Inside the Mind of a 23 Year Old Indian NextGen

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Kanishka Arumugam

Kanishka Arumugam is the perfect example of the kind of NextGen this blog is all about. Young entrepreneurial people with a can do aptitude; an authentic leader that knows what he wants from life and goes for it. In this interview, this young NextGen surprised me with his maturity and wisdom. Kanishka Arumugam shares his family story and hopes for the future. Please, enjoy it!

1. Kanishka Arumugam tell me about you and your family business, Deccan Pumps Group, in India

I am from Coimbatore, an industrial and entrepreneurial city in south India, dubbed as pump city of Asia, known for its world class Pump Manufacturers, Textile Industries, International Educational Institutions, and also an emerging IT hub.

I am fortunate to be a second generation member of the Deccan Pumps Group. I grew up around the business and decided to be an entrepreneur from a very young age and this passion drove me to learn from organizations around the globe. Thanks to my prestigious alma maters of Sheffield, Leeds and Stanford Universities, that groomed me in many ways.

My father P. Arumugam and his uncle K.K. Veluchamy founded Deccan Pumps 32 years ago with a mission to make the life of farmers better by manufacturing superior reliability pumps. Today Deccan is a closely held conservative group with an annual turnover of around Rs 100 core focused on pumps also with its presence on Fluid Handling Distribution, Real Estate and Education. The brand is one among the Top 5 manufacturers of submersible pumps in the country and it remains Asia’s largest producer of vertical open well submersible pumps.

My father is a keen philanthropist. He runs a home for elders, has a desire to turn his ancestry farm into a model agricultural unit, and spends time in upgrading the basic infrastructure of his home village.

He believes not in chasing numbers but in giving back to society in as many ways as possible. Recently, he undertook a not-for-profit initiative and incepted the Info Institute of Engineering, along with his friends, mainly for the first generation learners of the country.

One can have simple living and be content but when it comes to business I believe one should never think twice about making it bigger. And this is what my dad and I often argue about. However such arguments help me evolve and I get to know the perceptions of the previous generation and absorb whatever is suitable in the current scenario.

Last year, after my graduation, I spent time with a few European family owned manufacturers and also had a short stint at Xylem, a non-family owned American company, the world’s largest producer of pumps and systems. Its major competitor was a Danish family owned company.

I was awestruck to learn how a family tradition could bloom into an industry that gives its competitors a tough time.

2. What’s your thoughts on building a Socially Responsible Company?

As mentioned earlier, a few years ago I often wondered why my father started a not- for- profit engineering college, a home for the elderly, rural development programs and similar activities instead of just growing the business. But now I realize that companies which are long lasting have a broader outlook and contribute to society in crucial fields such as education, healthcare, women empowerment and for a lot of other important social causes. The Forbes, Godrej, TATAs, Thermax and Wadias, are all living examples of this in India.

Last month when I was in Germany I visited my friend’s family owned company VIEGA, a fifth generation company which is into pipes and systems. It was interesting to learn how the family and business have involved the small town of Anttendorn in a larger way and how the feeling of goodness has been spread across from the taxi drivers of the company. Also the spirit of entrepreneurship and drive for growth is clearly seen in the fifth generation more than in the previous generations.

It is very essential for all the next generation family members to involve the society and community at large, in which they operate, and also to help the underprivileged and make the world a better place. A company’s purpose is just not to acquire wealth and markets but also to contribute to the society in which they live. This is an important value in creating long lasting organizations.

What do you think about Value system in a family operated company?

Care for the members (employees), humility, simple living with high thinking, involving the society, respect and care for the underprivileged, professional management with family members on board and taking part in participative management are important to the company.

The role of family business leadership can no longer be authoritative; only an all inclusive leadership model with the best value system works in today’s business organization. To put it in a nutshell, the secret behind a successful business is long term thinking, highly ethical practices strong values of family spirit, integrity, value delivery to customers and developing an entrepreneurship attitude in every employee. Keeping the company financially stable and risk-proof, safeguarding and adding value to the business: these must be the goal of a Next Gen member who wishes to grow his company in leaps and bounds.

