Spring 2007 - Family Business Center

Transcription

UMass Amherst Family Business Center
Related
Matters
Related Matters • Spring 2007
Treat Your Business
Like a Business
and Your Family
Like a Family
www.umass.edu/fambiz
Spring 2007
Washington and Lincoln
Share their Wisdom
HE UMASS AMHERST Family Business Center is known
for “bagging” top national business speakers. But never before
has the Center managed to snag a speaker from beyond the
grave. And never before has a U.S. president, past or present,
appeared before the group.
Yet at the December gathering, members heard from not one but two
deceased U.S. presidents: George Washington and Abraham Lincoln.
Staying in character throughout—at one point, in response to a question about the impact of television, Washington replied, “He’s using a
In the company of
companies (pg. 2)
Evolve or Devolve
(pg. 3)
Hands on women,
hands off men (pg. 4)
continued on page 11
How to Steer Clear (pg. 5)
Fun with Heijunka,
Jidoka & Genchi
Genbutsu (pg. 7)
Everyone in the
Risk Pool! Lunatics at the
Helm!
Robert Charles Photography
T
Our Issue Will Help
Your Issues:
Abraham Lincoln, Ira Bryck & George Washington
(pg. 8)
(pg. 10)
Gone is the Handshake (pg. 13)
The Answer is:
It Depends (pg. 13)
F r o m
t h e
D i r e c t o r ’ s
D e s k
Photo: Ben Barnhart
By Ira Bryck
All You Can Eat, All You Can Learn…Come and Get It!
I
T SURPRISES me how often business owners describe
themselves as “a bit different.” From the tone, I sometimes
suspect it means, “I think other companies have it together,
but we’re winging it.” But in 13 years of gathering companies
together, I conclude that if what helps many others also helps
you, you may have more in common than you realize.
For example, your values may differ, but you have in common
that you want your company to reflect those values. Or maybe
you’d bend further backwards for a customer, but discovering
how far others will bend, or not bend, is a good reality check. If
bryck by bryck
you pay attention to who you are, and where you’re at, you can
start a plan to move to where you want to be.
At our dinner forums, you might notice how many people
who began with an idea or talent, and built a team to deliver
whatever that idea or talent produces, created a delivery mechanism that is as productive and inspired as whatever they manufacture. As a past speaker, Jack Stack said, “A great company
can’t help but make great products.” No matter that they make
whips and you make fedoras—you’re both manufacturing solutions. These solutions are not off the academic rack, and are the
result of much head banging, but they are often elegant, even in
their home-made-ness.
The UMass Amherst Family Business Center is a brain
trust of many thousands of years of experiences, successes, and
failures that you, Dear Reader, get to explore. Ours is a practical group who may not think of themselves as philosophers, but
their stories, warnings, brags, examples, and even dilemmas can
make you a wiser solver of the very hardest problems: yours.
And the fact that they’re running these companies with
siblings, cousins, parents, children, make them even more clever
and able to carry that weight. I remember a track star in my
high school, who ran laps with a log tied to his back. He did
it so he’d run better without it. But imagine if he could win
races wearing the log. That’s family business. (In some cases,
our members have jet packs, not logs, strapped to their backs,
because their family businesses add power, not detract. Imaging
learning from them how they changed from logs to jet packs.)
Hardly any of our members began their companies so they
could become expert in fixing conflict, using advisors, mitigating
risk, facing mortality, and improving culture. That was almost
never part of the bargain, and is a science taught almost nowhere. But it’s an art taught here. Imagine having access to that
resource, helping to arrange messy ducks in rows.
The Family Business Center is a showcase of many who’ve
overcome challenges, i.e., Mom led like General Patton, Son
discovered how to lead like Albert Schweitzer! Or a family
where the last generational transition wreaked havoc, so now
continued on page 9
© 2007 Bryck by Bryck, conceived by Ira Bryck, drawn by Andrea Bryck,
more at http://www.umass.edu/fambiz/BryckByBryckCartoons.htm
On Trilobites,
Troglodytes,
Armored
Knights, and
Owners’ Rights
O
N HIS THIRD TRIP to the UMass Amherst Family
Business Center, Don Jonovic didn’t have to face a power
failure (like last time)– but he still kept his legendary
good humor. His imaginatively titled September presen-
tation – “On Trilobites, Troglodytes, Armored Knights, and Owners’ Rights” was, as
usual, full of good one-liners.
While trilobites don’t seem to have much relevance to today’s family business
owners and managers, Jonovic structured his talk around a series of more relevant
evolutions he’s seen in the last few decades that go right to the heart of today’s family
business culture:
• From Feudalism toward Federalism
• From Secrecy toward Transparency
• From Stockholder toward Stakeholder
• From “Business” to “Opportunity” Transition
• From Prognostication toward Expectation
• From CEO to The Plan
• From Plutocracy toward Meritocracy
What do these “evolutions” mean? Let’s look at a few of them.
Feudal to Federal
In a feudal society, there’s one big boss – the business founder. Once profitability is
achieved, there’s also the person in charge of the money, whom Jonovic calls “the
family business dragon” – and a lot of serfs. But as a business transitions to subsequent generations, “the feudalism thing doesn’t work too well. The idea of one dictator only works with a patriarch or matriarch who has all the power.” With multiple
generations, siblings, cousins, Crown Princes and Princesses, spouses of the Royal
Children all strive for influence, but none have The Hammer.
Don Jonovic
Secret to Transparent, and Stockholder to Stakeholder
For Jonovic, replacing secrecy with transparency is a no-brainer: “Worried about your
competitor finding out? He can’t even read his own statements, what’s he going to do
with yours?
“You’ve got two choices when you’re naked on stage with a London Fog raincoat:
open it up or keep it on. We’re already open with banks, with the IRS. So why not
give the information to our employees, fellow shareholders, the industry, and our
in-laws? To do that gracefully requires a three-piece suit or a number of feathers,
at least.
continued on next page
Do
WOMEN
Make
Better
Leaders?
Jonovic: cont. from page 3
“I’m seeing in the successful companies, an
almost orgasmic release of information; and
with it, people start to understand the business.
You take them out of serf status and bring them
inside the walls.” And this flow of information
turns stockholders into stakeholders: people who
know and care enough to bring creativity and
commitment to the table.
Sometimes that results in an understanding
that the best place to look for a CEO may not be
in the owner family. “Is the best way to recruit our
people through procreation? It’s fun, but slow and
inefficient. As a second-generation leader of one
of my client companies once noted, ‘…there are
250 million people in the country and 18 in our
family’s third generation. What’s the likelihood
that we’ll find our best leaders among those 18
rather than the 250 million?’”
A related insight: family members may be
receiving plenty of wealth from the company, but
they should “stop thinking they’ve got to earn it.”
Instead, think of that cash flow as a dividend,
and reward managers of the business (family or
non-family) with creative performance incentives separate from dividends. “This can allow
for attracting some top-notch people without
using equity. Ten years ago, I thought equity to
employees was one of the most effective options.
But then I was primarily a consultant; now [that
he sits on 12 family business boards] I see the
downsides.”
CEO to The Plan
“I’m even wondering if the requirement for a
CEO is the given it used to be. The next generation of managers doesn’t think quite in these
terms. Boomers are hierarchical, but 30- or
40-year-olds have evolved new approaches to
authority, duties and management.
“An alternative is to make ‘The Plan’ the boss
– combine history and expectation into a set of
financial expectations that have teeth. Then,
if three brothers refuse to work for each other,
that plan becomes their boss. Does this work as
well as the CEO concept? Well, it gets over the
endless argument about who’s going to be the
boss. Put them on an executive committee, all
with their areas of oversight, and their job is to
work The Plan.”
