College Orientation

I've just finished my last of five separate orientations for our five children who have, or will, attend the University of Alabama. Our twins had separate schedules for orientation, which meant that I attended two separate sessions for them. One of the best parts of each orientation occurred in the closing sessions. The speakers talked about the adjustment from living at home to becoming more self-sufficient. The adjustment is a two-way street. There is surely an adjustment for the student, but sometimes it's a bigger adjustment for the parent.

The irony for me was how similar those adjustments were to those needed when a business owner considers how to transfer power and responsibility from one generation to another. There were three main points presented by the speakers, which I thought were very apropos.

First, if the student has bad study habits, poor time-management skills or sloppy housekeeping habits before leaving for school, those habits will not suddenly change. Conversely, if the student has good study habits, a good understanding of the value of time and budgeting, and an appreciation for neatness, there is every reason to believe that those habits will continue.

Second, in many cases, students will be interacting with non-family members for the first time, on their own. In fact, a large number of incoming freshman will become roommates with someone they've never even met. Nowadays, at least they will have some time to "discover" more about their new roommate through Facebook, MySpace and all of the other social sites. The University takes that one step further and offers the roommates a written agreement, which forces the students to agree, ahead of time, on such issues as quiet times, how late the lights stay on, who can visit, best study habits for each, how clean and tidy the room will be kept, and on and on...

Third, and my favorite, was the independence of the new student from the parent. The speakers made it clear that some levels of independence should have already been practiced at home. It seems that in many cases, it's not the student rejecting their new "freedom", it's the parent(s) who seem to be unable to let go. There is a great article in the June 27, 2009 online edition of U. S. News and World Report that explains how to stay involved, but not become a "helicopter" parent. http://www.usnews.com/blogs/professors-guide/2009/04/17/how-not-to-be-a-helicopter-parentbut-still-be-a-parent.html#2692915 That parent stands ready to swoop in and solve whatever little problem their child has, denying that child the opportunity to grow and learn from their own experience.

Since I speak on family business succession, you can clearly see how translatable this information is in my specialty. As a third-generation business owner myself, and the father of five children, I can vouch for the similarity of the challenges of sending your children off to college, and planning the successful transfer of control from one generation to the next in the family business.

If the heir to the presidency of a small business has not shown the maturity and responsibility necessary for leadership prior to taking over, the chances are almost nil that suddenly those qualities will appear.

Even when people assume they know everything about those close to them, a change in circumstances can expose traits never before noticed. That is why the University offers a written document that forces students to answer questions which may expose differing expectations. That is even more important in closely-held family businesses.

In case after case, one of the most difficult challenges in family businesses is how and when to allow the "freedom to fail" to become a tool in the development of the successor. It's a long-term process, but in order to have real growth, there must be some level of trust and responsibility meted out in appropriate doses. That will be different in every situation, but it is absolutely necessary.

My wife, Lane, and I have learned so much from watching our three oldest children navigate the ups and downs of college life. We look forward with excitement and anticipation to the challenges awaiting our twin daughters as they begin their journey. The lessons mentioned during their orientations certainly are applicable to the successful transition of family businesses from generation to generation.

Please add whatever comments you have about either process...I look forward to hearing about your experiences or thoughts!

NAIFA Speech

Last week I had the pleasure of speaking to the Mobile chapter of the National Association of Insurers and Financial Advisors. This was especially important to me because these professionals advise many of the small business owners I'm trying to reach with my book. Family-owned businesses and closely held corporations benefit greatly from their advice on how to plan for future succession. While these professionals help owner/managers with what they need to do, many of their clients won't act until they understand why they need to plan ahead.

I was thrilled that some of those I met with after the speech expressed a desire to buy large numbers of An Act of Congress - The Real-Life Story of Power & Politics in Family Business to send to their clients. They agreed that my book makes a powerful tool to encourage business owners to plan now rather than hope things work out over time. They don't!

I hope you enjoy the talk I gave to NAIFA - Mobile. I'd appreciate any comments you may have.

http://www.box.net/shared/oem05gqn1f

Government Takeover?

More than one of the readers of my book, An Act of Congress - The Real-Life Story of Power & Politics in Family Business, made the point that our small family business experienced a government takeover, well before today's experiences. Their point is on-target! Way back in the early 90's, a government entity decided that they didn't like the way our family was running our own family business. The judicial sector of our government decided to take our ownership rights and transfer them to a court-appointed board and receiver, controlled entirely by the minority owner.

I won't use this column to rehash the details of our situation. I hope you will purchase the book at my website, www.tommyfulton.com, and take the opportunity to read how messed up life can get when government decides to take away the rights of business owners.

I will tell you how crazy this seemed to so many during the removal period. One of the biggest questions people had, whether they were paying close attention or not, was the same question we had. "How can the government just take your company away from you and give it to someone else...after all, this is not Russia?" Believe me, we wondered the same thing. There are some who believe that kicking my family out of our company and replacing it with the minority's board was a lifesaver for the company. They state that the financials of the company were in better shape than when we were kicked out.

Here's the problem...there is no way to prove what would have happened if we had been allowed to keep our company. We maintained that we would return to profitability soon, because we had already taken action to curtail the losing divisions. The only thing we needed was time to allow financial commitments to expire, which were scheduled during the next 12-18 months after we were removed.

The bottom line is that when the principles of risk and reward, inherent in our free enterprise system, are violated, a vital piece of our economic freedom dies. I'm not defending all of the leaders of today's companies, but I will never believe that the government is the best entity to decide who leads the companies. That is the sole responsibility and right of the shareholders who have invested in the company.

Lastly, one of the biggest problems comes about because the government decides to prop up failing companies, taking taxpayers money to decide who will succeed and who will be "small-enough" to fail. Ultimately, that takes the power out of the free market and gives it to politicians. Our family felt the negative side of government intervention well before today's foibles.

Book Signing

I just had my first book signing this weekend @ Jesse's Restaurant in Magnolia Springs, Alabama. I would like to thank two people who were instrumental in the success of this event. Cynthia Rush handles the public relations for Jesse's and put this event together. Nicole Houser is the manager of Jesse's, and was very gracious as the host for the book signing. If you ever have the chance to eat there, I can promise you will enjoy their food & the atmosphere.
http://www.jessesrestaurant.com.

One of the most interesting things I've found since publishing my book, "An Act of Congress - The Real-Life Story of Power & Politics in Family Business", is how many families have experienced some level of consternation with businesses, estates and many other relationships. The common thread seems to be that those involved never anticipated the problems that occurred. Instead of communicating to their loved ones (and sometimes "unloved" ones) prior to a decision time (e.g. - death of majority owner in the family business, or estate holder), most of them assumed it would be easier to put off that uncomfortable conversation. The truth is that they were afraid of reality and simply felt that "hoping" was a valid strategy. It isn't!

As I tell the story of "An Act of Congress...", I'm offering others the opportunity to use my experience as an opening point for discussing how they can avoid future disaster. The "knowing" looks of those purchasing my book tells me that they have experienced some feud in the past, or in many cases, are expecting one in the future.

My wish is that my book can be used early in the process of starting a business, or any family venture, with the knowledge that no matter how unpleasant or awkward it may feel to talk now, the pain of unpleasant surprise is infinitely more hurtful! I'll talk about this a lot more in future blogs & articles, but for now, buy my book...read it...and, pass it on to those in your family or close relationships. It may just open the conversation that allows for a lifetime of pleasure rather than heartache!