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Wealth Matters: Family Foundations Prepare for Next Generation

February 8, 2013 by Leave a Comment

Families of great means often try to encourage this interdependence through the creation of a family foundation, a nonprofit organization meant to give away money to charitable organizations. The idea is almost always that the act of giving to others will keep the family together and help them weather inevitable family discord.

The plans don’t always work out, but when they do, they can offer lessons to families of far less wealth about passing along shared assets to their children — be it the family business or just something that one generation hopes subsequent ones will share.

One issue that some families have encountered is that the types of philanthropy favored by one generation may not be the ones favored by the next — something that could cause strife if not addressed.

A recent report, “Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy,” produced by 21/64, a philanthropic consultancy, and the Johnson Center for Philanthropy, looked at how younger generations felt about philanthropy. It found that those who followed the baby boomers wanted to give to charities in ways that produced measurable change. The report also found that they wanted to be more hands-on with the groups they give to.

“The belief is that Gen X is cynical and Gen Y is entitled,” Sharna Goldseker, managing director of 21/64, said. “We found this high-capacity subset to be different, to be more involved and interested in stewarding their family philanthropy.”

Their desires will affect how grants are made by family foundations for decades. But the vast transfer of wealth from older generations will first have an impact on how family foundations function from within. Many are large financial organizations, but they are also a collection of family members with all the issues that any family has.

I hoped to learn more about how the generations were managing the transition.

BRINGING THEM ABOARD Succession in family foundations, not to mention family-run companies, used to happen when the founder died. With people living longer, this is happening less often, and the desire to use foundations to teach children and grandchildren about the family’s values is increasing.

As with many things with children, it’s easier to get them to do something if you’re interested in it, too.

Ms. Goldseker said the report found that nearly 90 percent of respondents cited their parents as their model for philanthropy. In her case, she said her parents started talking to her when she was quite young about philanthropy in general and, specifically, the Goldseker Foundation, started by her great-uncle, who made his money in real estate.

But she said she still had to demonstrate interest and competence to get a seat on the board, which she did in her late 20s after paid and unpaid work with various grant-making charities and nonprofit organizations.

Zac Russell, whose grandfather built Russell Investments, the money management firm and creator of the eponymous stock indexes, said he had wanted to be on the board of the Russell Foundation since he was 11 years old. He worked with the foundation’s chief executive and attended various next-generation conferences to learn as much as he could. Now 25, he will attend his first board meeting as a member this month.

“My interests have never been on the programmatic side but on how we fund those programs, how we invest accordingly, how we help people who are passionate about it,” Mr. Russell said. “I didn’t play soccer as a kid. I read The New York Times and The Economist to learn about investments.”

Younger family members are not always so eager to join the foundation. Nor are their parents or grandparents ready to have them.

Article source: http://www.nytimes.com/2013/02/09/your-money/estate-planning/family-foundations-prepare-for-next-generation.html?partner=rss&emc=rss

Filed Under: Your Money Tagged With: , ,

You’re the Boss Blog: Introducing Creating Value

September 13, 2012 by Leave a Comment

Creating Value

Are you getting the most out of your business?

Business owners start businesses for a variety of reasons. A few do it to make a lot of money, but a vast majority do it for other reasons.

Some have an idea they believe the world needs. Some have a social mission in mind. And some just can’t work for anyone else (I include myself in that group). Whatever the motivation, at the end of the day, it all comes down to creating value, whether it’s business value or personal value. Surprisingly, though, not enough business owners think about this.

When they start a business, they know they have to fill a market need, and they know they have to make a profit. But in many cases, they have had no formal business training, and they don’t speak the language of business, which is finance. And they very likely haven’t stopped to think that they might one day want to leave the business. Instead, at first anyway, they concentrate on keeping their customers happy and having enough cash in the bank to pay their bills.

Here’s another problem: Most owners know more about running their businesses than anyone else in the organization. When it comes time to sell or transfer the business, prospective buyers aren’t interested in the skills of the buyer; they’re interested in cash flow. Buyers want to see regular growth and profit margins and a business that has systems that work without the owner.

I’ve been trying to understand how businesses build value for more than 35 years. One of the things I’ve learned – from the businesses I’ve owned, from reading a book a week for 35 years, from developing seminars for others and attending several educational sessions a year – is that value is in the eye of the beholder.

I grew up in a family business, a vending and food service company. I joined the business after college and within a year had bought a branch of the company from my father. At the time, the branch was grossing $75,000 a year in annual revenue. Twenty years later, when I sold the business, it had grown to four branches, 90 employees and $6 million in revenue. During that time, I made a zillion mistakes and even learned a bit along the way.

