The Forum For Family Business

Many years ago, I began studying the costs and benefits of the flat tax, or if you prefer, the fair tax.  One of the most consistent arguments I heard followed the premise/concern that so many CPA’s, accountants, tax attorneys, etc., would lose their jobs.  Therefore, these advisors would adamantly oppose the simplification process.

I picked up the phone and called some of my company’s advisors, our CPA, our attorney, as well as others who make their living providing services to closely-held and family-owned businesses.  While I admit that it’s not a scientific polling, I was surprised by their virtually unanimous opinion…

Their point…They would much rather spend their time and effort working with business owners to increase their bottom line, enhance their efficiency and effectiveness, and maximizing the ability for the owners to realize their dreams of a legacy.

So, why am I bringing up the tax system in a column that deals extensively with family-owned businesses and their success?  Well, here it is…

If you are currently using advisors (attorneys, CPA’s, financial analysts, bankers, consultants, etc.) who do not have the above-mentioned goals in working with you, it’s time to fire them.  The best advisors do not relish wading through the muddle of nonsensical, unproductive regulations and red tape, just so they can get paid.  They have your legacy and goals as their overriding purpose.

Unfortunately, our government-produced maze of mayhem requires their attention. Until that changes, only the best advisors will venture past the required task of pushing your company through the landmines of bureaucracy.  So maybe it’s time to ask a few questions of your trusted advisors.

1. Do you fully understand where I want my business to be in the future?
2. Are you able and willing to guide me along the way to that goal?
3. Do you understand that, in my family-owned business, it is vital to understand that my legacy is not only for my business, but for the health and wealth of my family?

Those are set up as yes/no questions.  But, don’t let it stop there.  Ask for details.  Dig deeper for answers.  Make sure that you give them the feedback so that they remain a vital part of your team.

The flat tax would indeed lessen the need for advisors to spend unproductive (but profitable for them) effort on regulations.  The best advisors will be those who look past the necessary “have-to-do” work, and will concentrate on helping you maximize your family/business legacy.

That is their real job security!

I love the Food Network.  I don’t watch it all that often, because I’m not the kind of person who needs extra motivation to eat.  There are times, however, when my interest in a specific episode is piqued because the eatery is a local establishment.  The show, Man vs. Food, featured a local, Mobile, AL restaurant named The Hungry Owl (www.thehungryowl.com).

My wife & I decided to visit the establishment last Saturday night.  The restaurant is located in an out-parcel of a neighborhood shopping center.  Obviously, the restaurant had gained some level of notoriety because of the Food Channel episode, which evidenced itself in the huge crowd, filling the parking lot.

We were lucky, though.  Next door to the restaurant was a tanning parlor franchise, Palm Beach Tan.  We pulled into a half-empty parking lot, and as we exited the car, we saw a sign that said the parking was only for patrons of the tanning parlor.  Violators would be towed away, at the violators expense.  Since it was late Saturday night, and there were more than a couple of dozen empty spaces in that lot, I stepped inside Palm Beach Tan to ask the receptionist if that policy was in force at that time.

She sheepishly told me that it indeed was in place, and seemed sympathetic to me…and seemed frustrated with the policy.  She told me that she would be fired if she didn’t call the wrecker service.  The owner, “Scott”, apparently ranked the issue a top priority.  Of course, I proceeded to move my vehicle to another spot, not under their purview.

As we took a seat on the outside waiting area at the Hungry Owl, we saw another vehicle pull into our former parking spot.  As the gentleman approached the restaurant, along with his family, I warned him of the threat of being towed.  He simply shook his head, thanked me and continued into the restaurant.  Within 5 minutes, a wrecker showed up and backed up to one vehicle, engaged it, and began towing it away.  I had never really seen that operation, and I was truly amazed at the speed.

I was even more amazed at the speed of the other violators, as they ran out and started moving their vehicles out of the parking lot.  The wrecker was able to tow a second vehicle, as the others scrambled to avoid capture.  Very quickly, the entire tanner’s parking lot was down to two vehicles, presumably the one worker I met and one patron.  At least 80-90% of the parking lot was vacant.

This brings me to my topic.  (Finally, you say…).

I wonder if “Scott”, the Palm Beach Tan franchise owner had any idea that he had alienated at least 50-100 potential customers, along with all of their friends and acquaintances.  I did a little “man-on-the-street” investigative reporting on my own, and from my limited scope, found that the parking lot was only rarely fully occupied, especially during the peak nighttime dining hours.

I discussed the situation with the owner of The Hungry Owl, Tony Nicholas, who had made several efforts to remedy the situation, to no avail.

I don’t know why I got so involved in this, except that I’m sure each side could easily benefit from cooperating.  Clearly, the loser, besides those who ended up paying a towing company to retrieve their vehicles, is “Scott” and Palm Beach Tan.  I wish he could have heard the descriptions of what kind of *!@#$%^&* he and his business must be.  I can only hope that it would matter.

By the way, our food was delicious, and Tony seemed to be the kind of entrepreneur I will continue to support!

I had the absolute pleasure of attending the initial coursework required to receive certification as a family enterprise consultant from the Family Firm Institute.  We worked on several case studies, and I especially enjoyed working with my team partners on all three days.  We all came from different circumstances and backgrounds, all with different perspectives and biases.

One of the most important exercises we practiced was the development of the questions we needed to ask, in order to get the most useful information from our clients and all of those involved in the family business.  Since we had members in our “professional consultant” group from various core disciplines, it was interesting to see how the team came up with the proper questions.  What resulted was an amazingly effective list, which elicited key responses from our test clients.

In one of the exercises, we were allowed to ask only one question on four different topics.  What we found is that, without follow-up questions, our ablilty to discern useful feedback was severely limited.  Without the ability to ponder the first responses, it was very difficult to clarify the intentions of our interviewees.  In fact, during our daily conversations, in real-life, the first question is often a set-up, meant to get attention so that the follow-ups can dig up the real answers.

We’ve all watched untold numbers of presidential press conferences over the years.  I remember that there was a time when reporters were only allowed one question each.  For the most part now, many reporters are allowed at least one follow-up.  Of course, one of the top requirements for a follow-up question, is that you pay attention to the answer to your opening question.  This inattention has manifested itself in so many ways, but we’ve all heard the courtroom banter when an attorney doesn’t really listen:

The best parts of our exercise during the case studies were the discussions on what to ask, how to ask, and when to ask.  In every case, listening to the answer, how it was answered and when it was answered was every bit as important.  Thanks to my partners, I thoroughly enjoyed those exercises, as did they…or at least, I think that’s what they said?!?