A Final Observation
“Samuel Butler said, ‘A hen is only nature’s way of
continued on page 6
W
OMEN ARE severely underrepresented among top executives, holding
only three to five percent of top positions nationwide. But according
to research from a wide range of sources both in the United States and
abroad, gathered and presented to the Family Business Center’s December gathering at
the Clarion Hotel by Rich Giombetti and Paul Alves of FBC sponsor Giombetti Associates, a woman may often be the better choice.
Significant gender differences begin to manifest even in young children; when given
blocks to play with, boys tend to build towers, while girls will build enclosures. Psychologist Eric Erickson says that the enclosures represent community and belonging, while
the tower symbolizes a desire to conquer and compete.
Using the personality scoring instruments familiar to FBC through Giombetti Associates’ many previous presentations, Giombetti and Alves examined 21 years of their
research and determined that men and women differ on a number of key areas:
• Females score an average of 12 percentage points higher on social skills; they are
more empathic and better at working with (and supporting) people than men.
• Women are more “hands-on” than men, more nurturing. Once again, there’s a 12point difference in the average score for delegation.
• Women are more reflective, and more intuitive—by 10 points.
• 12 points again separate women from men in their willingness to acknowledge
and reward good performance in others. Alves says the female leadership style is “more
user-friendly.”
• On competition, women scored 13 points lower than men. Women, in other words,
are much more likely to seek a resolution rather than a one-sided victory. In the words
of Susan Lyne, CEO of Martha Steward Living/Ominmedia, “Always leave a little
something on the table. A total win for one side in any negotiation is…almost a Pyrrhic
victory. It’s important to make sure no one feels beaten in a negotiation.” And Giombetti
notes that “organizations are now rewarding collaboration” over competition—seeking
people who can build and lead teams. Women, however, are not as keen to take risks—but
when they do take risks, they’ve covered all the bases and gotten buy-in from all the key
players. They are more likely to do the right thing for the organization than to conquer
an opponent, he says.
• Stability, according to the instruments used by Giombetti Associates is defined as a
non-emotional approach. Whether emotion is really a lack of stability is debatable, but
one thing that can’t be debated is the spread. Women, by 16 points—the largest spread
of any scale they measured—are more emotional than men, though many successful
female executives have learned to disguise this.
Summarizing the results, Giombetti said, “The aggressive 800-pound gorilla is dead.
Our research validates what they’re saying about female executives.” He believes that
part of the dearth of female CEOs is that “not a lot of them want to pay the price” of
shattered relationships and sharply limited personal time. RM
By Shel Horowitz
David Rothenberg
I
Amy Scott
Paul Whalley
CEBERGS. Hidden giants slumbering and mostly invisible
under water, calmly waiting to tear apart even as mighty a ship
as the Titanic.
How can your business avoid destruction by its own icebergs?
Joanne Goding
Iceberg on the
Starboard Side!
Avast!
Four FBC members shared their stories at the Center’s October meeting at the Log
Cabin.
Whalley Computer: Thriving in a Commoditized Marketplace
What to do when your profit per unit shrinks from $1200 to just $42, and any shopper falsely assumes he or she can find cheaper suppliers in a few minutes online? Paul
Whalley of Whalley Computer described how a group of key co-workers helped
the company evolve over several years into an entirely different model. The computer hardware business has become commoditized, but opportunities abound for
people who don’t play the commodity game, but market their expertise and special
skills—and partner with other companies that can expand their offerings. Whalley
doesn’t just push boxes out the door, but focuses on aspects of the computer business
that would challenge less skilled companies: integrating computer and communications solutions for larger companies, functioning as a contracted IT department for
smaller companies, developing recurring streams of income through long-term repair
contracts and remote network monitoring/maintenance, and acquiring their hardware clients as an adjunct to the stellar service that is their hallmark.
And the strategy works. With a client roster that includes such marquee brands as
TJ Maxx, BJ’s Wholesale, and FBC member Hannoush Jewelers, the company has
been profitable in all but one of its 27 years, and is nationally recognized.
Moss Nutrition: Harness the Key Asset
Her business faltered as her main supplier broke one promise after another—and it
took an outsider, a successful distributor in her industry, to show Joanne Goding that
she had something worth building.
“I burst into tears and said, ‘What is wrong with us? I don’t know what to do!’
The general manager came out, talked to employees, and looked around. We had
such good staff taking calls. They were answering questions only the sales people did
Iceberg: cont. from page 5
at other organizations; some had master’s degrees
in nutrition. She said, ‘You’ve got some really
great people here. We could learn from you.’”
Realizing that her company’s core strength
was its knowledgeable, ethical personnel, Goding
turned the business around. And now she hires
carefully, knowing that everything else follows:
“I’ve got to have truthfulness. The customer
doesn’t know what it is, what it does. One study
says it’s good for you and the next says it’s going
to kill you. It could be sawdust—you don’t know!
Our competitors take advantage of people, telling people it’s going to work. The FDA doesn’t
regulate it. So my niche is to tell the customers
the truth and to sell products that actually have
what they say they have.”
Thus, she asks questions that identify “ethics, honesty, truthfulness. If they don’t find it
interesting to help people get healthy, I have no
use for them. I ask, ‘What motivates you? What
makes you feel good about your work?’ I hire
for character.” She looks for passion, interest, a
mission to be of service, and specific interest in
nutritional products.
This paid off when she parted ways with the
distributor that didn’t keep promises, and couldn’t
get product for a while. “The first month, we lost
$30,000. But our wonderful people got on the line
and called customers, told them what happened
and what we would do for them, and we’re still
in the game.”
Bottaro-Skolnick: Focus on Your Expert
Niche
Like Whalley, Springfield furniture maker Bottaro-Skolnick faced an unpredictable and pricesensitive market. As fewer women stayed home
and more joined the workforce, and as cheaply
priced but cheaply made furniture swept the
market, it became harder and harder to survive
serving the discriminating customer who was
buying heirlooms and appreciated quality and
durability.
And like Whalley, David Rothenberg found
niches where he could compete. “Our uniqueness was based on our custom design expertise. I
concentrated on areas of the business that were
more promising—onsite drapery and upholstery rooms to provide the independent design
community with all the tools they needed. We
sought freelance designers, we had events, fabric
showings…
“Gross sales increased from 1995-2005, but
it was coming from the lower margin divisions.
Success isn’t volume, it’s profit. The perfect storm
hit in 2004.”
Reeling, Rothenberg again re-evaluated, and
realized he no longer needed to keep extensive inventory like a traditional furniture store. “Eighty
percent of our sales were special order. Our niche
had always been interior design. I lowered my
inventory by 50 percent to raise cash and open
space in the building. I discussed the plan with
associates, staff, family, and the Family Business
Center roundtable. But the staff morale plummeted. I began to experience self-doubt.”
But he persisted. “I had a vision that my 60,000
sq ft building could become a destination. CJ
Sprong moved in, Magnolias, a silk flower arranger, moved in, and a computer artist moved
in to the 4th floor. Ten months into the change,
things are looking up. I’m sleeping the night
through. I embrace the concept that change is
good. But I still look ahead because I know my
opponents’ armies are massing, ready to strike.”
Designworks: Passing the Baton to a
Non-Family Member
The last set of panelists were unusual: a daughter
who left the family business and started her own,
but kept her parents’ company as a major account…and an outside general manager brought
in from California.