Kanishka brief me about your opinion on Ownership, Management and Family.

Ownership, Management and Family should be viewed differently among the next generation members.

Your father might have been a great product designer who helped the company grow, but that doesn’t mean the next generation could follow or repeat the same. There is no point in just holding positions, adding value to the business is more important.  Perform else take a back seat.

Family involvement in a company definitely helps it grow at a much faster pace since the outputs are going to benefit their whole generation. More than money, emotions and attachments drive individuals towards better growth.

I believe family owned companies and the next generation should clearly differentiate between ownership, management and families. When these collide it gets complicated outside of the office too. It is simple when said, but I’m sure it is difficult to practice. My father and I might have a disagreement inside the office room, but that should not hinder the father-son relationship. My style of working is different from my dad’s. It doesn’t mean one is right and the other is wrong; we have to find our own strengths and contribute.

Is there any family structure in Deccan Pumps Group? Your group recently announced a Spin off.

Its sad we had to do this, we tried our best but was too late. Also the chief emotional officer my grandfather was no longer there . There was no issues for money or business.

In India sometimes families grow faster than businesses and so we are forced to draw agreements for securing the future of the business and the brand value of what our previous generations have created. We, at the Deccan Pumps Group, are currently working on ownership and brand sharing methods with the next generation members. The ultimate goal is to secure the business, brand value and at the same time allow every member of the family to pursue their interests.

Every next generation family member should be on a stewardship / trustee role. I find myself not as a maverick, but as a star in my own way. Gen-next entrepreneurs are fortunate to be born in privileged families and should be thankful for their education and resources that not many are fortunate to have in a country like India. So we should add value to what the previous generations have created, protect it and pass it on to the next generation.

Brilliant. What’s your future Goals?

I’m just 23 years old and have a long way to go and I am sure my thought process and learning will evolve as I observe, learn and grow. I strongly believe that every next generation member should spend time in at least two companies briefly before joining their family business. It gives one a great learning curve of how business families work across the globe, which elevates the thought processes and enhances entrepreneurial skills.

I’m looking forward to creating a great family owned company with strong values and best practices that I have seen and learnt in the last few years across the globe and act as a trustee to the future generations. One thing I have learnt from the west is that family companies are held by Foundations and work on the model of investing all profits back into the company where the family is allowed only a small percentage of profit. I shall try working out a similar model.

The next ten years is very crucial for the country. I’m sure there can be a lot of globally competitive family owned companies from India across all sectors, if family companies practice the best processes and systems. I hope to put myself to work and add value to what my father has created. I’m sure every next gen member is talented, unique and can contribute in their own way – be it CSR, Marketing or Research.

The internships I went through, systems I worked in, diverse cultures I experienced and talented individuals I met, have left an indelible mark in my life.

I’m currently working on a project setting up a state-of-the-art new plant with the experiences and processes I have seen across the globe. Though not a mega plant, I aim to make it a very efficient one. I found the brand Deccan Pumps strong only in certain segments. So my new Brand extension line would help create a new perception among customers and drive towards growth.

The products are being designed and upgraded to world-class standards with a great emphasis on manufacturing systems and process technology. The new plant is a small test that I’m putting myself to. It will also increase our productivity in one product line up to five times.

My Professors in Stanford and Sheffield have always been good mentors and when I shared this idea they felt that this startup would help me learn quickly all aspects of business and if I perform well I will be ready for a bigger role.

Perform and Preserve, else Perish. Also, if one fails to safeguard the business and grow, it’s a crime. With a strong support of the previous generations and the wide global exposure that we have access to, it’s time we next gens create history!

