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More on Family Business

More on Family Business

By BRAD PALMER

On one of my previous blogs, I discussed family business and the importance of not letting an owner’s spouse “run interference” in the management of the company. This is often a major cause of failure of closely held entities.

Let It Go

Another major cause of failure is a founder not being able to let go of the day to day management of the New Jersey business and to permit younger family members to take over. Sometimes this is simply due to the founder having an obsessive personality, and sometimes it is due to the owner lacking confidence in the ability of the younger generation. Regardless of the cause, every founder needs to recognize that someday she or he is going to die. When this eventually happens, the business is either going to be sold by the heirs, usually at a steeply discounted price, or the heirs are going to be running the business, be it competently or incompetently. Death is an exit strategy, albeit not a very efficient one.

Hypothetical Example

Let’s hypothetically say that Tom Founder has three adult children: Sue, Bob, and Joe. Joe has no interest in the business and has pursued another avenue in life, but Sue and Bob have both worked in the company on a full-time basis for about five years in low and mid-level jobs. Senior management positions are held by outside non-owner employees. Tom has some misgivings about the managerial ability of Sue and Bob and has thought of selling the business, but at the same time he would like to see them eventually take over; he has never really given either of them real responsibility, and even though they are both in their late thirties, he still views them as “kids”.

Given this hypothetical scenario, what should Tom do? If he decides that he does not want to sell the business, he needs to give Sue and Bob more responsibility and accept the fact that at some point he is going to have to trust them to manage the company. He should consider immediately promoting them to positions of real responsibility, albeit with supervision and with a mentor assigned. He should also emphasize to non-owner managers that this is a family business and, as regards promotional opportunities, it is run by and for the benefit of the family. Assuming that Sue and Bob apply themselves and have some aptitude, they should be able to manage the business within a relatively short period of time – two to three years. If they cannot manage it at that point, it should be sold.

Crown Business Brokers, LLC Update

So, what’s going on with Crown Business Brokers here in New Jersey, the Garden State? And come on, no corny jokes. Like, why is New Jersey called the Garden State? Because landfill, trash, nuclear dump and refinery won’t fit on a license plate. Actually, New Jersey is a beautiful place once you get out of its Northeast corner.

Anyway, over the past month, we’ve listed three childcare centers and are getting significant activity. In January, we also listed a midmarket services business. We are also in the process of reaching out to New Jersey commercial real estate brokers and forming alliances with them. Commercial realtors often have knowledge of the impending sale of a business but have neither the desire nor the expertise to sell it themselves. If you are a New Jersey commercial realtor and would like to partner with us, we’d love to hear from you. We have a generous commission sharing plan. Lastly, we are forming an alliance with a successful loan brokering company located in central New Jersey so as to be able to offer our clients a more efficient way of obtaining funding for their projects.

Geoff Caplan of Boca Raton, FL has also redesigned our website and is optimizing it for us. Brad Palmer, Managing Member of Crown Business Brokers, LLC is writing these blogs, and Geoff is posting them for us. The blogs are attracting increased attention, and so far, all of the comments have been complimentary. If you would like to discuss your website with Geoff, you may contact him at (561) 609-7624.

We expect business next year to be good. It is a presidential election year and, somehow, things always seem to improve in a presidential election year, regardless of which party is in power or the election prospects of either party.

If you would like to discuss the sale of your business, purchasing a business, or any topic that you have read about in these blogs, please feel free to call Brad Palmer at (908) 931-9300, or by email at crownbusiness94@yahoo.com. We always love hearing from you.

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Family Business

Family Business


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