Amy Scott, daughter of long-time FBC participants Nan and Jim Hurlburt, was for many
years an executive in her parents’ dance apparel
company—which started in Amy’s bedroom and
eventually expanded to a 30,000 square foot facility in Ludlow.
“Managing the company together was no
longer viable, for both practical and emotional
reasons. I went on to start my own graphic
design business, but I continued to serve them
as an outside vendor. And now that I’ve run my
own business, I have new respect for them and
they for me.”
But with Amy out of the line of succession,
and the older generation thinking about retirement, how would the business continue to grow
and thrive? “My parents were overworked and
overstressed and morale was low. So they decided
to seek a general manager. I thought they were
crazy. She wanted someone with experience in
our industry—where are you going to find that?
It was a really lengthy process, but in San Diego
there was a man who knows how to make tutus.
He had a lot of expertise in the dance and cheer
business.”
That’s putting it mildly. David Hodgen had
worked his way up through the dance and cheerleader apparel industry to head a $28 million
division of Danskin.
“They said, ‘We love your ideas, what’ve you
got? We’re launching private label, launching our
own brand...’ I get to expose everything I know
in the industry. They let me play, they trusted in
my expertise and empowered me. But I wanted
the opportunity to be listened and empowered
and possibly ownership down the road.
“Be open to new ideas AND revenue streams.
We went from 170 to 274 pages in our book,
and we were the talk of the show. Our customer
list is three times larger, a new thick book and
the response was amazing.” The lesson? “Bring
someone like me to make a difference, and allow
them to make the difference.”
Says Scott, “Dave’s new sales dollars allow us
to add a CFO, production supervisor, others. The
cost of doing nothing—if we hadn’t been brave
enough to take the step—the company would
have just faded away. Sewing used to be a prime
industry, and it would also be gone. It’s a lot of
jobs in a small town.” RM
By Shel Horowitz
Jonovic: cont. from page 4
making another egg.’ Substitute ‘family business’
for ‘hen’ and ‘opportunity’ for ‘egg.’ If we’re going
to succeed in this wildly changing world, doesn’t
it make sense to see that chicken stays as fertile
and healthy as possible, fully understanding it
will one day end up in the stew pot? We need to
manage the current business as the creative beings we started as, not as preservationists.” RM
By Shel Horowitz
“I am always ready to learn, although I do not always like
the things I am taught. “ –Winston Churchill
If It’s Good for
Toyota, It Could
Be Great for You
A
UTO GIANT TOYOTA is a family business—among
the most successful in the world. UMass Amherst professor Alan Robinson, returning to the Family Business
Center for an unprecedented seventh appearance, says
Toyota is among the world’s largest family businesses.
Toyota offers plenty of success modeling for smaller family businesses. This is a
company, after all, that…
• Enjoys a market value that’s twice the combined market value of its next five
competitors—with only one-sixth as many employees
• Has never laid off an employee due to economic downturns in its entire corporate history
• Has learned to treat employees/unions and suppliers as partners, defusing potential labor problems before they ever start
• Makes a strong and genuine commitment to environmental improvement, in an
industry widely known for its stonewalling on the issue
• Will sometimes compensate an entire class of customers, as they did to all Lexus
purchasers in 1996–97, following complaints about tire life; every purchaser got a
$500 coupon, whether or not they’d complained
Robinson spearheaded a large panel of Family Business Center members, all of
whom had read The Toyota Way by Jeffrey K. Liker, and all of whom had applied
lessons from Toyota to their own very different businesses. The panelists shared 14
principles from the book, in a little over an hour.
David Rothenberg of interior design and furniture company Bottaro Skolnick
says he’s learned from Toyota’s focus on long-term rather than short-term thinking,
and how this plays out in union relations. Toyota took over a failed General Motors
plant and reorganized it along the Toyota Way. “When it reopened, it surpassed all
GM plants in US in terms of quality, productivity, inventory turns.” And the union
contract, says Robinson, went from several hundred pages down to three, the first
page of which pledged no layoffs for productivity improvement and a 40% pay cut for
management if any layoffs at all were necessary.
Bottaro-Skolnick embraces Toyota’s principles in its reformed approach to customers and vendors. The company provides significantly improved levels of service,
cheerfully fixing things that weren’t its fault, and going to bat for its customers with
its own suppliers. “If we have vendor problems, we fix the problem for the customer
and then drop the vendor.”
For Fran Johnson’s Golf and Tennis’s owner, Cindy Johnson, learning to operate a
very lean, fast-acting company, like Toyota, is crucial. “Most businesses are 90%
Alan Robinson
Toyota: cont. from page 7
waste, 10% value added.” But Toyota manages
to tightly control inventory so there’s neither
too much nor too little, and at Toyota, speed
is good.
Transferring those lessons from a giant manufacturer to a single-location retail store was challenging, at first. “When I first looked, I said it’s
not going to apply in retail. But then I started
looking at the back room. We have a huge way
to go to make improvements.”
Kitchen designer Curio Nataloni was also
impressed by Toyota’s inventory management.
“Push leads to overproduction: the supplier
forces product on the customer. The end result
is leftover products that create waste and tie up
capital. This is a no-no for Toyota. Pull leads to
lean production. The customer initiates an order,
which the supplier fills. Fewer leftover products.
Our business uses a pull cycle. Once committed
to the sale, production begins.” Nataloni also
has adapted Toyota’s clear communication, with
written specifications that delineate responsibilities of each party.
The theme of “lean” waste reduction also came
up for Jeff Glaze of Decorated Products, who
notes that Toyota has identified and attacked
three kinds of waste: activities that add no value,
uneven matching of inventory to demand, and
overburdening staff or equipment. “Heijunka”
is the Japanese word for overcoming these obstacles.
Another principle Glaze examined was
building leaders internally, who are steeped in
the culture, rather than hiring hotshot outside
executives. “If you have a family and adopt an
8-year-old child who spent 8 years growing up
in someone else’s environment, it’s hard for them
to function. Try hiring a guy with 40 years in a
different culture!” Toyota sees great leaders as
teachers whose job is to mentor the staff and see
problems as opportunities to coach.
Stop and fix problems as they occur; it’s far
more efficient than making a troubled batch and
having to fix it later. That’s the key takeaway for
Joanne Goding of Moss Nutrition. “Toyota has
given every person the permission to press a button, pull a lever, something to tell everyone ‘we’re
stopping the line now to deal with the problem.’
And they ask why did this happen, and why did
that happen?
“In traditional manufacturing, you never shut
down the line. At Toyota, the line is running
How Massachusetts
Health Care Changes
Affect Your Business
W
HY IS IT that the individuals who are the best health risks, those who are
most desirable in an insurance risk pool, are the ones who are most likely
to be without health insurance?
There are a number of reasons, according to Cheryl Brooks of MillBrook Benefits
and Insurance Services, LLC, brought to the FBC’s October gathering by sponsor Axia
Insurance. Consider that adults age 18-34 represent almost 87% of the nearly 500,000
uninsured individuals in the Commonwealth. Many of these adults are employed but
31% of them work for employers who do not offer coverage or work part-time and are
not eligible. The shift in jobs from manufacturing to the service sector and a decline in
employer-sponsored health insurance are also contributors. Effective with Massachusetts’
new requirement for “universal” coverage, insurers are mandated to address the uninsured
with lower cost products. “But we don’t know what they’re going to look like or how much
they are going to cost,” notes Brooks.