After the sale, I tried working for a large mutual life insurance company for a couple of years but learned that I’m a lousy employee. And after that, I helped found Stage 2 Planning Partners, a wealth management firm. My specialty in the firm is working with owners of privately held businesses. In fact, they are the only people I work with.

Some of the things I help clients examine are whether they are on the road to financial independence, whether they are moving from active management to passive management of their businesses and of course whether they are creating value in their businesses.

This fits nicely with the title of my channel on this blog, Creating Value. I believe creating value is a keystone in making one’s life better. And I find that helping clients find out what will create value in their life helps me fill my personal mission of doing interesting things with interesting people.

My goal in writing for this blog is to help the people who read it ask themselves good questions about what’s important to them. In these posts, I expect to explore the importance of passive ownership, performance indicators, cash flow, developing a niche business and hiring and developing employees.

One of the defining events in my life has been my cancer experience. Three and half years ago I was diagnosed with non-Hodgkin lymphoma, Mantle cell variety. This is a nasty and rare lymphoma. Luckily, I’m in remission, which has allowed me to focus on leaving a positive footprint as I move through life. I see the opportunity to write this blog as part of leaving a positive footprint.

Thanks for reading, and I hope you’ll share your thoughts as we go through this journey together.

Article source: http://boss.blogs.nytimes.com/2012/09/13/introducing-creating-value/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

A.C. Nielsen Jr., Who Transformed Research Firm, Dies at 92

October 5, 2011 by Leave a Comment

He had Parkinson’s disease, family members said in announcing his death.

The son of Arthur C. Nielsen, Mr. Nielsen became president of the A. C. Nielsen Company in 1957 and its chairman in 1975. He presided over the company’s growth from a modest operation, generating less than $4 million a year in revenue, to one with revenue of more than $680 million.

He worked for the company his entire adult life, joining in 1945 after serving four years in World War II as a major in the Corps of Engineers. One part of his wartime experience gave him insight into the potential importance of computers. He was assigned to construct a building to house a machine that would create elaborate tables to calculate the metrics for firing big artillery guns accurately.

Mr. Nielsen recognized the potential to use such calculations in the family business, which at that point had gained most of its profit from an index that measured and tracked sales of items in food and drug stores. The company, one of the first ever to offer market research, also began to measure radio stations’ audience size in 1936. But even after expanding to a national service in 1942, the radio arm of the business was not profitable.

In 1948, at Mr. Nielsen’s urging, the company invested $150,000 in building the first general-purpose computer, the Univac.

His father remained the entrepreneur of the company and led the way to creation of the first television audience measurement system in 1950. The younger Mr. Nielsen, who was known more for institutionalizing his father’s innovations, moved the company into new areas, like the creation of a clearinghouse for coupons, a service that had become a business generating more than $90 million in sales by the time the younger Mr. Nielsen retired.

He also led the company into tracking subscription data for magazines and even tracking oil and gas wells in the United States and Canada. And as chairman he presided over the development of scanning technology in its early days, allowing the company to collect information on consumer purchases of all kinds. The most visible expansion of the Nielsen business took place in the media measurement division. Nielsen fought to retain its place — critics have long labeled it a monopoly — over the measurement of television ratings, beating back the challenges of several potential rivals. As cable television began vastly expanding the number of networks needing national measurement, Nielsen was positioned to provide the numbers each of those channels needed to sell time to advertisers.

Arthur Charles Nielsen Jr. was born in Winnetka on April 8, 1919, the oldest of five children of Arthur C. and Gertrude Nielsen. While an Army engineer he met Patricia McKnew and soon married her. He was a graduate of the University of Wisconsin.

An avid athlete, Mr. Nielsen played competitive tennis until he was in his 80s and had the distinction of winning the United States Father-Son Doubles Championships with his father in 1946 and 1948. He later represented the United States in senior tennis tournaments. He also won Midwest-based father-son doubles championships with two sons, Arthur III and Chris.

Patricia Nielsen died in 2005. Mr. Nielsen is survived by his sons as well as a daughter, Elizabeth Cocciarelli; a brother, Philip; two sisters, Margaret Stiegele and the Rev. Barbara Nielsen; and seven grandchildren. His father died in 1980.

Mr. Nielsen served on the boards of more than 20 companies, including Dun Bradstreet, Walgreen, Marsh McLennan and Motorola, and advised three presidents.

He also appeared as a mystery guest on the postwar TV show “What’s My Line?” and was questioned about his line of work by the panelists Arlene Francis, Bennett Cerf and others.

Accepting the company’s strict retirement policy, Mr. Nielsen stepped down from active leadership in 1983 and became chairman emeritus. The following year he engineered the sale of A. C. Nielsen to the Dun Bradstreet Corporation for $1.3 billion in stock.

