Some call these the Dog Days of Summer. The business world tends to slow down. I think it's a great time to reflect and regroup on how ready your business is for being sold. Even if selling seems a long way down the road for you, it's never too early to start. Plus, you never know when you might get that call from a buyer making an offer you can't refuse (or can you?). As for my Dog Days of Summer, I found an article (rather than write my own) on this very topic. A few points here that are worth noting: To read more...
Wealth Management
Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen My Amazon Authors' page Twitter:@ jacolineloewen Linkedin: Jacoline Loewen Profile
July 26, 2018
You never know when you might get that call from a buyer making an offer you can't refuse
If you are thinking about selling your company within the next few years, here are a few reminders to keep you on track. It's from a blog written by Alan Crossley who sells companies and who shares his observations about business owners as they get ready to sell. Here is an excerpt:
July 22, 2018
Breaking down blockchain
TORONTO, Ont. – If trucking wants to take advantage of blockchain, it needs to come together and work as one unified team.
That was the message from panelists at this year’s TransCore Link Logistics’ 20th annual conference at the Markland Wood Golf Club in Toronto.
Panelists, that included Dave Brajkovich, CTO of Polaris, Jacoline Loewen, director of business development at UBS Wealth Management, Mark Southey, executive v.p. of business development at Traffix, and Moe Sabry, director of IT at TransCore all agreed that the best way for trucking to be successful with blockchain technology is to work together.
The trucking industry is just dipping its toes into the water, so to speak when it comes to blockchain, because many don’t know much about it, or, don’t know how to get started.
Blockchain is, in simple terms, a digital ledger where transactions are made and recorded permanently. It is decentralized, in that information isn’t going to and stored in one place (like a centralized system), rather, several places.
The greatest advantage blockchain will bring to the industry that it desperately needs, is trust, panelists said.
“Blockchain will eliminate paperwork because there’s trust,” explained Southey. “Because we have all these nodes feeding information into a shared ledger…it means that when a warehouse puts 1000 boxes on truck, there is no question there are 1000 boxes on the truck. There is no proof required…and then we have trust between the shipper and the transporter. This negates the bill of lading. Because of that, we can automate payment. We can automate transfer responsibility. Half of our industry (with blockchain) can be automated. That’s where blockchain will have a fundamental shift.”
He added that the trust between driver and employer will also improve.
“Driver behavior won’t be questioned because it will all be recorded,” he said. “There is no dispute whether an action occurred or not.”
Brajkovich agreed, calling blockchain an API manager on steroids. He said the greatest advantage blockchain will offer transportation is quality, speed, and efficiency.
Brajkovich agreed, calling blockchain an API manager on steroids. He said the greatest advantage blockchain will offer transportation is quality, speed, and efficiency.
And while many may be panicking saying blockchain could eminate jobs like dispatchers or other administration roles within trucking, Barjkovich says this is not the case.
“Those people that handle paperwork today in trucking, they can be repurposed to do more efficient things,” he said.
He said that banks are the leaders in blockchain right now because they “are leaders together and understand that these paradigm shifts happen quickly.”
Right now only 1% of the supply chain industry is using blockchain.
“The industry needs to come together. If we can’t come up with a singular composed strategy, it’s going to be difficult to implement blockchain,” Southey said.
Loewen said to those in trucking who don’t know where to get started when it comes to trucking, should research groups you can join that are looking into blockchain now.
“There are all these business incubators,” she added. “There are lots of tiny companies looking for problems to solve. As individuals, go meet with these people. Give them problems to solve. They will likely solve them for you, for free. There’s some out of Ryerson University and some from Waterloo University. Canada is leading-edge with this stuff..you could go from a five truck trucking company to the next Walmart of trucking if you wanted to dream that big.”
June 22, 2018
The next gen of technology is here - Blockchain and Transportation
4 steps for business owners to minimize personal financial risk
"My riskeist investment was into my business," says John Rothschild, CARA Operations Ltd. Read the full article here:
The following article is a summary of a conversation with Mr. Rothschild, CARA Operations, Ltd., speaking with David Simpson, Ivey Business School, at the UBS Speakers Series, 2018. We were honoured to have John share his journey from entrepreneur to managing wealth.
First published in The Globe and Mail, written by Jacoline Loewen.
Business owners are challenged to make decisions every day, and it is essential for them to know their risk tolerance.
The following article is a summary of a conversation with Mr. Rothschild, CARA Operations, Ltd., speaking with David Simpson, Ivey Business School, at the UBS Speakers Series, 2018. We were honoured to have John share his journey from entrepreneur to managing wealth.
Phaby Utomo, John Rothschild, David Simpson, Jacoline Loewen, |
First published in The Globe and Mail, written by Jacoline Loewen.
Business owners are challenged to make decisions every day, and it is essential for them to know their risk tolerance.