Kanishka Arumugam

Deccan Pumps Private Limited

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¿Cómo convertirse en un “empresario en serie”? Esteban Sosnik de AtakamaLabs nos da las claves

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Yo vengo de una empresa familiar donde financiarse con dinero ajeno es el último recurso y pensar en vender la empresa nos produce dolor de estomago. Por eso, cuando conocí a Esteban Sosnik y me contó que ha creado dos empresas con dinero de inversores y las ha vendido en menos de 5 años desde su fundación, mi mente empezó a bullir con preguntas… ¿Cómo se hace eso? , ¿Por qué?, ¿Qué tienes que tener para que te den dinero?, ¿Cuánto te queda de la empresa?…

Esteban ya apuntaba a emprendedor de éxito desde el principio de su carrera. Después de graduarse con honores de la Universidad de Virginia con una licenciatura en Economía y Relaciones Exteriores, se unió a JP Morgan en el grupo de fusiones y adquisiciones de América Latina con sede en Nueva York. Más adelante, Esteban fue director general de Inversiones en Penguin, un fondo de Venture Capital para start-ups en América Latina, donde ayudó a lanzar más de una veintena de nuevas empresas en la región, muchas de los cuales aún hoy operan con éxito.

En 2.002 junto a Tiburcio de la Cárcova y Wenceslao Casares  (el fundador de Patagon) lanzo “Wanako”, una empresa dedicada a la producción de juegos para PC y consolas, que vendieron 5 años más tarde a la mayor empresa de video juegos del mundo, Vivendi.

Después de vender Wanako, Esteban paso a desempeñar la función de vicepresidente de Desarrollo de Negocios de Sierra Online, división de Vivendi Games. Pero su espíritu emprendedor lo llevo a lanzarse en el 2.010 a una nueva aventura, AtakamaLabs.

AtakamaLabs es una empresa de juegos online que se caracteriza por la innovación de sus productos que van adaptando dependiendo de cómo los usuarios funcionan con ellos. Solo dos años más tarde, Esteban vendió Atakama Labs a la multinacional japonesa DeNa aunque hoy en día sigue al mando de la empresa.

Esteban es un argentino alegre, divertido e inteligente que le gusta llenar la casa de amigos y aprender de todo el mundo a su alrededor. Yo he aprovechado nuestra amistad (es el padre del mejor amigo de mi hijo) para bombardearlo con preguntas y aprender de su extensa experiencia como emprendedor.

Pero he pensado, que tanta sabiduría tiene que ser compartida con el mundo y esta es la razón de esta interesante entrevista donde Esteban nos da las claves para ser un emprendedor de éxito. ¡Disfrútala!

Written by Carmen Lence, Executive Coach at NextGen Consulting & Coaching LLC. Contact Carmen  at carmen@nextgenfamilybusiness.com

What Dr. Kirby Rosplock Has to Say About Family Business, Women and Wealth

I met Dr. Kirby Rosplock at the Transitions West Conference in San Francisco a couple of years ago, when she joined me and another colleague in a very interesting conversation about family companies. She was humble, open, easy going and the way she talked about family business, and especially about women in family business, showed her passion and commitment to making a difference for them.

This is no surprise when you learn that Dr. Rosplock is also a 4th generation member and owner of a 130+ year old family business (www.BabcockLumber.com), a board member at the company and a co-trustee on her family’s foundation.

Her experiences in her own traditionally male-oriented family company filled her with an immense curiosity about how other people, especially women, experience their involvement in the family business world. This led Dr. Rosplock to write her dissertation paper: “Women’s Interest, Attitudes and Involvement with their Wealth” and she subsequently dedicated part of her successful career as a writer, researcher and lecturer to women’s empowerment around wealth.

In the following interview, Dr. Rosplock shares with us what is behind her passion for helping women, what interesting findings she has discovered in her research and details of her new project, which involves writing a handbook on the family office for Wiley & Sons.

How Strong Family Values Can Keep your Family Company Successful Over Generations

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It is a windy Friday afternoon at the lovely Marina del Rey. I’m meeting Gilbert Devlyn to learn about the keys behind the success of his family business, Devlyn Optical, which is now in the 3rd generation.