She is, however, concerned about the impact on small business. One of the major provisions will merge the risk pools for small businesses (those with up to 51 employees) with the
non-group market, which consists of individuals who buy insurance directly from a carrier.
These individuals are generally considered higher risk purchasers and some actuaries have
projected that premiums for small businesses will increase slightly as a result.
The push for reform in Massachusetts came about because of a number of factors. It is
estimated that 31% of employers don’t offer coverage or their coverage does not extend to
part-timers (who, for retail giants like Wal-Mart, represent a major chunk of the workforce). Uninsured workers account for a billion dollars a year in health care, financed by
us, and this number is growing. Skyrocketing premiums, with double digit increases and
the highest per capita healthcare spending in the nation don’t help. Add the threat of a
loss of $385 million in federal Medicaid funding and Massachusetts was ripe for reform.
A major feature of the law is the individual mandate which requires all residents to have
coverage by July 1, 2007. In year one, uninsured individuals will lose their personal state
tax exemption and additional penalties will apply in following years.
Employers who do not offer coverage will face penalties as well. These include a fair
share assessment of $295 per employee and a requirement to pay between 10% and 100%
of the cost if these uncovered employees access free care at a hospital. Other employer
responsibilities included implementing a Section 125, premium-only plan, non-discriminatory premium contributions and additional reporting requirements.
Brooks also has a few questions we all need to keep in mind. “Is this program going to
be financially sustainable? Where will the money come from? How do you get the person
who gets free care now to accept personal responsibility and buy insurance? They may not
file taxes and the loss of a deduction may not be important to them.” RM
By Shel Horowitz
Ira: cont. from page 2
watch them doing it more carefully, democratically, strategically.
At our dinner forums and roundtables, you’ll
meet regular, everyday people who can be your
heroes, who can show you how you’re not doomed
to repeat history. Hear from earnest relatives who
learned the hard way—but still, learned—that
you have to give the job to the best applicant,
family or not. Who came to comprehend that if
you don’t work in the family business, you don’t
own stock. Or struggle, but succeed, in comparing
competing offers to buy the company, one from
a stranger, the other from a daughter. There’s no
one “right answer” to any of these situations, but
put yourself in the huddle with people thinking
it all through, and increase the odds of getting
it right for you.
If there were 100 people in a room, some would
estimate that only 16 are born or trainable leaders,
the rest are trying their best with what they got.
There’s much to learn from the 16, of course; but
the 84 have astounding persistence, ingenuity, and
aspiration. If there’s 100 people at a dinner forum
of the Family Business Center, I can’t tell for sure
who the 16 are, and don’t really care. Whichever
of these somewhat synthetic groups you belong
to, learn from both: you may hear something
from a new friend that you couldn’t hear from
your old man. Your father will be glad you heard
it from anyone.
Our gatherings are customized for you, with a
steady stream of ideas bouncing off and filtering
through 100 perspectives, taking a shape that is
your “Aha!” for you to take home and plug in.
Conversely, this group can sometimes shine a
light on what you think is gorgeous, then you
gratefully realize “this idea needs work” or “this
idea is scrap.”
The Family Business Center is in year 13. If
you are a Western Mass. family business, that’s
how long you’ve been invited to take a look. If
you’ve never been to one of our events, I admire
your diligence in putting me off.
But consider: business owners are investors,
users of resources, continuous learners. There is
no reason you should not consider this a bit more.
Whether your thing is whips, widgets, welding,
websites, wellness, wine or what-have-you, if you
want to win, you could do worse than to meet the
many kinds of winners that consider this learning
community the place to be. Please contact me at
(413) 545-1537, or [email protected]
to let me know you want to come to a dinner
forum soon. RM
Howard Cheney
Financial Reporting:
Enron and You
H
OWARD CHENEY, of FBC sponsor Meyers Brothers Kalicka, updated
FBC’s June meeting on post-Enron accounting practices, starting with a
little recent history.
The year 2001 saw “some of the country’s largest frauds and bankruptcies—but there were
things they were doing that were within accepted accounting practices of the time. Colossal
financial failures were occurring on a regular basis, and there was a concern that auditors weren’t
doing their job very well.
“In 2002, the federal response was Sarbanes-Oxley (SOX), which changed the level of responsibility taken by senior managers and auditors” regarding both external and internal reporting.
SOX created the Public Accounting Auditing Oversight Board. “The SEC and the American
Institute of CPAs still have roles, but SOX added this other organization.”
Family business owners may wonder, “’How does this affect me, I’m not publicly traded?’ But
there’s a trickle-down effect: other legislative bodies say, if it’s good for the federal level, it’s good
for us too.” Massachusetts has not yet adopted new laws in this area, but California and other
states have.
Also, if you serve on nonprofit boards that receive federal or state assistance, you’ll need to
meet the new standards.
“The landscape starts to change. GAAP [Generally Accepted Accounting Practices] doesn’t
provide karma for privately held family businesses. It’s all one set of rules.”
What are your options?
“1. Follow all the GAAP rules except the one you don’t want to bother with. Accountants
issue a statement that your accounts have been prepared; we have the option if you choose not
to implement one complicated rule that’s not designed to apply to you, to add some language
that says this company did everything except this. If you get your banker on board with this
concept, no problem.
“2. Convert your reporting to a basis that is not GAAP, such as income tax basis. Then your
financial statements will take on the appearance of your corporate tax returns. Some of the items
on the P&L may be different, like depreciation. Your expenses will be a bit higher, your earnings
a bit lower. If you do what’s necessary for third parties to understand, you’re all set.
“3. Have your accountant do something other than the typical year-end report. If your loan
agreement calls for certain benchmarks and metrics, under ‘agreed-upon procedures,’ we design
procedures to look at those metrics. It’s more straightforward and less time-consuming than a
full-blown audit, and it provides third parties with the level of comfort they’re looking for.”
Cheney warns that these options won’t work in every case, but that your chances are good if
you involve your partners in the process. “If you want to do one of these things that’s a bit different, you don’t want to say ‘Hey, look what I did,’ but go to them early in the process and say,
‘This will give you the information you need.’” RM
By Shel Horowitz
What Kind of Business will You Have in
30 Years– And Who will Be Running It?
I
S THIS WHAT the world looks like in 2025? “Your satellite-controlled cars do not
require drivers. A solar power station in space supplies electricity. The latest news is
projected on the wall. You use your eye scan to use a [public] laptop—what business
are you in today?”
This was the two-sided challenge Ravi Kulkarni, of CoachRavi.com, threw out to the
UMass Amherst Family Business Center’s September gathering at the Clarion Hotel: how
can your business anticipate—and be ready for—rapidly changing conditions, and who
should be at the helm?
A successful succession strategy recognizes the need to combine younger visionary dreamers—sometimes called the “lunatic fringe”—and Boomer-generation practical managers who
can turn those sweeping visions into systematized, replicable products and processes.
For those entering today’s workforce, the mindset is different, formed as it was by technologies already adapted so thoroughly as to be organic. “My daughter sends me email upstairs
from downstairs; that’s how she communicates.” And from people steeped in that milieu,
the quantum thought leaps needed to prepare for the future can more easily arise—but they
may not have a clue about putting them into practice.
And getting those radically different perspectives—the visionary and the manager—to
harmonize requires an adjustment. But despite its inherent stresses, collaborative leadership
is key to fusing those two very different personalities.
