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Ive participated in some of my most productive client meetings sitting around kitchen tables! If its good enough for my family and I to eat off of, its damn well good enough to make business decisions on This type of thinking typifies the heart and soul of American ingenuity: The Family-Owned Businesses ("FOB"). Some profound, yet often unreported statistics regarding Family-Owned Businesses include:
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The greatest part of Americas wealth lies with Family-Owned Businesses Family firms comprise well over 80% of all business enterprises throughout the country Family-Owned Businesses contribute more than 60% to the US GDP and employ a like percentage of the US workforce More than 30% of all Family-Owned Businesses remain viable into second generation ownership Return on Assets is more than 6% greater than the same return for non-family companies

What Makes Family- Owned Businesses Unique?

The Family-Owned Business enterprise is best depicted by the three-circle model first created by Renato Tagiuri and John Davis. Picture three equal sized circles representing "Business Goals", "Family Goals" and "Owner Goals". As you can imagine (or have experienced), the real fun starts at the heart of the overlap, where business and family goals intersect with owner goals. Family-owned businesses have the arduous task of aligning all three, in a world where more often than not, at least two of the three categories do not align. This dilemma makes the family-owned business dynamic a unique proposition.

The Family- Owned Business Cycle of Life

All good things must come to an endOr do they? There are 4 distinct phases in the life cycle of a Family-Owned Business. The Start- Up Phase:This is where an idea becomes a reality. Decisions regarding capital structure and securing knowledgeable professionals are critical during this phase. The Growth / Renewal Phase: The family owners have been able to successfully generate recurring revenue such that worrying about expenses day to day now have taken on longer time horizons. Still working hard, the family is able to increase sales volume by generating cash from operations. Investment in new equipment or other infrastructure items begins to shape the future of the company. The family begins to separate duties and responsibilities, and other family members join the business, bringing with them unique talents (college graduates, other working experiences, etc.) The business also begins to embrace the concept of "financing growth", as a way to leverage their success to date. The astute family business is able to take a step back at this critical juncture, sometimes bringing in an independent perspective, to address the above issues along with critical areas of:
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Succession planning-Estate planning Training Business forecasting (planning) Valuation Alignment of professional service firms with today's business and tomorrow's future

The Maturity Phase: Those family-owned businesses that have made it over the hurdles of growing up, make it to what I call the Maturity Phase. Sales and growth have stabilized. This is where the real fun begins. The Transition or Sale Phase: No one said the decisions would get any easier! So now the family (yes, the family and not just the founder(s)) has the toughest of all decisions to make - turn over the business to the next generation or sell all or part of it, forever transforming it and changing the lives of many family members. If you remember back to the start-up phase discussed above, I mentioned building relationships with key professionals. Though often times we see successful family-owned businesses outgrowing and replacing their initial roster of professionals, it is these professionals that family-owned businesses traditionally rely on for advice during the Transition phase. Family-owned businesses are best served by CPAs, attorneys, asset managers, bankers and insurance agents who are experienced in dealing with the uniqueness of their structure. How SingerLewak Makes a Difference

Family-Owned Businesses have represented the core of our clients since 1959. By understanding the dynamics of these ventures, SingerLewak has been able to assist family-owned businesses operating in all four phases of their existence. We're regularly called upon to provide assistance with family disputes, transition planning and valuation services, estate and gift tax strategies, as well as things as simple as just wanting to bounce some ideas off of us. And the best part of all, we're just as comfortable at the kitchen table as we are at the Board room table! If you have any questions or would like to explore your own situation, I can be reached at rschlener@singerlewak.com.