Friday, October 22, 2004

Family Owned Business - Its a Matter of Planning

Jeff Cornwall posts about a study from the Wharton that reports on the challenge of intergenerational succession in family businesses.
The study essentially states that for all stakeholders, it is better for founder of the company to be at the helm. If a decendant of the founder runs the company value is essentially lost and value decreases ever more as you get further and further down the lineage from the founder.
Let me play the devil's advocate role here:
In this Wharton study, the researchers concentrate on large organizations like Ford, Home Depot, and Motorola.
This got me thinking:
What about smaller family owned businesses? Surely they are family businesses that face the same problem as their large public counterparts. Do these same conditions apply to smaller non-public companies?
I would argue that they don't. I think that with small family owned/controlled businesses the stakes are much higher so owners are much more reluctant to have things "screwed up" by a son or daughter that is not capable of running an organization with all its pressures. (This is their retirement money we are talking about here)
In a smaller setting, the successor would have a chance to get to know his/her employees and managers through working with them. I don't think that the "rallying the troops" issue is as big in a small family owned enterprise.
Also, if you have a child enter the business he/she will most likely have been to college. This may not be true for the owner, especially if he/she is the second generation to run the business.
Now I know that the statistics say that value declines from generation to generation, and each new owner finds it more difficult to motovate employees and capitalize on various competitive advantages, but I think that change is good. It is certainly inevitable. So well run small businesses shouldn't (in theory) have a problem with family succession in business.
Anybody out there have experiences that testify to either point in the small family-owned business arena?

Thursday, October 14, 2004

The Reeling Entrepreneurial Mind = Sleepless Nights

Ok. I am going to come clean. This potential business opportunity is driving me crazy. Well not crazy, but I am most assuredly losing sleep over it at night! I sit at work all day and ponder the future and what it holds for me if it all pans out. I do the same at home and especially before I TRY to go to bed. I imagine myself living in the rolling fields of Lebanon, PA - working all day (no doubt), but knowing that at the end of the day that what I have worked on is mine and will contribute to my personal as well as my company's success.
I am completely enamored with the idea of being my own boss. I am so enamoured with the idea of being my own boss that I cannot imagine working as a "subordinate" to someone else any longer.
It has become something more than just making a living or earning a weekly paycheck. It is about building something great, something that will exist into the future, something that will allow other people to make a living and provide for their families.
Why do I think like this? Are my years of being surrounded by my family's business and my entrepreneurship study finally coming to fruition in my uncontrollable desire to build this company to the greatness that I know it can become?
Or could it be something much more simple? Could it be that some people are just born with an "itch" to create magnificent companies like those of which the Dell's, Gate's, and Henry Ford's of the world have built?
Is the entrepreneurial mind something that can be learned or is it something inate that some people are just born with?
What do you think? I would be very interested to find out!
Whatever the answer may be, I know that I will not be getting much sleep in the near future!

Wednesday, October 6, 2004

Blogosphere Weighs in on the Age Old Question

This is part two of a two part series. You can find part one here. This is a fairly long post, sit back and enjoy!
I surveyed some of the entrepreneurs of the blogosphere and this is what they had to say...
Dane Carlson of the Business Opportunities Weblog:
While taking a job after graduation will get you exposure to the business world, it's most likely not the kind of experience you need to be an entrepreneur.
Starting a business is all about gumption, calculating risk, and ultimately taking responsibility for your own lively hood, and unfortunately there's no way to learn that as a cubicle-dweller.
Jeff Cornwall of The Entrepreneurial Mind:
A pervasive myth about entrepreneurial success is that it is related somehow to experience in a corporate setting. That is, young people have been told that before they go out and start a business they should get a "real job" for a few years. Young entrepreneurs are finding more success than ever.
A student was telling me about an encounter with a fellow student who was twenty years her senior. The older student had spent her entire career in human resources in the corporate setting. When the younger student told her about the entrepreneurship class she was taking, the older student said something like this: "If I knew leaving college what I know now, I would have started my own business and never looked back. Now it's too late. My life is too complicated to even think about such a thing."
Certainly, sometimes it makes sense to gain some experience. A student with a passion for the restaurant industry needs to have had experience in running such a business, for example. But much of this experience can be realized even during the time that these young people are pursuing their education. The key is to choose experience that directly supports the entrepreneurial path desired. And, there should be a clear time frame, with specific milestones of experiences gained, and with a defined "exit strategy" to allow transition into the entrepreneur's own venture.
It should be noted that there is some research that supports the role that experience that the entrepreneur has had plays in predicting the success of a venture. However, the strongest predictor is experience in another entrepreneurial venture. This is even stronger support, in my mind, for getting started in an entrepreneurial career sooner rather than later.
BJ Olin of The Start-Up Chronicles:
I'm sure there's not a "set" answer for everyone in regards to this question, unfortunately. Life after college is just as much about "finding yourself" as college itself was. However, if you don't have something that you know you want to do as far as starting a company, then I would suggest finding a steady gig right off the bat.
Living a life, no matter how temporary, in the working world as an employee will more than likely be a good thing regardless if you hate it or love it. My experience at the job I hated right out of collegeis what still drives me to this day. So a bad experience could be just as good, if not better, than a good one.
That all said, I think that it is most ideal to work for some other company, especially if you can find one that encourages the entrepreneurial spirit or at least one that you can easily juggle withsome sort of midnight/after-hours gig on the side. I think the most important thing is to not get addicted to a paycheck and keep your options open.
Know what you want, even if that's a vague and generalist vision. Always remember the big picture.
Barry Moltz of BarryBlog:
I believe that unless there is something or someone that is tugging at you after graduation, you should get some experience working for someone else. You can learn alot working in a big or small company. There are crazy people in both.
There is always something to lose. You can never pick the best time to start a business. It picks you based on what you see and who you meet. Let circumstances, your passion and serendipity "drive you".
John Lusk author of The MouseDriver Chronicles:
If you're passionate about your idea, there is no better learning ground than going out and doing it yourself. You will learn a ton from your mistakes and will recognize early on whether or not entrepreneurship is really for you. The older you get, the harder it is to sacrifice the lifestyle you are living to start a company.
I want to thank all my contributors for weighing in with their opinions. Hearing your advice and opinions has been truly a learning experience for me and hopefully my readers.
So what's your opinion on the old age question? What are the pros and cons of both sides? I wanna hear what you have to say! Click the comment link below!