Family Business Mangement Why Family Business Is Different Academic Ve

Family BusinessAn overview : 

Family BusinessAn overview ENTR 6300 Family Business Management Domenick Celentano 908 866 1366 http://fdu.domenickcelentano.com

Domenick Celentano Background : 

Domenick Celentano Background Celentano Bros Inc. Key positions over 30 years Consultant to numerous Family Business Teach Family Business Management Fairleigh Dickinson University

Family Business Facts : 

Family Business Facts 35% Fortune 500 50% GDP 48% of Workforce 90% of All businesses

Family Business Facts : 

Family Business Facts Family Business Average CEO Tenure = 24 years Public Company Average CEO Tenure = 6 Years

What Is a Family Business? : 

What Is a Family Business? Family and Business are similar in the beginning… Headed by one or two people with Autonomy Family has controlling interest Two or more members of the same family are directly involved A firm whose ownership passes from one generation of a family to another (succession)

Two types of Family Business : 

Two types of Family Business Single Generational Beginnings Work in Business Cross line Major Responsibility Ownership Cross Generational Complexities Abound Modify Parent Child Relationship Peers Preparing to take over leadership Business and Life Cycles In Synch Out of Synch

So…. Where Do We StartThe Two Fundamental Questions : 

So…. Where Do We StartThe Two Fundamental Questions

Core Question For Families In Business : 

Core Question For Families In Business Why Does This Family Have This Business? What Benefit Does The Family Derive From The Business? Why Does This Business Have This Family? What Benefit Does The Business Derive From The Family? Assessing Human, Social and Economic Capital

Key Aspects To Manage : 

Key Aspects To Manage

Family Business ManagementKey Aspects to manage : 

Family Business ManagementKey Aspects to manage Shared Vision Shared Values Leadership Across Multiple Generations

Family Business ManagementKey Aspects to manage : 

Family Business ManagementKey Aspects to manage Business Continuation of Family Boundary Confusion Interlocking Systems Systems Differences Closeness or Independence Hierarchy Triangles Family Rules

Managing Family and Business : 

Managing Family and Business

The Three-Circle Model of Family Business : 

The Three-Circle Model of Family Business Interdependence of the Family and Business System The parts effect the whole Everything affects everything else Combining Family and Business Makes Life More Complex

Interlocking Systems Challenges : 

Interlocking Systems Challenges FAMILY Emotional Support Security Fun Inward Focus BUSINESS Tangible Outcomes Task Oriented Productivity Outward Focused Ownership Creates The Plan Vision Future Growth Wealth Stewardship Am I the son or manager ? Am I the Father or the boss? Am I the majority stockholder… the boss… the father?

Family vs. BusinessOverlap : 

Family vs. BusinessOverlap Family Concerns Care and nurturing of family members Employment and advancement in the firm Loyalty to the family Business Concerns Production and distribution of goods and/or services Need for professional management Effective and efficient operation of the firm

Insider vs. Outsider Perspective : 

Insider vs. Outsider Perspective FAMILY Permanent Relationships Unconditional Love Role based on Relationship Maintain Harmony Power… Hierarchy Fairness is equality BUSINESS Temporary Relationships Conditional Approval Role based on Function Maintain Productivity Power, Performance = Title Fairness = performance/equity

Advantages of a Family Business : 

Advantages of a Family Business Shared Value Common Goals Family Spirit Family Name Organization… family also owners Flexible… less hierarchy Familiarity Strong motivations of family members for business to succeed Long Term View

Disadvantages of a Family Business : 

Disadvantages of a Family Business Fighting… infiltration from Family into business Role Confusion Lack of Objectivity Nepotism Succession Problems Isolation Boundary Problems Empowerment

For the Early Successor : 

For the Early Successor

For The Early SuccessorUnique Challenges : 

For The Early SuccessorUnique Challenges Family business defines identity Grow up sooner… learning earlier Family = Harmony Career and Wealth connected Entitled to a job Too much Compliance or Defiance Enmeshment Golden Handcuffs

Developing Credibility & MarketabilityKey Issues for Successors : 

Developing Credibility & MarketabilityKey Issues for Successors Credibility Legitimate Self Confidence Validated By Others Marketability Marketplace values your: Skills Credentials Experiences To Pursue and Succeed in a Career CHALLENGES Lack of positive pressure Mistakenly think you don’t need them Incorrect Parental Perception

Life Stage & Business Stage Transitions : 

Life Stage & Business Stage Transitions 17-22 Transition to Early Adulthood 22-28 Entry into adult world 28 -33 Age 30 Transition 33-40 Settling Down 40-45 Midlife Transition 50–55 Age 50 Transition 55-60 Beginning mid adulthood 60-65 Late Adulthood Late Adulthood Individuation Startup Growth Renewal

TriangulationKey communications issue : 

TriangulationKey communications issue Mom Child Dad

Challenges of Family Business : 

Challenges of Family Business

Challenges of Family BusinessWhere do we start? : 

Challenges of Family BusinessWhere do we start? Why Does This Family Have This Business? What Benefit Does The Family Derive From The Business? Why Does This Business Have This Family? What Benefit Does The Business Derive From The Family? Assessing Human, Social and Economic Capital

Family Growth vs Business GrowthFinancial issues not covered in the text books : 

Family Growth vs Business GrowthFinancial issues not covered in the text books Business needs to accommodate growth of family Families grow exponentially Businesses don’t always

Challenges of Family BusinessBoundary Management : 

Challenges of Family BusinessBoundary Management Something That Indicates A Border Or Limit’. Everything Is Defined By A Boundary Keeps Entities Intact True To Their Integrity Function As They Were Meant

Evolution of Family Business : 

Evolution of Family Business Entrepreneurial Personal Goals Intuition Hard Work Trial and Error One Man Band Managerial Outside Expertise Financial Systems Structure Tension between Entrepreneur & Managers Professional Market Driven Strategic Planning Mgmt Development Goal Setting Add’l Structures & Systems Growing Pains Focus - Entrepreneur Focus - Family Focus – Business not Family

Challenges of Family Business : 

Challenges of Family Business Family Rules Myths Birth Order Incongruent Hierarchy Two mistakes Caring is enough to carry the business Family Business is like any business Dual work & family relationship

Challenges of Family Business : 

Challenges of Family Business Two mistakes Caring is enough to carry the business Family Business is like any business Dual work & family relationship

Where do we start? : 

Where do we start? Sustainable structure for family? What does the family want? Good communications? Healthy family = healthy business. Can business accommodate growth of family? Families grow exponentially and Businesses usually do not. Hybrid Family/Business Plan

Thank Your for viewing Family Business an Overview : 

Thank Your for viewing Family Business an Overview ENTR 6300 Family Business Management Domenick Celentano 908 866 1366 http://fdu.domenickcelentano.com