The company has since been acquired by the Dutch publishing company VNU. But it has retained the name Nielsen, largely based on brand recognition. In many circles of the television business, ratings are still frequently referred to simply as “the Nielsens.”

Article source: http://feeds.nytimes.com/click.phdo?i=d60892dfc2ac892a824473082d4de7dd

Filed Under: Business News Tagged With: , ,

You’re the Boss Blog: Going Behind the Scenes With Four Owners

September 16, 2011 by Leave a Comment

She Owns It

Portraits of women entrepreneurs.

What happens when women who own businesses get together to talk openly about their challenges, strategies and goals? Beginning next week, we’ll find out when I start to meet regularly with the owners of four businesses. Our continuing conversation will become an important feature of She Owns It. This post introduces the women and the companies we will get to know.

Owner: Jessica Johnson.
Company: Johnson Security Bureau provides security services to government and commercial clients.
Annual Sales: $700,000.
Employees: 60.

In 2009, Ms. Johnson left her career as a pharmaceutical sales representative to take control of Johnson Security Bureau, a business her grandparents founded in 1962 in the South Bronx. She stepped in to fill her father’s shoes after he died and discovered that the business was not in good shape. Ms. Johnson, 37, said she used her inheritance to help turn things around, tripling the number of contracts, taking the company from 16 to 60 employees and doubling its annual revenue in 2010. She credits much of her success to her participation in the Goldman Sachs 10,000 Small Businesses program.

Today, her biggest challenges include managing cash flow and maintaining an effective workforce in an industry with high turnover. Ms. Johnson is often forced to fire security guards. “Employees let their guard down with us because we’re a minority-owned, family business,” she said. “They think they can get away with things that wouldn’t be tolerated at, for example, AlliedBarton.”

Owner: Alexandra Mayzler.
Company: Thinking Caps Tutoring offers study-skills coaching, subject tutoring, and test preparation to middle- and high-school students.
Annual Sales: between $700,000 and $750,000.
Employees: four full-time, 40 part-time tutors.

A past subject of She Owns It, Ms. Mayzler founded Thinking Caps Tutoring from her New York University dorm room in 2003. When we first met, Ms. Mayzler had been struggling to decide whether to expand into other cities from her base in Manhattan. She eventually chose to enter Austin, Tex., where Thinking Caps began tutoring students this month.

Ms. Mayzler, who said she has “big expectations” for herself and her company, continues to struggle. She would like to find a way to stop working 15-hour days. She wonders whether to pursue a more aggressive expansion plan within New York City. Most of all, she knows that Thinking Caps’ somewhat haphazard approach to growth isn’t sustainable and vows to begin planning in earnest.

Owners: Susan Parker and Erica Rosenfeld, sisters (Ms. Parker will meet with the group).
Company: Bari Jay manufactures and sells bridesmaid and prom dresses to retailers.
Annual Sales: $7 million.
Employees: 17.

Ms. Parker and Ms. Rosenfeld became co-presidents of their father’s business in 2008, following his death. Initially, a Bari Jay employee challenged the sisters for ownership of the business, locking them out of the computer system. Following a short-lived civil lawsuit, Ms. Parker said, she and her sister took over, as their father’s will had dictated. They found the company’s books in disarray.

With no garment industry experience — Ms. Parker, 37, has an M.B.A. and most recently worked in private wealth management for Merrill Lynch — the sisters sought help from their father’s longtime friends in the industry, opening Bari Jay’s books to competitors who “felt sorry for us,” said Ms. Parker. This year, sales are up 20 percent.

Today, Bari Jay’s biggest challenges include dealing with decreased production capacity in China, where the company manufactures most of its dresses, and keeping up with demand — particularly on the prom side of the business, which is growing faster than Ms. Parker would like. Unlike the bridal side, the prom business requires Bari Jay to maintain inventory. While brides order dresses and expect to wait three months for them, prom dress shoppers want their dresses immediately. Because most of Bari Jay’s small retail clients can’t afford to invest in numerous styles and instead buy just one prom dress style each season, Ms. Parker must anticipate which designs will sell best. She recently chose the 18 prom dresses Bari Jay will produce and hopes she made the right decisions.

Owner: Carissa Reiniger.
Company: Silver Lining Limited offers an online tool that helps small businesses set and reach financial goals.
Annual Sales: about $1.2 million.
Employees: six.

Ms. Reiniger founded Silver Lining Limited in 2005 in Toronto (she has since moved company headquarters to New York). Silver Lining began as a software-as-a-service business that helped small businesses set and reach financial goals. The service-based model required staffers who taught the method to business owners. Ms. Reiniger, who is 29 and has a marketing background, later developed an online tool that transformed her business model from service to tech. The tool enables Silver Lining clients to enter information like expenses and revenues and, with the help of algorithms, determine a one-year financial goal for their businesses. They then begin a process that helps them define their ideal customers and create a plan to connect with them. The tool offers additional support such as educational videos, opportunities to network with other Silver Lining customers, and features that foster accountability.