The Devlyn family is from Mexico, and they are the owners of  a 77-year-old company that first started as the only optical service in the town of Ciudad Juarez in Mexico. When it first opened, it had just two employees: Mr. Frank Devlyn and his wife Nelva Mortensen. Today, it has more than four thousand employees, 829 branches in Mexico, which makes it the largest optical chain in the country, and the brand has even expanded to Guatemala, El Salvador, the Dominican Republic and the USA. The company has also expanded its services into ophthalmology clinics.

What I find really interesting about this company is that, unlike most third-generation companies, which tend to keep the family out of management and focused on ownership, the Devlyns have managed to retain 11 family members working in the company and they are the 3rd generation in charge of operations.

There is definitely no sense of entitlement here, as Gilbert explains. When he was a little boy he asked his father to buy him a toy car. His father offered him the opportunity to work in the family company and earn the money he needed to buy the toy for himself instead. Gilbert was very disappointed when, after a week, he got paid just 140 pesos (the standard salary for the work he did at the time). He learned a lesson about how hard it is to earn enough money to buy what you want and that his family was not just going to hand him everything on a plate.

Gilbert is down to earth, kind, polite and oozes love and admiration for his family. He is also well educated, intelligent, ambitious and driven. After working for a few years outside the family company and completed an International MBA, he has recently joined Devlyn Optical. His desire to contribute, make a difference and find his place in the organization for himself is evident. With people like him in the family, there is definitely no need to look for talent elsewhere.

This is what Gilbert has to say about values, emotions, family business and making a difference.

Written by Carmen Lence, Executive Coach at NextGen Consulting & Coaching LLC. Contact Carmen  at carmen@nextgenfamilybusiness.com

About Transitions West Conference and Changed Lives

I just got back from the Transitions West conference at Marina del Rey, which was organized by The Family Business Magazine and Stetson University’s Family Enterprise center. This is a conference “created for family companies by family companies!” and, once again, we enjoyed some great, honest presentations by some outstanding family business members, non-family executives and family business experts.

Among my favorites were the opening keynote by Jim Ethier, Chairman of the Board of the Bush Brothers & Company, during which he described the experiences his family company had as they built their family governance. Also, the panel of non-family executives made up of James B. Wood, Senior Vice President and Chief Strategy Officer of The Clemens Family Corporation, Robert J. Underbrink, President/CEO of King Ranch, Inc., David Yale, President, Just Born, Inc. and Ross Born, Co-CEO of Just Born, Inc., where I realized how difficult it is to find the right non-family CEO and the time and effort involved in the process; and the panel about how family councils foster engagement among family members, where Ashley Levi, Board Member at H.G. Hill Company, and Meghan Juday, Family Council Chair and Director at IDEAL INDUSTRIES, shared their experiences about how useful their families council has been for them. And finally the presentation from Mark Peters, CEO of Butterball Farms Inc., who underlined the risks involved in not having succession planning in place. Thanks to all for sharing their experiences and being so inspiring!

This was my second year at the conference and I was happy to see that many families came back and brought along quite a few more family members. I would say that the number of participants doubled from last year. Congratulations to the organizers!

I also meet Peter Begalla, Adjunct Professor and Program Manager at Stetson University’s Family Enterprise program, who I interviewed last year about the unique Family Enterprise program that Stetson University offers (Read interview here http://wp.me/p1tGmG-2n) and Professor Greg McCann, founder and Director of Stetson University’s Family Enterprise Center. I was interested in gaining the perspective of one of its students and when I meet Emily Dudley, senior at the Stetson University’s Family Enterprise program and second-generation partial owner of Dudley’s Auction Inc., at the Transitions West conference, I couldn’t miss the opportunity to interview her.

Please check what Emily has to say about how Stetson University’s Family Enterprise program has “changed her life.”

