Hutcheson - Dirty little secrets of family business: ensuring success from one generation to the next

Henry Hutcheson has truly captured the essence of the pros and cons, ups and downs, and good and bad of running a family business.

Mercer F. Stanfield, president and COO, Brame Specialty Company, fourth-generation family business

A wake-up call for family business leaders, family members in the business, and the trusted advisors of the family business. Henry Hutcheson brings up difficult situations, but always with a light touch, that are worthy of examination.

Rhonda Stokes, interim director, Wake Forest University Family Business Center, Triad, and Charlotte Centers

Henry Hutcheson has captured not only the complex issues between the family and their family-owned business, but has also identified the critical steps needed to succeed beyond the first generation.

Chris Cecil, president, Biltmore Family Office, LLC

Henry simplifies complex family business matters, focuses on what is most important to family members, and provides answers that people can take home and use right now.

Cindy Clarke, executive director, UNC, Asheville Family Business Forum

Henry Hutcheson has a deep understanding of how small businesses survive generational transfers and how they dont. Moreover, he has a rare ability to explain the complexities of those transfers in clear and understandable language. This book is a must-read for anyone who hopes their business will not only survive but also thrive long after they are gone.

Whit Ayres, president and owner, North Star Opinion Research

This book captures the critical issues and the steps that family businesses need to follow to maintain profitability and sanity.

Lisa Oswald, CEO, Sorrelli

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher and author are not engaged in rendering other professional services. If expert assistance is required, the services of a competent professional should be sought.

Published by Greenleaf Book Group Press

Austin, Texas

www.gbgpress.com

Copyright 2016 Henry Hutcheson

All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise, without written permission from the copyright holder.

Distributed by Greenleaf Book Group

For ordering information or special discounts for bulk purchases, please contact Greenleaf Book Group at PO Box 91869, Austin, TX 78709, 512.891.6100.

Design and composition by Greenleaf Book Group and Sheila Parr

Cover design by Greenleaf Book Group and Sheila Parr

Cover image: Shutterstock.com/Murvin, iStockphoto.com/artsstock

Cataloging-in-Publication data is available.

Print ISBN: 978-1-62634-260-6

eBook ISBN: 978-1-62634-261-3

Originally published as 978-1941870006

Indie Books International, LLC, Oceanside, CA

Part of the Tree Neutral program, which offsets the number of trees consumed in the production and printing of this book by taking proactive steps, such as planting trees in direct proportion to the number of trees used: www.treeneutral.com

Printed in the United States of America on acid-free paper

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Second Edition

This book is dedicated to three people: Nathan Hutcheson, Dennis Gile, and Giovanni Agnelligreat friends of mine who were each on a path to change the world, but whose lives were unfortunately cut short. They left a hole in the families and communities they came from and will always be missed.

This book is a compilation of many years of work, tremendous research, and extensive engagements helping family businesses find the answers that are best for them. While academicians, business leaders, and professionals can all gain insights from Dirty Little Secrets of Family Business, its true audience is anyone currently running a family business and anyone in the next generation who may one day be running the family business. Thus, while each chapter attempts to address the various broad questions facing all family businesses, the perspective does shift back and forth between these two viewpoints.

Clearly none of this would have been possible without a lot of help. I would like to thank the Family Firm Institute (FFI) and members, my Institute of Management Consultants (IMC), the Society of Financial Services Professionals, the Wake Forest family business program, the editors of all the McClatchy papers, IGC and its members, the Psycho-dynamics of Family Business group, and the Kure Beach Professional Society.

On a personal level, let me thank my brother Jim, who brought me into the family business profession and showed me the ropes; Jane Hilburt-Davis, my FFI mentor; and Dane Huffman, who helped me break into the professional writing field. Let me, of course, thank my family: Oskar, Avery, and Kirsten, for their patience with my travel schedule, and Kirsten in particular for her many hours of editing. Finally, this book truly would not have been possible without those family business owners and members with whom I have spent so much time; I offer a special thanks to Eddie, Mark, Kevin, Kayle, Mercer, Lisa, Kermit, and Lily.

Happy families are all alike; every unhappy family is unhappy in its own way. So begins Leo Tolstoys classic novel, Anna Karenina. The same is true for the unhappy family business; every unhappy family business is unhappy in its own way. The root causes of the unhappiness, and the solutions, are the dirty little secrets of family business.

Family businesses form the backbone of the economy in the United States and virtually every country of the world. The Family Firm Institute (FFI) estimates that more than 70 percent of all businesses are family businesses. At the same time, family businesses historically have accounted for the largest portion of new jobs created, a significant percentage of the gross domestic product (GDP), and a good chunk of Fortune 500 companies.

Happy families are all alike; every unhappy family is unhappy in its own way.

What is a family business exactly? Some people define it as simply two or more relatives working in the same company. Another school of thought attributes family business status when there is significant family influence. Many think that family business simply means small business. But billion-dollar companies such as Ford, Walmart, and Cargill would disagree. The best definition I have encountered comes from Carmen Bianchi, the director of the Family Business Center at San Diego State University, who defines a family business as any business that considers itself to be a family business.

There are also definitions of the generations of a family business. The first generation is referred to as the founding generation, the second as a sibling partnership, and the third as a cousins consortium. I usually refer to the fourth generation as Wow, isnt that amazing, because only a small percentage of diligent and forward-thinking family businesses ever make it that far.