“When you put them in one room, leadership is going to be tested. No one has put these
people together. But you still need a task team” to integrate marketing, sales, and manufacturing. “You will need collaborative leadership for boundary-less management. In a traditional
organization, knowledge transfer does not take place; people are protecting their turf. In
collaborative leadership, we all work together. Everyone may not benefit equally, but together
we’ll change the size of the pie.” RM
By Shel Horowitz
Toyota: cont. from page 8
less and their production is higher. We initiated
instant meetings as problems occur. But stopping
the line for us meant we could not pick up our
telephones. What if they didn’t place the order?
We found how smooth it was to deal with the
problem right in that moment.”
Related to this idea is the concept of visual
control of information. Bill Dempsey of office
equipment company H.L. Dempsey suggested
clearing away extraneous visuals, so that the important visual cues are as noticeable—and acted
on as quickly—as traffic signals.
These processes may be part of why Toyota
was able to maintain 96% uptime while converting an entire plant, noted Jason Mark of Web
developer Gravity Switch. “Ford, GM, they’re
lucky if they can hit 85% on a good day, never
mind when they’re upgrading.” And another part,
Mark says, may be Toyota’s commitment to being a “learning organization. At Toyota, you do
something bad, your job is to go and fix it. Toyota
focuses on learning how to learn. Always room
for improvement.”
Alan Robinson’s co-author, Dean Schroeder
was in town from Indiana, and he pinch-hit for a
couple of panelists who couldn’t make the event.
Schroeder noted that in custom homebuilding,
shorter building cycles are more profitable—but
many builders have never tried to do this. By
standardizing the entire process and then revamping the time-wasters, the firm was able to drop
the construction cycle by more than half, from
180 days all the way down to 75. The result:
8% increase in margin, a seven-fold increase in
referrals, and 70% of all jobs completed with no
“punch list” of items to be redone!
Schroeder also stressed the importance of
creating exceptional teams from exceptional
people. “When Toyota has a family member
they’re trying to groom, they move them around
the company a lot. They make sure they work well
with others, take other people’s ideas. The people
who head the Kaizen (continuous improvement)
system are oftentimes family members of people
on the board. So when you’re developing the next
generation, do it in a team context of working
with others, not just how great they are” within
their own skill set and comfort zone.
These teams go beyond the company and into
vendors, notes Goding. Toyota took 10 years
to train a partner company in its cross-docking method, crucial to Just-In-Time inventory
management. Ford, by contrast, took the cheapest
bidder, quickly, and lost a million dollars when
the system didn’t work.
One of Toyota’s principles is to see for yourself.
Before redesigning the Sienna minivan, Chief
Engineer Yuji Yokoya visited every state and
province in the U.S., Canada, and Mexico—and,
reports Jim Sagalyn of Holyoke Machine, the
car’s engineering reflects his commitment to be
successful in the extreme range of driving conditions he found: Higher crowned roads in snowy
Canada led to excellent drift control, high winds
in Mississippi made him engineer for stability,
Santa Fe’s narrow streets enforced a tight turning
radius. His observations at Home Depot led to a
cargo bay that can take a 4x8’ plywood sheet—and
observations of how Americans eat and drink in
the car much more than Japanese produced a
car with 14 cup holders! Although larger, it was
$1000 cheaper than the original.
Beamed in by video, Larry Grenier of Grynn &
Barrett Studios had a double-barreled principle:
move slowly enough to reach consensus on decisions, but once that decision is made, move fast
to implement it. An example: On environmental
grounds, Toyota opposed construction of a large
development near its Arizona testing facility. The
company sought consensus among all the stakeholders, including local government bodies. As
a result, 200 acres were saved and the developer
anted up several million dollars for groundwater
replenishment.
Grenier incorporated a similar consensusbuilding process into his company’s presentation
of photo proofs.
Toyota’s principles are enabling them to step up
as the world’s largest auto maker, but apparently
can be implemented by companies of any size
and industry. RM
By Shel Horowitz
10
Washington: cont. from page 1
word I don’t know”—the two men were portrayed
by William Arthur Sommerfield, artistic director
of the American Historical Theatre in Philadelphia (Washington), whose credits include appearances on NBC’s Eyewitness to History, Good
Morning America, and The Today Show, as well
as Mount Vernon and the White House.
Lincoln was brought to life by Jim Getty—like
the historical Lincoln, an Illinois native, who
now resides in Gettysburg, Pennsylvania. He has
performed at the Library of Congress and the
Smithsonian Institution, among other impressive locales.
Alternating back and forth, the two presidents
answered a series of questions posed by FBC
director Ira Bryck, plus a few from the assembled
multitude.
On dealing with difficulty: Washington said
he learned from the Benedict Arnold fiasco that
“I do not put people in important positions on
the basis of emotions only.” One part of the story
not often told: Washington claimed that Arnold
had mixed government money with his personal
funds—something that still rings a warning bell
in today’s Enron era.
Lincoln was less popular in his own day than
Washington had been, and often faced a hostile
press. He also fought with General McClellan,
who refused to carry out Lincoln’s strategy, prolonging the war, according to Lincoln, in order
to maintain the hope of not eliminating slavery
in the South.
Both men were known for their impeccable
honesty. When asked about it, “Honest Abe”
replied, “Honesty tops everything in leadership.
I worked with a cabinet of seven people, and I
had to be honest with them. I don’t just mean
you have to be always truthful, but you have to
be consistent. You can’t change your policy every
week… And humor—without it, you’re lost. I
used humor back when I was a lawyer, not just
to tell the joke but also to get the point across
to that jury.”
And the man of whom the “I cannot tell a
lie—I chopped down the cherry tree” story is
told? “My father was a farmer and I am a farmer;
my father taught me the value of anything that
grew from God’s green and blessed earth. ’Tis a
myth, I never cut down a cherry tree!” When he
was 11, his father died and his half-brother Lawrence took over the estate. Lawrence “handed
me a book called the Rules of Civility, told me to
copy them to improve my handwriting. I copied
those rules again and again, and they became part
of me. The basic rule of civility is: have a great
deal of respect for all other human beings. That
tenet is supported by honesty, which remains my
basic philosophy.”
Lincoln also talked of his cabinet when discussing leading difficult people. “I was coming
to the White House under the condition of
possible rebellion. This great government could
have cut itself right in two. Each of the seven
men as I chose them looked down upon me;
they all thought they were more qualified to be
the president than this hick from Illinois. I chose
both Democrats and Republicans to fill those
seats. If we were to go to war, this wasn’t going
to be a Republican war; it was going to be a national war. I never wanted a group of yes-men. I
wanted new ideas. I wanted them to throw things
out on the table that I would never have thought
of. And then we could discuss it. And when they
went out from there, they knew the policy. A
reporter asked, ‘You have four Democrats and
three Republicans, and the Republicans have all
run against you, aren’t you worried about a coup?’
“It is said an Eastern
monarch once charged
his wise men to invent
him a sentence to be
ever in view, and which
should be true and appropriate in all times
and situations. They
words: ‘And this, too,
shall pass away.’...”
- Abraham Lincoln
11
Robert Charles Photography
presented him the
Divorce and the Family Business
A
NY SUCCESSFUL family-owned business should employ
protective strategies to minimize the impact of a shareholder’s
divorce. In a mature family-owned business, one that has been
in existence long before the marriage of one of its young shareholders,
the founders should have engaged in business-succession planning that
contemplates the possibility of a shareholder’s divorce. This can be accomplished with contractual agreements
“Sometimes...only
or by using trusts or other entities,
such as family limited partnerships, to
after the business
hold the business interests and protect
against an involuntary transfer due to a
becomes successful
shareholder’s divorce. At a minimum,
such strategies will track the ownership
does the owner’s
of the business and/or confirm the
interest was non-marital or separate
marriage fail.”
property when the marriage began.