Written by Carmen Lence, Executive Coach at NextGen Consulting & Coaching LLC. Contact Carmen  at carmen@nextgenfamilybusiness.com

Dennis Jaffe on How to “Make it Happen” for the Next Generation Owners of Family Business

For 40 years, Dennis has helped families manage the personal and organizational issues that lead to successful and fulfilling transfer of businesses, wealth, values, commitments and legacies between generations. He is professor of Organizational Systems and Psychology at Saybrook University in San Francisco. Dennis received his BA in Philosophy, MA in Management and Ph.D. in Sociology from Yale University.

As both an organizational consultant and clinical psychologist, he is one of the architects of the emerging field of family enterprise consulting. As a founding member of the Family Firm Institute, he has presented at many of their annual conferences, served on their board, written frequently for their journal Family Business Review, and was awarded the Richard Beckhard Award for contributions to practice.

In this interview, Dennis Jaffe share his experience in helping next generation members of family business to create a future for themselves and the keys to succeed at succession.

Do you want to gain control of your family Business? Buy it!

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Jamie Calvetti, President of James Calvetti Meats in Chicago

After 32 years working in the family business and running it before his father’s passing, Jamie Calvetti found himself as an equal co-owner with two more siblings that were not involved in managing the business. The situation got to a point that he had to buy his own business to gain control. In this interview, Jamie Calvetti, President of James Calvetti Meats, one of the USA’s leading purveyor’s of prime quality meat products, shares how to go about buying your family business and what he learned from his father’s mistakes.

What were the main challenges that you faced working in your family business?

In family business, there is a lot of jockeying back and forth. My father was aggressive, charismatic and well known around the country. He slowly allowed me to manage some pieces of the business.

I had been gainfully working and managing in the business since I started. I learned everything that I could about the business. I bought computer into the business in 1982 for logistic and accounting functions. Email did not exist in 1982. I managed to processing, logistics, personnel, accounts receivable and payables and some purchases. I had my own sales, but of course there was many times that competition was a problem. I did everything an entrepreneur does in a business.  In 1986 I started up business in Japan (the country was too small for my father and myself to compete within). Shortly after that I started up sales in Europe. Between the time 1986 and 1991, I traveled, on business, to Japan and or Europe about 15 times.

In 1991 I was able to manage the large multinational business customers we had because of the change in technology. That was the advent of email.  Major customers starting using email to communicate, which I was very proficient. My father’s style of communication did not work for the new younger buyers/managers.

My father felt that I was taking him away from the business. There was a competition between my father and I and competition between the siblings.

Was there any succession planning?

There was no formal succession planning. My father’s accountants came to him and said he needed to move some of his shares to his children for tax purposes. He wanted to split it equally. The accountants, unbeknownst to him and me, gave me a tenth of 1% more than my other siblings.

Were you the only sibling working in the company?

One sibling was. He was in charge of the newspaper for the first 15 years and then in charge of Internet marketing the last 15 years.

Do you think that equal is not always fair?

It wasn’t. The accountants set it up. When my father passed away there was jockeying for position. At that point, my father was 89 years old, and I was running the business.

My dad was very good at running a business and did not melt the company. Because of that, the company was and is very well financed. We left quite a bit of cash in the business.

I had to buy both my siblings out over three years and both were major negotiations. There were bad feelings involved and it took a very aggressive attorney to take care of things on my side.

In the meantime, we had to run a business. I could see down the line that with all these buyouts I was going to need to start growing the company again. We were in the airline and food service business and we stopped growing after 9-11 and didn’t diversify. I tried to diversify a couple of times and it failed. Ultimately, I went back to my core business. I reduced my salary and reduced expenses where it was necessary to generate the cash for the buyouts.

What were the keys to raise capital to buy your siblings out?

You have to make a profit, have good cash flow, and show and prove that to the bank. Handle your personal finances properly and correctly. Be conservative with the money that you do have. I had my  broker contact the bank and give a referral. I come from a place where my dad wanted to pay everything in cash. We paid cash for a building, and in about 17 years the value of the building doubled and there are no loans against it.