The transition to a tech model has required Ms. Reiniger to confront new challenges, including different growth metrics and software development challenges. On top of those issues, she is trying to exit the company. “I’m a creator and starter, not a manager,” she said. She hired a president and chief operating officer so she could begin easing away from daily operations. But it didn’t work out, and he left the company in March. Ms. Reiniger, who is seeking to raise capital, must now formulate a new exit strategy.

In future posts, I’ll explore these and other issues that arise as the owners pursue their goals. Feel free to suggest topics and questions.

You can follow Adriana Gardella on Twitter.

Article source: http://feeds.nytimes.com/click.phdo?i=96d92b35b0c3ef45e54a06635734bd80

Filed Under: Small Business Tagged With: , ,

Corner Office: Jack Dangermond: Cultivating His Plants, and His Company

July 10, 2011 by Leave a Comment

Q. Do you remember the first time you were somebody’s boss? 

A. I was a teenager. My parents owned a plants nursery. We all grew up growing things, and planting things, and selling things, and I also managed landscape crews.   

Q. So how old were you when you first started running a crew?   

A. Sixteen.  

Q. Was that hard for you?   

A. No.  Growing up in a family business like that was really a happy time.  When my parents started it, they had little education and were immigrants from Holland. We all just worked together as a team in the nursery. It basically gave me all the lessons of business school when I was growing up — issues like cash flow, customer service and how to grow a business. 

My parents had no money, but they had strong values that I’ve carried throughout my life — things like not going into debt, never borrowing money, never leveraging, paying your bills on time, keeping your agreements, selling customers the right things, treating employees right and growing things. 

Q. So, at 16, you’re managing a crew.  I assume that these people were older than you.   

A. Yes. We worked as a team. Part of my management style today is not being elitist, but rather being involved with the people doing the actual work. On the landscape crew I learned a lot from the other workers. We treated everybody equally, and we worked hard.  I also remember my father and I were once walking through the nursery, and one of the plants was wilting.  And he said, “Did you notice something?” 

I looked down and realized the plant was wilting.  He said: “Don’t ever walk by a wilting plant. Get water on it right away.”  Which sort of stuck with me — you inherently have responsibilities to take care of things. In a nursery, if you don’t take care of those plants, your profits get lost real quickly.  You have to weed.  You have to water.  You have to nurture.  Also, you have to take care of your employees in such a way that they do the same.

Q. What other lessons from the nursery?

A. One of the guiding principles was to take care of your customers.  Don’t sell them something they don’t need. So we would simply listen to our customers, and work with them, show them some alternatives, sketch some things out and create a successful design for their yard.  And that kind of customer relationship was something that was genuine and also endeared our family to people. People loved going to that nursery, and having somebody actually care for them rather than just shove some product in their face. 

Q. How do you apply all those lessons at Esri?   

A. I have four priorities. The first one is to focus on what customers need and want. And, second, make my company a really great place to work.  So when we hire somebody, we have in mind finding a person who really fits so well that they realize their life’s work with us.  

  The third is to make sure we’re a very strong business that supports the first two priorities. In a public company, the first thing is taking care of stockholders, and then you keep the employees happy, and then, O.K., the customers. I was very lucky to start this company and keep it my own. And the fourth priority was added about 20 years ago when we started to work seriously with business partners. Today we have about 2,000 business partners all around the world. 

Q. Can you talk about hiring?

A. Our H.R. department screens applicants to make sure they would fit in a certain job.  Then they have interviews with as many as 10 different people they would be working with if they got hired. We want to have peer review of the person so that we are sure that they really want to do the work we do. We’re very passionate about our work.  We want to make sure that they’re skillful, that their motives are right, that they can work on a team and that they’re nice.   

Q. Can you give me more of a sense of how the conversation goes during an interview? What do you ask?

A. I’ll ask provocative questions that help me quickly get a sense of someone, like, “What’s the worst thing that’s ever happened to you?” In their professional life, the issues they bring up are often associated with challenges like laying people off. And so I’ve heard every story of a public company’s ups and downs where people were confronted with doing dirty work for others and not feeling good about it. I learn a lot about people’s values and their judgment about things based on how they act in those situations. I’m just trying to figure out who they are.   

Q. What other questions do you ask?   

Article source: http://feeds.nytimes.com/click.phdo?i=0cdeb79b4d63f8edc013354e2f5b9ca2

Filed Under: Business News Tagged With: , ,