Sometimes a business enterprise is
started early in a marriage and then
only after the business becomes successful does the owner’s marriage fail.
There are numerous tax considerations that must be addressed in the
event of a divorce. The divorcing parties should try to agree on the division
of a family business in whatever form that takes, and in doing so, utilize
a mutually tax efficient method the benefits of which can then be further
divided between the parties.
I said, ‘If you think they don’t like me, you should
see how they hate each other.’”
Washington also faced people who were
anything but yes-men, citing “several instances
where I surrounded myself with people one might
think were not appropriate for the task. My best
general was Nathaniel Green, of Rhode Island,
a Quaker! I also surrounded myself with young
men, my aides-de-camp. Out of that group, the
most important was Alexander Hamilton. He was
very difficult to manage; he overworked all the
time. He was extremely loyal, but he had a short
fuse. I told him one day to come to my office.
He said he had to deliver a paper first. When he
came back, I said, ‘You have kept me waiting 15
minutes.’” In a fury, Hamilton stormed off and
threatened to resign. “Later I called upon him
to be Secretary of the Treasury and Jefferson
to be Secretary of State. These two did not get
along well, but I needed them both. Without
Hamilton’s ability to see the future, I doubt this
12
The most tax efficient method to divide a family business depends
on the circumstances surrounding the business and the respective goals
of the divorcing parties. In the context of a family business the advisor
must consider: (i) is there a premarital agreement?; (ii) is there a buy/sell
agreement?; (iii) what are the ownership interests of the divorcing parties?; (iv) how much alimony is to be paid, if any?; (v) were both parties
active in the business?; (vi) what value, if any, does each spouse contribute
to the success of the business?; and (vii) were both parties sufficiently
compensated in the years prior to the divorce? General tax considerations
for divorcing spouses include the non-recognition of property transfers,
the tax-free division of retirement plans, and the tax shifting result of
alimony payments.
There are no easy solutions when owners of a family business divorce.
The best way to avoid many of the complications is to use prenuptial
agreements, buy-sell agreements, or other forms of business succession
planning. In the absence of such pre-existing agreements, there are unique
and tax efficient methods to divide and exchange the spouses’ interests in a
family business. The advisors for both spouses will need to coordinate the
goals of each spouse, the options available in light of the form, profitability,
and nature of the family business, and the risks and costs of having the
spouses resolve their differences in the divorce court. RM
By Kristina Drzal Houghton, CPA, MST, Meyers Brothers
Kalicka (a proud sponsor and advisor of the UMass Amherst
Family Business Center.)
country would have any solid financial structure
and Jefferson’s knowledge was essential in foreign
affairs.”
Both men faced rebellions. Washington, to
his regret, oversaw the execution of two of the
mutineers, but spared the lives of the other five;
Lincoln suspended habeas corpus during the
war. Fortunately, the typical family business
owner is unlikely to face the need for such drastic
consequences.
How does a leader motivate and communicate
and entertain?
Washington: “To lead means to win the
respect of those serving with you. This respect
is oft-times won by sharing the experiences in
the field, doing the things that they do. Hence,
the cold and the misery of war was shared by
the leaders as well as the rank-and-file. This
was necessary to retain the loyalty of those who
served. A constancy of character was needed. If
I deviated from that concept of being respectful
to those who served, then I could not ask them
to do the things they had to do. The most im-
portant thing was I learned to listen. I allowed
each general to speak his mind, give me ideas,
but then I did what I thought should be best,
never violating the goals and objectives which I
had laid out at the start of the revolution. Perhaps
I do not have Mr. Lincoln’s way with humor?”
Lincoln: “When I debated Stephen Douglas for
the Senate, all our debates were out of doors.
We were going at it in front of 2000 people. He
told them I had had a liquor license when I was
a storekeeper. Have you ever heard 2000 people
inhale at once? So I told them that I was always
on the rear side of the counter, but Mr. Douglas
was on the front side.”
But sometimes, a leader simply has to act
decisively, as Washington did here: “We had lost
battles in Brooklyn Heights, Manhattan, Fort
Lee and Fort Washington. We were driven all the
way across New Jersey all summer long, fighting
at every crossroad, every bridge. Finally we found
our backs against the Delaware River. People
Cash Flow
is King
Three Lawyers, Three Questions
I
’M SURE THAT if you ever requested
financing from a bank, the banker asked
for a laundry list of financial information. You probably scratched your head and
wondered about the good old days when
transactions were completed with a handshake. What could the bank possibly be
doing with all of this information?
While most borrowers feel that loans
are generally approved on the basis of your
company’s credit history or collateral, the
banker must also be comfortable with the
company’s ability to support the payments
through a debt service or cash flow calculation. Simply put, the bank is looking for
the borrower to have at least $1 in cash flow
for every $1 to be paid back during each
year the loan is outstanding. The bank
looks at historical ability as reported on the
company’s financial statements to determine
cash flow. Simple debt service or cash flow
is calculated by adding the company’s profit
(or loss) for the year plus non-cash items
such as depreciation and amortization plus
the total interest paid throughout the year to
add back to the cash flow formula. The sum
of those items is then divided by the required
principal and interest payments for the year.
Hopefully the answer is greater than one to
one coverage. If the coverage is too weak,
the bank may say no or perhaps amend the
amount of the loan request.
Often, on a new venture or business
expansion, the bank is relying on projections to support cash flow. The true test is
whether the projections seem reasonable;
is the projected cash flow comparable and
realistic in comparison with other businesses
in a similar industry and what resources can
a company fall back on if certain projected
line items are not met?
So, as you can see, the banker uses the
borrower’s financial information to help
calculate cash flow—the most important
component for a loan. RM
By Don Anderson,
Vice President, Hampden Bank
Scott Foster
Mary J. Kennedy
Ron Weiss
A
TTORNEYS FROM FBC sponsor Bulkley, Richardson and Gelinas, LLP
tackled three questions asked ahead of time by attenders at the March gathering.
First at bat was Mary Jo Kennedy tackled non-compete covenants: “Cov-
enants not to compete are different in every state. In some states, they’re not even valid. So you really do not want to get a form off the Internet or from your trade association. Each of your needs is
going to be totally different.”
“There has to be a legitimate reason for the non-compete such as necessary to protect the legitimate business interest of the employer: trade secrets, goodwill, etc. What are the restrictions? What
is reasonable in geographic scope and length of time? It’s interpreted very narrowly by the courts.
They’re going to make sure employees have the ability to earn a living if they go elsewhere. Many
judges will look at what’s fair, what’s reasonable. If you go too big, overly burdensome, the court will
not narrow it; they’ll simply declare the agreement unenforceable.”
“When hiring—are applicants bound by any of these covenants? You want to know at the time of
the interview, and not after you make the hiring decision.”
Next up was Scott Foster, on whether to have a buy-sell agreement: “Who’s buying? Who’s selling?
Where’s the money coming from? Are you dead—is there an insurance policy? Where’s the money
going to come from? The bank is not here to be your exit strategy. Will you leave an empty shell?
Lastly, when will this agreement take effect?”
Does the departing generation just need to comfortably retire? Or do they want millions?
“Once you’ve answered those questions, you get the answer” about whether a buy-sell agreement
makes sense.