You just have to play it right and you can’t be the guy that has a $1 million dollar house with an $800,000 mortgage. You will not get the financing even though that is your personal stuff they are going to look at it. They are going to see that you are too much of a risk taker or you don’t know how to run your money.

I also look at my cash position every day. I know what my accounts receivable, accounts payable, loan, and my cash positions are. I also know what my estimated payouts are for the following week. In the meat business, you have to pay your bills in seven days because we buy a perishable product. You should also follow the markets. When we made a lot of money, instead of taking it out, I loaned it back to the company. It was advantageous to me because I could pay myself interest more than market rates.

It also showed the way that you ran the company.

Right. I had stable employees. You bring the banks in show them the business-that is not normal. You show everything to them and show them you can make money in various economic conditions.

When your father passed away there was no real succession plan. What would you do differently for your children?

I don’t have any children but I do have a stepdaughter. I would never burden her with this. What I would do different than my father is I would determine who was most interested in the business and most capable. I would move those assets upon or before my passing to that person. Then, I would compensate the others.

How is your relationship with your siblings now?

We have a strained relationship.

Do you think that all this pain could have been avoided with proper planning?

Maybe. Entrepreneurs are a special type of group – they are very competitive at least my father was. He was competitive with his children. I can remember a couple times, that he wouldn’t be so happy  that I would bring in a huge order. It was a strange situation.

What advice would you give next generation members that are considering buying their Family Business?

  • You first have to know how to run the business profitably and conservatively. You should not take a $500,000 salary, take cash out the business, and expect the bank to finance the business.
  • Have to have your own money in the business too.
  • Have a great reputation in your industry, better reputation than everybody else.
  • Pay your bills on time or early. That gives you power to do the things you want to do or at least it helps you.
  • Then you have to run your personal life properly. Don’t have a $1 million house with $800,000 loan.
  • You have to be and work at the job. You can’t be on vacation all the time.
  • You have to have stable employees, be a good manager, and a good communicator.

What about you? Have you ever been in a similar situation? What other resources could have been used to take control of the company? Are banks the most likely founding source for family business buyouts? Please, share your experience, we can all learn from it!

Written by Carmen Lence, Coach and Consultant at NextGen Consulting and Coaching LLC. www.nextgenfamilybusiness.com


How Educational And Networking Events Can Improve Your Family Business.

Click on the picture above to learn the highlights of last Friday’s presentation by Peter M. Johnson on family business governance at the Institute for Family Business at University of the Pacific in Stockton, California.

Peter M. Johnson, Director of the Institute for Family Business at University of the Pacific in Stockton,  shares in this interview the value for Family Business to join networking and educational programs, like the ones offered by the Institution he leads, to learn what to do when you don’t know what to do in your family business. Ready to learn and mingle?

How does the Institute for Family Business support family businesses?

With all of our family business, wherever they are we support them through several different ways. First, we offer about five (and as many as ten a year) different programs in different locations. These programs are offered to family members and non-family members who are key employees. With the idea that attending this program with key non-family members or their consultant, everybody is on the same page. They hear the same message and it is easier to start creating a strategy around what a group heard in a program. They will get information for an expert in the field who will speak about challenges as a current or former family business owner, consultant, or a panel.

The other benefit of the program is that it allows family to talk to each other.  One of the biggest challenges that I have seen over the years is that families always think they are alone. They think that they have unique challenges and that they are a messed up family and other family businesses are much more professional than they are. So, it is an opportunity for families to get to know each other and learn from each other.

We also have a very large resource library of videos from previous programs, books, articles, consultant information, and a wide variety of family business resources that we can refer our members to.  For example if someone inquiries about non-family employee conversations, succession planning or would like a consultant, we have resources that we can refer them to.  We will also connect them with other members who for example may be thinking of starting an independent board of directors. They have not done it before, are not sure what the structure would look like, and want to know what the pros and cons are. They will want to know if there is another family who they can speak with that has been through this journey and can provide their experiences.

