Tag Archives: financial

Patience, Planning & Perseverance: A Client Success Story

Mike Fassler
Mike Fassler

During the first quarter of this year I had the great privilege of witnessing a significant accomplishment by a long time client.  I started working with this family in the late 1980’s as they were contemplating exiting their business due to some feedback from their lender and general frustrations with short cash flow.  They asked me to take a look at their situation and share my assessment and recommendations.

Their lender had indicated that since they were not able to “zero out” their operating loan once a year from the operating cash flow of their business, this suggested they were not making money.  The lender further argued that if they were not making money they should consider exiting their business.  My client was alarmed and considering an exit.  I dug into the numbers and had extensive discussions with the client.  My analysis indicated that in fact they were very profitable but the combination of their growth rate and the structure of their balance sheet was creating their liquidity challenges.  I shared with them that they were bankable and they could likely have their choice of lenders.  They shopped their financing package and were presented with financing offers from 3 different lenders.  The flood of emotional relief this family experienced upon refinancing was moving.

Fast forward to the first quarter of this year, 25+ years later, to the incredible experience for me.  At our annual planning meeting where we were reviewing their financial statements, this client proudly shared that as of this past December they had completely paid off all of their debt.  Their personal equity position is now over “8 figures”, they have plenty of liquid assets, and their business continues to churn out positive earnings and cash flow.  We spent the meeting discussing the future for them personally, for their family and for the business.  The pressures they now face are around stewardship of their sizable equity position, and making choices between options – enjoyable challenges to consider.  It has been my privilege to serve this family along their remarkable journey of success.

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Family Firms Triple Bottom Line

Joe Schmieder
Joe Schmieder

Lost in the commotion of last week’s Boston Marathon bombings on Monday, April 15, was the fact that many Americans, including family businesses, were scurrying about to sign off and send in their final tax forms for the 2012 tax year.  The season for “harried bean counters” has come to an end, or at least to a well-deserved break!  For weeks family firms, taxpayers and their supporting financial people have been buried in their offices, factories and homes adding up what we earned, spent, gained, lost and perhaps misplaced.   One thing that these tax people do very well is provide us with a quantitative tally of our financial position.  According to our family business clients, most family firms had another strong financial performance in 2012.  Yet for family businesses the financial results are not the only metric used to measure performance.  Many family firms think broader as some have developed the more encompassing concept of the triple bottom line: Economic, Environmental and Community.  Great family enterprises, while economically strong, are also stewards of the environment and often lead the development of eco-friendly products and practices.  These innovative efforts create jobs that support many families.  In addition, communities around the world benefit significantly from the philanthropy provided by these visionary family companies.  In the future the bean counters may find ways to also measure the long-term impact of these important contributions, which family firms make to society.

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“Someday This Will Be Yours”

Bernie Kliska
Bernie Kliska

The ability to carry on a successful intergenerational transfer of ownership and leadership is one of the most important and difficult issues facing a family business. One metaphor for succession is the firefly. They flicker brightly for a period of time, then fade away. Consultants call this the rule of thirds: only about a third of family businesses make it to the second generation. A third of those survive to see a third generation and only three percent of those manage to see the fourth generation. Research indicates that failing to transfer the family business can be traced to one major factor: lack of planning. A recent survey (1,952 families) indicated that 66% had no succession plan or had a ” loose plan” that was rarely executed.

Succession planning can be especially complicated because of the relationships and intense emotions usually involved. Most people are not comfortable discussing issues such as aging, death, and their financial affairs,all of which are involved in the discussion of succession. Realistically, it takes years to plan and implement a proper succession plan. A good plan typically covers three main topics: management, ownership, and financial matters. It is important to recognize the distinction between management and ownership. They are not necessarily the same thing.

Often, the most challenging part of the succession process is getting started. First, you should thoughtfully and realistically assess the situation, and determine your objectives. Then, methodically address each issue that may stand in the way of those objectives. Seek input and help from advisers, independent directors and family members.

Succession of a family business is inevitable and the earlier you start planning, the more effective your transition will be.

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The Year of You

Norb Schwarz

By now most of us have made our New Year’s resolutions and have put them on a back shelf.

For 2012, I am working on a new challenge. I am concentrating on self-improvement as opposed to focusing on the business. The process will be much the same as my business planning process. First take an inventory. Who am I? What are the elements that make up “me”? I came up with eight potential elements for myself; the spiritual me, the emotional me, the relational me, the financial me, the professional me, the experiential me, the intellectual me, and the physical me. Given those elements of “me”, the next step is to look at how I have fared in each area in the past, where I am now, and where I want to be in the future. The final step is to outline what I have to do to meet each of my future goals and begin the process for each.

I like to keep the following favorite verse in mind as I go though my “year of me” process:

Isn’t it strange that princes and kings
And clowns that caper in sawdust rings
And common people like you and me
Are builders of eternity?

To each is given a bag of tools
A shapeless mass and a bag of rules
And each must make, ere his life is flown,
A stumbling block or a stepping stone.
R. L. SHARPE

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