Finally, Ron Weiss discussed who should own a building that your company buys: “Often, the answer
should be a separate LLC from your operating business. This offers the opportunity to accomplish:
• Reduced-tax or tax free transfer of wealth: if it’s owned in substantial part by the younger generation it avoids gift taxes in transferring equity. Rent payments are deductible and used to pay down
mortgage, and the equity builds tax-free
• Tax-free distributions of substantial amounts of cash (unlike a C or S corporation)
• Chance to let the older generation transfer ownership of the operating company but retain a
stream of income from the real estate
• Chance to provide an income stream and equity to children who don’t work for the business
• Flexibility to sell operating business and retain the real estate without tax consequences
• Isolating a major asset from most of the risks inherent in youroperating business.” RM
By Shel Horowitz
13
Schedule of Upcoming Events
Full Schedule Online at: www.umass.edu/fambiz
Wisdom!
Experience!
Honesty!
Frankness!
Come and
Get It!
Highly Enrich
Your Cranium at
an Upcoming
Family Business
Center
Dinner Forum
Full Schedule:
www.umass.edu/
fambiz
Ask About Our
Trial Run Offer
or come as the guest of a Member
Company or Corporate Sponsor.
For more information, contact
Ira Bryck at (413) 545-1537,
or [email protected]
F.B.C. MEMBERSHIP
BENEFITS
• Participation in the Full Series
of Seven Dinner Forums
• Roundtable Discussion Groups
• Opportunity to Network
and Confer
• Subscription to our
Educational Newsletter
Related Matters
14
MAY 16, 2007
Wednesday 5:00-8:30 p.m.
Clarion Hotel & Conference Center,
Northampton, Mass.
Is Birth Order Ruining Your
Succession Plan?
Owing to biological evolution, conflict is
built into family life. On average, siblings
share only half of their genes, so they are
inclined to keep for themselves twice as
much of any scarce resource as they give to
a brother or sister. Because parental investment is a scarce resource, offspring typically manifest sibling rivalry. Fortunately,
biological evolution has also predisposed
family members to cooperate with one
another. Close relatives tend to behave
cooperatively because they share many of
the same genes and thus represent genetic
insurance policies for one another. To what
extent do Darwinian principles, which are
well documented for animal species, apply
to human beings? In particular, what can
family members do to maximize cooperation, rather than competition and conflict,
within the family system? This presentation
explores these important questions in terms
of recent studies about family dynamics,
including new research on the kinds of
problems that most threaten the survival
and continuation of family businesses.
JUNE 19, 2007
Tuesday 5:00-8:30 p.m.
Log Cabin Banquet & Meeting House,
Holyoke, Mass.
The 7 Irrefutable Rules of Business
Growth: 21st Century Strategies for
Building Your Company
More than any other objective, businesses
want to grow. We are proud to present Steven S. Little, who will investigate what it
takes to grow your business effectively and
profitably. Through his personal experience as a growth expert (both as a growth
consultant and as President of three fast
growth companies) and studies of the Inc.
500 (America’s fastest growing private
companies) Steve identifies best practices
of organizations that achieve sustained and
profitable growth. Steve will also touch
on The Ten T’s of Customer Acquisition
& Retention: how today’s most successful
organizations are transforming the way
in which they acquire and retain customers. Through concepts such as “touches”,
“telepathy” and “timebombs”, this no-nonsense discussion will help your group build
customer-centric processes that lead to
sustainable growth.
SEPTEMBER 20, 2007
Thursday 5:00-8:30 p.m.
Clarion Hotel & Conference Center,
Northampton, Mass.
How the Upcoming Generation Can
Overcome Its 8 Biggest Challenges and
Take Ownership for Their Future
What is it you wish you knew then, that
you know now, about the opportunity to
join your family business that you should
probably be talking about with your teenagers now? Or if you or other young adult
children (say 25-40 years old) in the family
business didn’t have the proper discussion,
is it too late? There is still much that can
be achieved through some self-analysis
and self-improvement, building credibility,
determining your career path, building a
life plan, clarifying your values, determining your marketability, and keeping yourself
open to the risks and benefits of objective
feedback. No matter your age, there is work
to be done to make sure your inner child in
the family business is both behaving him/
herself, but keeping hope alive! This session
would be a great one to invite your teens,
or college age kids to hear, whether or not
you’ve ever had “the family business talk.”
You can always see our full schedule
online at www.umass.edu/fambiz.
OCTOBER 23, 2007
Log Cabin Banquet & Meeting House,
Holyoke, Mass.
thought the war was over. We needed something
to awaken them to our greatest cause. I went
back across that river and attacked the Hessian
outpost. It’s not true that they were celebrating
Christmas and were sodden with drink; they had
doubled their guards and the rumor was abroad
that we were coming. But they could not believe
that this ragtag army would strike across the
Delaware. One man, Colonel Daniel Glover of
Massachusetts, said to me, ‘Your plan is ridiculous, you have no boats.’ I said, ‘Col. Glover, find
me the boats!’ Three days later, on Christmas Day,
we had the boats, stolen for us. By the by, if you
want anyone to steal a boat for you, get a Massachusetts man. I knew that if we did not strike
within New Jersey, that we would lose popular
support and the war would be over.”
Some points specifically relevant to family
business issues:
Lincoln, on active management: “When you go
to the front lines, the general never knows when
the old man is going to show up, so he keeps in
a higher state of readiness. But you’re reassuring
the troops that you’re on the same wavelength
or success.”
Washington, on delegation and the importance
of a shared mission: “Each officer under me received very clear orders, but the orders also said
that officers must use their own initiative when
the situation changed rapidly. We disseminated
information in the early days of the war by trying
to get everyone on the same page, a page written
by Tom Paine…a short tract called Crisis No.1.
I asked that the pamphlet be distributed to men
in the Continental Army, and they read it. It’s
important to make your basic message clear. Why
were we fighting? It was important that even the
common soldier understood our mission.”
Washington, on the power of admitting weaknesses while quelling dissention in the ranks: “I
couldn’t read the letter. I reached for my eyeglasses. Not even my intimates knew I wore them. ‘You
will excuse me, for not only have I grown gray
in the service of my country, but nearly blind.’ I
looked into their faces and where there had been
anger and confusion previously, now in each eye
a tear glistened and I knew at that moment the
dissention had been eliminated.”
Lincoln, on the role of business: “I’d go back
as a shopkeeper in Springfield, Illinois, and serve
some of my clients who were small business
people: John Deere, McCormick…financial,
banking, insurance—the Hartford already had
agents in Chicago and Cincinnati. We started the
transcontinental railroad during my presidency.
Business did that.” RM
Harnessing the Awesome Power of Your
Subconscious to Achieve Those Goals You
Forgot You Set
In our attention deficit plagued society,
it’s no wonder you have trouble staying
focused. How often have you set goals for
yourself, and before you know it, you’re
back to old habits, and the reward for a
job well done is nowhere to be found, and
you can’t even summon the motivation to
look for it. This event will demonstrate the
awesome power of your subconscious mind.
With actual volunteers from the audience,
Anthony Galie guides you through a series
of visualization techniques that must be
seen to be believed. And even though you
will not soon forget how fabulously entertained you were, even more dazzling is the
effectiveness of the tools you will be given
that can be used continuously to improve
many aspects of your life.
DECEMBER 11, 2007
The Delaney House,
Holyoke, Mass.
The Starbucks Experience: Lessons in
Leadership to Spark Your Business to
Unimaginable Success
What once was a service economy has
transformed into an “experiential revolution.” Learn strategies for achieving
the Ultimate Customer Experience by
combining employee empowerment with a
strategic view of operational precision. Dr.