Is the Institute for Family Business at the University of the Pacific the only one of its kind in the Bay Area?

Yes.

Why do you think that there are not more institutions supporting family business in the Bay Area?

That is a great question and I think that there are a couple of reasons for it. First, with some families they don’t realize that they are a family business. Some think of a family business as a mom and pop out of their home or small grocery store on the corner. They don’t really think of big family business like Levi-Strauss, Ford, or Wal-Mart. So a lot of families don’t think of themselves as a family business.

The second problem is that many families don’t want to admit that they need help. Generally, the family has a patriarch in charge and they tend to think they don’t need help and there are no issues. They are blinder to some of the problems and will gloss over the issues.

The third problem is that you have to know where to find family businesses. We know that 80% – 90% of businesses in the United States are family owned or controlled.  But getting people to recognize that they are a family business and promoting the concept to them is difficult. One thing that I hear people say when they come to our programs is that they didn’t realize that this was available. It is kind of tough because until a family is in crisis, like a succession issue, family members tend to gloss over the resources that might be available to them.

Do you think this type of organization is important for next generation family members of family businesses?

Yes and actually what we see is that Next Generation is more likely to call. They recognize that their family is having issues and the senior generation is blind to the challenges and want to know what they can do. The Next Generation largely sees the value in these programs and is more likely to speak up and say that they are a family business. They recognize that the family is a part of the business and that they are having challenges that go beyond the traditional business challenges.  It is critical, especially if the goal is for the Next Generation to take over, for them to develop their leadership skills.

Do you offer leadership development programs for the next generation?

We do. As a matter of fact our programs are not just for one generation, type of business, or industry.  We offer informational programs that go into different topics that can be related to any business.  So the next generation and senior generation both get something out of the programs.

What is your typical member profile?

There is a wide range. For example, we may have a winery that has 4 or 5 family members and 10 full-time employees.  We also have some that have 80 or 100 full-time employees. Almost all of our members are multi-generational and occasionally we will get some from the same generation. They tend to be two –generation with the parents in the business.

Educational and Networking events are a great opportunity not only to learn from the presenter but also from  other participants. What is your experience with this kind of events?

 

Written by Carmen Lence of NextGen Consulting and Coaching LLC. www.nextgenfamilybusiness.com

How to Survive and Thrive Despite the Lack of Succession Planning

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After her father suffered a stroke, Kathleen Thurmond had to jump into managing her family business, without previous experience in the business. In this interview, Kathleen share tips on how to survive and thrive – successfully selling the family business 12 years later, despite having no succession planning, experience, or guidance with running the business. 

If you are in a sink-or-swim situation with your family business, relax it can be done… here is how.

How did you become involved in your family business?

My father had a stroke and it prevented him from being able to do anything with the business. We had an outside person running it day to day. My father was overseeing it and then he had a stroke that created a much bigger problem. At this point, my mother asked me to step in along with one of my brothers.

How was it for you to jump into the family business without warning and running it without guidance from your father?

It was exhilarating and terrifying at the same time. I had just come from being a director of an AIDS hospice program and I had 35 employees. But it was very different from stepping into a uniform supply industrial organization. There were two unions and 50 employees. I had to deal with people who had been there a long time and knew a whole lot more than I did about the business. The fortunate part is when you don’t know very much, you are not as afraid as you might be if you really knew more.

What was your background before joining the company?

I had about 18 years in the fields of non-profit and social work. I have a Master Degree in Social Work, which I got after three years in journalism and I was writing and in to photography prior to that.

With my social work career, I often ended up in management. I was an assistant director in a hospital for 8 years and then went on to run an AIDS program. I was also always politically active in whatever I did because I am an activist at heart. I was on the AIDS commission for LA (Los Angeles) and president of a Long Beach AIDS consortium.

When you joined the family business with your brother, what was your position?

