders could appoint a board member.

A progressive action...and, a successful one.

The shares have been re-valued every year. Each $1,000 invested in 1983 is worth over $37,000 today! In addition, the company has paid out regular annual dividends to its shareholders. [a spectacular ROI]

Perhaps it was that set of 1983 actions that solidified a bond between the Flanagan family and the people who work with them at their company? Perhaps, that set the stage for 3 decades of growth and profitability? I am sure the progressive 1983 actions were an important aspect of the Flanagan magic.

"People serving other people."

"Our team is our greatest asset."

That's the way Dan described his family's business.

And, it is clear the family doesn't just talk that talk - it walks that walk.

Here is a summary of The Ingredients of Flanagan's Success:

  • Think/Plan Ahead
  • Democratic Decision Making
  • Treat People Really Well
  • Employee Share Program/Profit-Sharing
  • Community and Industry Involvement/Support
  • Grow Sales
  • Own Your Property
  • Customize Your Software
  • Open Branches Close to Your Customers

Business success is all about people working together: thinking together, serving together, and succeeding together. 

Flanagan Foodservice Inc. is a terrific example of how to achieve family-business success.

Thank you for sharing the Flanagan's Family Business Success Story with us, Dan.

 

PS: Here is a picture of the Flanagan brothers. It strikes me that 4 brothers working together and achieving such family-business success must be quite rare. 

The Flanagan brothers: Rick, Murray, Dan, & Jeff

Tags:

Family Business and CFFB | INSPIRE PEOPLE - GROW PROFITS! | Succession

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Mentoring

by Rick Baker
On Jan 10, 2012

The best of mentoring happens 'naturally' when an eager-to-learn business person 'connects' with a more-experienced business person who is eager to teach. For both people, mentoring is of value. This type of 'natural' mentoring tends to happen in cycles: over time, the student of the present becomes the teacher of the future.

One of my favourite examples of 'natural' mentoring is the story of 25-year-old Napoleon Hill meeting steel-baron Andrew Carnegie in 1908. At the time, Andrew Carnegie was well into his 70's and he was one of the richest men in the world. Yet, for some reason, when Napoleon Hill visited to interview him about business success, Carnegie took Hill home and spent 3 days with him. That was the starting point for Hill's labour of love...and the creation of his classic self-development books, including my favourite 'Think and Grow Rich'. This story does not end with the creation of books like 'Think and Grow Rich' in 1937. That's just the beginning. For example, one of the greatest leaders of the 20th Century - Mahatma Gandhi - read Hill's book. The book was translated and widely circulated throughout India; I suppose supporting the good work of Gandhi.

Some business and education organizations promote mentoring. I am honoured to be able to participate in Conestoga College's mentoring program. Mentoring at the student level is a tremendous idea!

I am keeping my eyes and ears open for mentoring ideas, advice, and suggestions. If you have any then please share them.

Here is a sample of the things I have learned about mentoring. This is the advice of Eric Chester, the author of a recently-published book titled 'Reviving Work Ethic':

5 Tips on Mentoring

  1. Find your style
  2. Develop trust
  3. Value tact and timing
  4. Tell stories
  5. Cast a vision

Good, simple advice!

Tags:

Borrowing Brilliance | Hero Worship | Succession | Vision: The Leader's Vivid Vision

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Robin Todd visits our Centre for Family Business [CFFB] - “Confessions of a Bad Boss”

by Rick Baker
On Nov 15, 2011
Robin Todd, President/CEO of Marks Supply Inc., was the special-guest speaker at CFFB’s October breakfast.
 
Description: Robin Todd, CEO/President - Marks Supply Inc.
 
Robin shared her family-business story and she shared her ‘boss’ experiences. That title “Confessions of a Bad Boss” send many messages. Here are some of the thoughts that went through our minds as we listened to and talked with Robin:
  • No Boss is perfect…all Bosses make mistakes
  • Owning up to those mistakes…that involves self-awareness, courage, and a desire to improve
  • All Bosses can learn…it starts with self-monitoring
  • Bosses can learn from their mistakes
Robin has a habit of testing herself with tough questions…here are a few samples:
  • What if you impede the success of your company?
  • Great people have options: how do I find them? Entice them? Keep them?
  • What did you do wrong to allow this person to leave?
Robin’s key message was:
 
How much better would your company be if you were a better boss?
 
About Marks Supply Inc. – a local Family Business Success Story.
 
Marks Supply is a wholesaler of top-quality Plumbing, P.V.F., Hydronics and HVAC products.
 
Recognizing their products, to some degree, are viewed as a commodity, Marks Supply strives to out-service its competition.
 
Robin joined the family business when she finished schooling. That required an adjustment on the part of her Dad. He wanted to separate family and business. None of Robin’s 3 older sisters worked at the family business. Robin was the first and only to join her father. They agreed to a one-year period. After the year, when her Dad agreed to keep her full time he provided this piece of advice:
 
“Show up earlier, stay later, work harder, and be happier than everyone else.  Don’t embarrass me.”
 
What clarity and candour of advice. What valuable Father-to-Daughter advice. Particularly the part about being happier, what a way to lead by example: working hard and being happy while you do it!
 
Working for her father, Robin moved through a number of jobs…as her career unfolded and her responsibilities grew.
 
In 1995, when her father decided it was time to sell, he sold the business to Robin. That was a surprise to Robin and others in her family and her business.
 
At this ‘transition’, Robin’s Dad provided another excellent piece of advice:
 
“Don’t be trapped…make sure you have money…there will be surprises that require money.”
 
Robin followed her father’s advice. She repaid her ‘buy-out’ debts in 5 years.
 
During the last 16 years, Robin has led Marks Supply to impressive growth - from $8Million to $71MM.
 
Robin was very candid. She plans for continued growth.
 
Why?...
 
”Because you grow or die!”
 
It was very clear to all of us…Robin isn’t a Bad Boss…Robin balances the numbers side of business [impressive growth of revenue] with the personal side of business [the Human side]. She thinks a lot about the people who choose to follow her at Marks Supply. She has learned from the people-mistakes she has made. She takes full responsibility for her errors…and her self-development.
 
Robin closed with:
 
“If you care about your people, you should let them know”
 
***
 
Congratulations on your personal and business achievements, Robin!
 
THANK YOU for sharing your Family Business Success Story with our CFFB.
 
PS: Robin Todd was recently has selected as one of Canada’s 100 Top Women Entrepreneurs in the 12th annual PROFIT W100 ranking. This, of course, is far from the first time Robin’s leadership has been recognized…and there’s no question – it will not be the last.
 
Link to Marks Supply
Link to CFFB

Tags:

Entrepreneur Thinking | Family Business and CFFB | Leaders' Thoughts | Succession

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Copyright © 2012. W.F.C (Rick) Baker. All Rights Reserved.