Help For Baby Boomer Family Business
Baby Boomer businesses that once thrived are under severe pressure in today’s changing economy. How do we navigate these new waters for future success and maintain the business value as part of the legacy we want to leave to our children. The following article offers some suggestions.
Baby Boomer Family Business Help
By: Henry Hutcheson
Baby Boomer business owners make up the largest part of all business owners and have historically thrived. But now, they face hard decisions to cope with the economy and begin to plan the next stages of their lives.
How do they continue to succeed? Here are some answers I have seen work.
– Don’t bid unprofitably to win a bid
I have a successful HVAC and plumbing client who has seen home and commercial construction slow to a trickle. With each new bid request the company faces a hard question: should we bid so low to ensure we win and keep the cash flowing and then hope to make it up through change requests or future jobs? In the current economic paradigm, this may be the first step toward bankruptcy.
Our client has found a better course by trimming the pricing down to as competitive a level as possible, without going negative. This means you may lose some bids. But if you are confident in your cost data, then you will be better off letting a competitor win the job at a negative margin. This will mean belt-tightening between bids. But the low-ball winners of today will be the business losers of tomorrow.
– Be open to looking for and testing new revenue streams
If work is slow, what should you do? I have a client who is the leader in a critical high-volume, low-margin business, but when the economy turned south, so did its profit. What to do?
Many successful family businesses can become closed-minded to new ideas. There are some reasons for this:
• No one understands the business like they do, so how could anyone know how to do it better?
• Branching out means going into an unknown area – they may be afraid.
• Ego can be an issue. It will mean being open and flexible, and being ready to accept mistakes.
Today’s businesses cannot afford the “Not Invented Here” syndrome. But at the same time, new ideas should always be tested. After brainstorming possible new revenue streams, we zeroed in on an ancillary business leveraging the current products and services to new customers. We made a small investment and endured many mistakes and delays in validating the new concept. In the end the financial results exceed expectations, and everyone is excited about the new business.
– Have a plan for the future
These Baby Boomer business owners also face a unique exit plan issue. These owners are feeling trapped because fewer businesses looking at acquisitions and there is little capital available for the few who are. But this same environment is making it difficult for their educated and qualified children to find good jobs. Many have been laid off despite stellar credentials. Connect the dots and it looks like a match made in heaven.
Unfortunately, it is a well-known fact that most family businesses fail to make it to the next generation. Increasing the number trying could sadly result in more estranged families and broken businesses.
It does not have to be this way. Business owners can be aware of this phenomenon, and employ tried and true actions to proactively manage this by:
• Creating a succession plan where the owners and family members agree to a future course of action regarding ownership and leadership
• Establishing appropriate governance that will serve the best interests of the family and the business
• Developing and practicing open and respectful communication regarding business, family and wealth decisions
Baby Boomer business owners have hard choices in this economy, but by choosing battles wisely, being open to change and planning ahead, the right decisions can be made.
Henry Hutcheson – http://www.Familybusinessusa.com -Henry Hutcheson is a nationally recognized speaker, writer and consultant to family businesses. He is the CEO and founder of Family Business USA. He is a family business columnist for numerous periodicals including the News & Observer and Nursery Retailer Magazine. He is an MBA graduate of Columbia Business School, is a certified family business adviser and management consultant. But more importantly comes from his own family business, Olan Mills. Henry works to increase the well-being and wealth of the family, and the operational performance of the family business. He can be contacted directly at firstname.lastname@example.org Article Source: http://EzineArticles.com.