For six months, we shared a Vice President role. Each of us having the same title but he was living in San Francisco at the time. The business was in Long Beach and he never intended to stay. He worked in the business when he was younger in the production area and routing – delivering clothes. He knew the business from that perspective but he was a masseuse and had no desire to either leave San Francisco or to be a part of the business.

When did you start running the business by yourself?

In six months, I was in charge.

What would be your advice for other next gen that do not have a succession plan and all the sudden find themselves in the same situation-?

My first piece of advice would be to do the planning so that the family knows what to do in the event of death or illness of the founder. If you don’t do that then, learn everything you can about the business. Take every industry specific and leadership classes. Immerse yourself in education.

I joined a group of 12 men who were owners of companies like mine. We met every other month and talked about the business. We met at each other’s business so that we could and critique each other. We would give advice and talk about the latest innovations in the industry. That was a big help.

I always attended the trade shows, national conferences, and equipment shows. You learn so much when you talk to other people and see the equipment that someone talks to you about over the phone. In industrial laundry, there are washers, dryers, sort systems, and boilers so it was just like a whole other world for me.

Did you create a team of people to help you?

There were managers when I came in. The difficulty was they were hired primarily by my father. He was more of an authoritative figure, which is usually the case with founders. My management style was more collaborate and inclusive. I think it was important to be that way because in order for them to accept me as a leader, I had to also accept them, their expertise, and knowledge about the industry. I think that made for a much easier transition then if I were to go in and pretend I knew everything and I really didn’t.

Over time some people, I let go of or they let go of me because the style was different. It didn’t sit well with some people who had been there for years. There was also new energy, new people that was coming in who were from the industry and others who were experienced managers from other industries.

After 12 years of running the company, the decision was made to sell it. How did it feel to sell the family business? Why was the decision made to sell it?

When I was about two-thirds of the way through that 12-year process, I got my MBA while running the company. One of things that a professor said to me was what is your exit strategy. Although I didn’t want to hear that at the time, it really planted the seed that I needed to be thinking about it.

I was also very active in my industry and the only woman on my national trade board. I met the big guys Aramark, G & K, Cintas and UniFirst. They began to know me and also began a 5-year project with EPA on environmental management and wastewater treatment. We developed best management practices for the industry. All those things exposed my relatively small company to the larger guys.

They began to call me and at first I didn’t want to talk to them at all. It scared me. I thought I am never going to sell and will be with this company forever. Then, I remembered what my professor said and I began to talk with them. It was then a gradual process and it began to make sense. I sat down one day and really contemplate – did I want to stay here forever? The answer was no.

Selling is all about timing. Of course I am not clairvoyant. I didn’t know the economy was going to crash in a few years but the reality was I sold at the perfect time. It was when the bigger guys were paying a lot for companies my size. More than they paid a couple of years later. Thank goodness I did that because my mother, who is still alive at 93, is comfortable.

Emotionally, what is easy for you to sell it?

I knew deep down that it was the right thing. At the same time, I was letting go of a profession that I thought I would be in for the rest of my life. I was letting go of my dad’s dream. He died shortly after I began to run the company. My mom was helpful and said that if you feel like it is the right time to sell, then let’s do it. It was nice to have her support.

You are the President of the National Association of Women Business Owners-San Francisco. What is the most rewarding aspect of this position?

I wrote an introductory message for our monthly newsletter and a woman called me and said that what you wrote in the newsletter made me feel like you were speaking directly to me. That is what I love. I love mentoring women. I feel like I am here in the world and we as women are to lift each other up. Support each other in our businesses. Champion each other in what we hope to do and really to encourage each other to prosper in the world of business. It is not easy but it is much better for women now. With only 15% of women on corporate boards and 4% of women are Fortune 500 CEO’s, we still have a lot of work to do. It is inspiring to me when I see other women collaborating and working together to boost each other.

Kathleen is a natural leader with a strong “make it happened“ attitude. That is her greatest asset in dealing with having to take charge of the business with no experience or guidance.  What about you? Have you ever dealt with a situation like that? How did you manage it?