“My riskiest investment was the ownership in my business,” says John Rothschild, senior vice-president of CARA Operations and former Chairman and CEO of Prime Restaurants.
Mr. Rothschild knows about risk. When the opportunity emerged to buy Prime, a family owned business in which he served as an investment manager, he decided to take on the challenge despite the unhealthy balance sheet. His friends were aghast. He had a very comfortable life and he was in a strong financial position and they questioned his decision to risk buying a questionable business. Mr. Rothschild personally guaranteed all the loans required to make the acquisition.
He offered these four ideas on how business owners can minimize their personal financial risk:
1. Plan succession early.
You’ve seen the statistics: more than two-thirds of business owners over 60 years of age don’t have an exit plan. They want to sell their businesses, but fewer than 15 per cent are able to pass them along to a family member.
After Mr. Rothschild made the transition to business owner, he had to figure out how to take money out of the company.
“I knew that passing the family business to the next generation was not in the plans and that I had to monetize the business in a different way,” he says. “We did an income trust in 2002, where shares are held by outsiders. I had bought my business with borrowed money and personal guarantees. The income trust allowed me to pay off loans and personal guarantees, and there was some money left over. Also, I still got to keep my role.”
2. When opportunities come along, be ready to take them.
Mr. Rothschild says income trusts “were a great opportunity and only came by once.” Then he was faced with another opportunity when Fairfax Financial came shopping for restaurant companies. Fairfax is a blue-chip Canadian investment firm modelled after Berkshire Hathaway, founded by Warren Buffett, where the investment company buys businesses and holds them for a long time. Fairfax offered to buy the public part of Prime Restaurants and Mr. Rothschild was invited to stay on and grow the business.
“It was a defining moment when Fairfax then invested in Cara and merged Prime into it. Prime could have stayed an independent business, but the opportunity to scale up and turn something around was tremendous. You can’t pick your exit, or the moments when these opportunities come along, necessarily. You can just say yes or no. I saw this as the opportunity to make restaurant history. We are now the third largest in Canada.”
A business owner needs to plan for the company to be ready for monetizing at any stage, Mr. Rothschild explains. He pointed out that being ready is critical. For example, tax planning in advance is essential. When the opportunity arrives, that is a bad time to be starting your tax planning.
3. Know yourself and plug the gaps.
Mr. Rothschild recognized his strengths and he was honest about his gaps. “I don’t cook, but at Prime, I get to do what I love to do every day. I would tell people not to be afraid to go into an industry where you are not the core expert. It’s about running a business.”
Going from investor to business owner and operator meant that he needed to understand how to build customer loyalty.
When asked the key to success, Mr. Rothschild says: “It’s about the people surrounding me. My team is wonderful. I also had a five-person board for Prime Restaurants and the majority were outsiders who would challenge me, otherwise I would just be talking to myself. I can't make great deals by myself. I’m a numbers guy so I plug the gaps with people who have talents beyond my own.”
4. Take money off the table.
Keeping all your eggs in the one basket is risky. Business owners have the majority of their wealth invested in their own business.
The idea of having more wealth invested in what the business owners know best leads them to concentrate their wealth back into their company. This leads to concentration risk. This specific risk is the type of uncertainty that comes with the company or industry they are invested in. In the case of business owners, this is quite high.
The risk can be reduced through diversification, such as taking exposures across other industries. That is where a wealth manager becomes important.
It’s possible to diversify the long-term wealth preservation for your family by taking some money out of the business in a disciplined, mechanical way. By keeping money aside, Mr. Rothschild could handle the risks in the business, but have peace of mind by setting aside a nest egg for the family.
“I recognized that my highest risk was the business,” Mr. Rothschild says. “You do need to reinvest in the business. You do have to put money in the business or it will die. You have to manage that business on a daily basis.
"But it’s also essential to take money for your personal portfolio. I don’t have the time to manage my personal money. I choose people who I trust and they do it well. I made the effort to balance personal wealth and operating company investment. I stayed within my lifestyle, and shared the gains with those around me.”
During the conversation, Mr. Rothschild’s humble, quiet style of leadership stands out, as well as his deep concern and interest in his employees. But as an accountant, he also understands the financial factors driving the restaurant business.
“My friends thought I was crazy, as I did take on personal debt at a time when I was set up with my home and family and my career was stable."
"Buying a business was seen as financially risky but it has been an adventure worth living.”
Published in "The Globe and Mail," August 12, 2014.
Jacoline Loewen is the director of business development of UBS Bank (Canada). She has over 25 years of experience in finance for high-achieving entrepreneurs and family businesses. She specializes in the transition from business to sudden wealth from sale of a business and the impact on the Founder, their family, inter-generational wealth transfer and philanthropy. Prior to joining UBS Bank, Ms. Loewen specialized in finance, specifically sales and acquisitions, successions and private equity financing.