Joseph Michelli, author of The Starbucks
Experience, will help you generate employee
retention, empowerment and enviable
customer loyalty. When a focus on transactions and customer satisfaction just won’t
do — explore a world where “everything
matters” and companies are “beloved.” Just
as Starbucks went from one small shop in
Seattle’s Pike Place Market, to approximately 11,000 stores internationally, so too
can we all maximize our “ordinariness” for
positive impact, organizationally and in our
communities.
By Shel Horowitz
UMASS AMHERST
FAMILY BUSINESS CENTER
Director Ira Bryck
Board of Advisors
Charles Epstein, CLU, ChFC, FBS
MassMutual/Epstein Financial Services
Rick Giombetti, President,
Giombetti Associates
Larry Grenier, President,
Grynn & Barrett Studios
Kris Drzal Houghton, CPA, Partner,
Meyers Brothers Kalicka, PC
Cindy Johnson, President,
Fran Johnson’s Golf and Tennis
Michael Long, CIC, CEO,
Axia Insurance Services, Inc.
Skip Matthews, General Manager,
Louis & Clark Drugs
William S. McClure, Director,
Continuing & Professional Education,
UMass Amherst
Leslie Schaefer, Vice President, Marketing/
Principal, October Company and Chemetal
Ronald P. Weiss, Esq., Partner,
Bulkley, Richardson and Gelinas, LLP
Glenn S. Welch, Executive Vice President,
Hampden Bank
RELATED MATTERS
Treat Your Business Like a Business
and Your Family Like a Family
Ira Bryck, Editor
Shel Horowitz, Staff Writer
Jack Cavacco, Graphic Designer
UMass Amherst Family Business Center,
Continuing & Professional Education,
University of Massachusetts,
100 Venture Way, Hadley, MA 01035-9430
Telephone: 413-545-1537 • Fax: 413-577-0106
e-mail: [email protected]
web: www.umass.edu/fambiz/
Copyright © 2007 Continuing & Professional
Education, University of Massachusetts Amherst
Related Matters is provided for general information purposes only. It is not intended as legal or
accounting advice. Accordingly, readers should not
act upon information in this publication without
seeking professional advice. Copyrights to the
articles in this newsletter remain with the authors
and the UMass Amherst Family Business Center.
The University of Massachusetts is an equal
opportunity, affirmative action institution.
About Our Staff Writer
Shel Horowitz is a professional writer, and the
staff writer for Related Matters. He is the author of
six books, and recently published his sixth book,
Principled Profits. He can be reached at www.
principledprofits.com.
15
The UMass Amherst Family Business Center’s Corporate Partners
THE AXIA GROUP is the fastest growing Property & Casualty insurance agency in Western
Mass. Our mission is to create continued value for our clients, by helping to navigate them
through their insurance process. Providing professional, sound, cost effective alternatives
to our client’s insurance needs has proven to be the key to our success. We believe “There
is always another Solution.”AXiA: from the Greek word meaning Value, Merit, Worth,
Worthiness and Capable. Michael Long, CEO, and Alana Lupien, Director of Operations,
are available at (413) 205-AXiA (2942). www.axiagroup.net
Bulkley, Richardson and Gelinas, LLP is a full service law firm with offices in
Springfield and Boston, Massachusetts. The firm has extensive experience in advising
family businesses and in planning for the transfer, management, and conservation of
family wealth. Since its founding in the 1920s, the firm has grown to be the largest in
western Massachusetts. However, with fewer than 50 lawyers, it remains a mid-sized,
community-based law firm whose lawyers emphasize personal contact with clients. Ronald
P. Weiss, David A. Parke, Mark D. Cress, Peter H. Barry, Scott W. Foster, Jenelle Dodds,
are available at (413) 781-2820. www.bulkley.com
EPSTEIN FINANCIAL SERVICES With over 23 years of experience, Epstein Financial Services has provided family business owners proven tools, techniques and products to help
retire with greater financial security, reduce income and inheritance taxes, and transition
your business to the next generation. Our service, The Family CFO ® Process, gives a
clear picture of your financial future, with increased financial independence and reduced
anxiety. Your personalized “Crystal Ball Experience ®” provides you greater simplicity,
focus and balance in your financial affairs. Charles D. Epstein, CLU, ChFC, is one the first
certified Family Business Specialists; is a member of the Top of The Table, representing
the top one half of one percent of financial service professionals. Charles can be reached
at 1-877-9FAM-CFO or 413-734-6418. www.epsteinfinancial.com
In business for over 20 years with a national/international client base of over 250 companies, Giombetti Associates is a management consulting firm known for increasing
productivity and profit through people. Specialties include Leadership Development, Preemployment Assessment, Team Building, Management Training, and Conflict Resolution.
Hiring the “right” person is assured with the Giombetti’s trademarked assessment process,
Performance Dynamics. Giombetti is resolute about its highest credo: “Within each individual
lies untapped potential. Our job is to identify and develop this hidden talent. Once leaders
emerge, effective teams evolve. Challenges become accomplishments and profitability grows.”
Paul Alves, Rick Giombetti, Ross Giombetti, and Rich Frigon are available at (413) 566-3863.
www.giombettiassoc.com
Established in 1852, Hampden Bank is a full service community bank serving the families
and businesses in and around Western Mass. The bank currently has seven branch office
locations in Springfield, Agawam, Longmeadow, West Springfield and Wilbraham, and
offers customers the latest in internet banking, including bill payment services. Hampden
Financial, created through a strategic alliance with MassMutual and The Novak Charter Oak
Financial Group, offers clients a full array of insurance and financial products and services at
all Hampden Bank locations. Glenn Welch is Executive Vice President, Business Banking and
can be reached at 413-452-5144. www.hampdenbank.com
MASSMUTUAL FINANCIAL GROUP is a global, growth-oriented, diversified financial services
organization. Its member companies—with more than $230 billion in assets under management at year-end 200—provide life insurance, annuities, disability income insurance, longterm care insurance, retirement planning products, money management, and other financial
products and services. Charles Epstein, CLU, ChFC, FBS (413-734-6418) and Pete Novak,
General Agent, Novak Financial Group (413-781-6850) are available to answer your questions.
www.massmutual.com
Meyers Brothers Kalicka, P.C. is the region’s largest independently owned accounting
and consulting firm with offices in Holyoke and Greenfield, Massachusetts. Meyers Brothers
Kalicka, P.C. was formed by the merger of Meyers Brothers, P.C. and Joseph D. Kalicka &
Company, LLP, on January 1, 2004. Both firms began service to the region in 1948. As a
member of the Private Companies Practice Section of the American Institute of Certified Public
Accountants, the Firm specializes in serving closely-held family owned businesses and prides
itself with providing timely and personalized service to its clients. Kris Houghton, Kevin Hines
and Howard Cheney are available at (413) 536-8510. www.meyerskalicka.com
The UMass Amherst Family Business Center’s University Partner
For 30 years, UMASS AMHERST CONTINUING & PROFESSIONAL EDUCATION has provided a pathway into the university for local
and national businesses, for the general community, and for adult, nontraditional students in a variety of credit and degree programs
and professional development courses.
With a strong commitment to lifelong learning and the belief that education is the key to keeping the local economy healthy, Continuing
& Professional Education supports the UMass Amherst Family Business Center both in theory and in practice, continuing its tradition of bringing the university to the community. For
information on Continuing & Professional Education programs and courses, please call: (413) 545-2414, fax: (413) 545-3351, www.umassulearn.net
Related Matters A125923
UMass Amherst Family Business Center
Continuing & Professional Education
University of Massachusetts
100 Venture Way
Hadley, MA 01035-9430
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