Jacoline Loewen is the director of business development of UBS Bank (Canada). She has over 25 years of experience in finance for high-achieving entrepreneurs and family businesses. She specializes in the transition from business to sudden wealth from sale of a business and the impact on the Founder, their family, inter-generational wealth transfer and philanthropy. Prior to joining UBS Bank, Ms. Loewen specialized in finance, specifically sales and acquisitions, successions and private equity financing.
Ms. Loewen has authored numerous best-seller books such as, Money Magnet: How to Attract Investors to Your Business, Business e-Volution and The Power of Strategy. She is a guest columnist to the Globe & Mail and contributor to the National Post, Thomson Reuter, Profit and was a regular panellist on BNN: The Pitch. In 2018, Ms. Loewen was awarded #1 Forecast for Markets and Stocks by The Ticker Club Annual Forecast. She is ranked # 6 in the Top 100 Family Business Influencers on social media and awarded Top 50 Board Diversity. She is on a director on the Toronto Atmospheric Fund board and investment committee, Chair of the OCAD University business catalyst advisory board, as well as former director on the Private Capital Market Association board.
You can follow her on Twitter @jacolineloewen Contact: 416-662-1930 or jacoline.loewen@ubs.com.
June 8, 2018
Financial performance of family-owned companies is superior
Usually family and business blends are developed in countries where there is low trust. As Western countries have law and order to ensure corporations work well, family businesses are less in demand. Those that do work and get passed to the next generation properly, tend to do exceptionally well.
The de Gaspe Beaubien family is a great example where the next Gen. were able to influence the sale of the original business that made the wealth. Now the next Gen. is re-inventing the family business to the next level.
Here are a few excerpts from a Globe article talking about some of the questions to ask to achieve a strong and positive family business:
BRENDA BOUWSPECIAL TO THE GLOBE AND MAILAPRIL 29, 2018
While there’s an old adage that says never go into business with family (or friends), experts say the corporate pairing of relatives can be powerful, if properly handled. A recent report of 1,000 family-owned firms worldwide, including some in Canada, showed the financial performance of family-owned companies is superior to that of non-family-owned businesses. Family-owned companies generated a cumulative return of 126 per cent since the start of 2006. Revenue and earning growth (measured by earnings before interest, taxes, depreciation and amortization, or EBITDA) was stronger, EBITDA margins were higher and cash flow returns are better, the report said, adding that family-owned businesses have a “longer-term and conservative focus.”
A well-known example many experts point to is consumer products conglomerate SC Johnson, now being run by the fifth-generation of the Johnson family. It even uses the slogan “A Family Company,” to help boost its brand.
“When an entrepreneurial family gets together to work on something, they care so much more than someone who doesn’t have their name on the building or doesn’t have a stake in the community. To me, that’s a recipe for building a great business,” says David Simpson, head of the Business Families Centre at Western University’s Ivey School of Business. “However, when it goes poorly, it goes poorly doubled down because you’re losing your brother or sister or cousin.”
“There’s an intrinsic conflict that comes with family businesses,” says Mark Barnicutt, co-founder and CEO of HighView Financial Group, which works with high-net-worth families, many of whom are entrepreneurs with their own companies.
“Emotional issues easily come to the surface,” he says. The most successful family businesses recognize that could happen and put in place the proper governance, including family roles and responsibilities, to cover what happens when conflicts arise. “A business isn’t a family and a family isn’t a business. You really need to separate the two,” Mr. Barnicutt says.
Family members in business together should also outline what happens if one person wants out, or there’s a disagreement in direction, Mr. Simpson says.
“It’s unromantic … but a business is an organism that lives, dies and changes,” he says. “Businesses aren’t worth blowing up a family for. A business is just an instrument of economic gain … If you go the nuclear option of suing each other, you’ve hurt both the family and the business.”
Mr. Simpson once ran a business with his younger brother, Craig Simpson, a former National Hockey League player who is now a broadcaster with Hockey Night in Canada. The business relationship ended after his brother retired from hockey and focused more on the company. “We found out that our formerly passive, equal partnership didn’t work as active partners,” Mr. Simpson says. “We didn’t share the same vision, risk tolerance and personal objectives and our general assumption that siblings are of course similar, was surprisingly inaccurate. We were better brothers than business partners.”
Most often, it’s money and corporate strategy – including how various family members are compensated and disagreement over the direction of the company – that lead to family business feuds, says Jane-Michèle Clark, an instructor who teaches the family enterprise course in the entrepreneurship program at York University’s Schulich School of Business.
Ms. Clark recommends business families hold strategy sessions that cover topics such as their family values, how they want the business to work for them and vision for the company.
“When you start by reaffirming the family values and relationship, then get clear about each person’s expectations about what they want the family business to do for them, and then move on to the vision, the conversation takes on a whole different tone,” she says. And while she recommends family businesses bring in a family council or an advisory board “to act as both a resource and a buffer,” few do, believing it’s not necessary or conflict won’t happen in their case.
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