Times change, but convincing family members to let their business change, can be a challenge. So let’s turn to this week’s board of
directors to discuss issues that family-owned companies face. And to that point we have a very special
guest this week, My dad Max Ramberg who’s been involved
in three family businesses. He is a serial entrepreneur, president of
the investment company the Hummingbird Group, and he is the person to whom I generally
turn when I have questions about running my own company. Also joining us is Greg Alexander
the CEO of the strategic advisory firm Sales
Benchmark Index, and Phil Town partner in the private equity firm Oracle Equity and author of the book
“Rule Number One” Welcome everyone! You guys are lucky
because he has great advice, so you will learning something from him today too. On that note, I’m gonna start with you dad. You’ve been involved in a few family businesses, working with
your dad and then took over his company. How do you turn a family business into
something that’s not old school fighting new school? Max Ramberg: Well the transition is really an exciting event. It’s not easy because you’re fighting the the
individuals who started the business and you’ve got your own ideas but you’ve gotta make the change because the the way they were run in the past is
not the way they can be run today. You do have to have a passion for what
you’re doing too, and make the changes. It’s a tough go. Host: But how do you make the changes without going home and fighting every night? Max Ramberg: Well sometimes you have some battles and sometimes you just bite your lip and you swallow it for a while but you do have to make that change because times do change. Host: I would imagine that it’s got to be hard when it’s your family and you’re saying to your father or your grandfather or
somebody, “what you’re doing is wrong” and they say, “I’ve been here for sixty years what do
you tell me whippersnapper?” Greg Alexander: Yeah, it is difficult. I guess the thing that I would say is,
preserve the past because I got it to where you are today,
and explain to those that accomplish that feat what the future is
going to look like and what their role is going to be in that future. I think if you do it that way, they’ll
be happy to come along for the ride. Phil Town: But isn’t one of the problems with family businesses, is that the person
that has built-in runs really knows his or her stuff? And you
know, the whippersnapper thinks they know this stuff but if
you’re running this thing and you’re about to hand it off, you know stuff about them and they’re not
really kinda willing to admit that they’re not really quite ready, right? They sort of think they’re ready early. Did you did you run into that? Did you think you were ready to go, and your dad was like, “No.” Max Ramberg: Well the transition is awfully tough for the individual who started the
business because he knows that… Phil Town: Because he knows you’re an idiot, that’s the problem Max Ramberg: Well you know, that may be the case, that could be, and that’s very tough because often times that does happen, that the next generation does
destroy the business. However, it’s a very, very, difficult
process for the patriarch of the business Host: Yea, I mean, particularly now with technology changing so
quickly. So here comes the young kid who’s saying we’ve gotta put this online and the older person is saying, I don’t even know how to use a computer. So how formal do you need to make the transition? Phil Town: Oh man, I don’t know. I’ve never been through that myself. I think that you really have to pay attention to the
basics of the business and the idea of going to technology, and the idea of doing a lot of new things is a great idea as long as you don’t
disconnect from your core business and I think that’s probably what this guy was worried about in his successor right? Okay, you are going to do all of these fancy things and clean it all up but that’s not the business. Being clean and pretty isn’t what this business is about. So
I would say, if you are doing this transition focus on the core. What makes you
the business you are? What’s your niche in the world and never
lose track of that. Greg Alexander: Also, remove the fear. I mean as an example, instead of sending a catalog to somebody, you direct them to a website it’s the same process, it’s just a different form of media.
Host: Right Greg Alexander: Sometimes the older generation is struggling with the new form of media but if you explain it to them in terms that make sense explain it to them in terms that reinforce what they did in the past, they’ll accommodate it. Host: I wanna go back to something
we talked about before which is, how do you separate work from the dinner table? Max Ramberg: You have to do that, absolutely. Otherwise it just becomes so difficult. The family issues just explode. Host: so you just say, it’s five o’clock we’re not gonna talk about this anymore? Max Ramberg: Well, you don’t really do that. I think that has to be done in a fashion that’s natural. You just don’t take it home with you all
the time. Occasionally you’ll talk about business issues but it’s not healthy to do that on an
ongoing basis. Host: Alright. Great. Thanks everyone.
Guests: Thank you. It’s time now to answer your business questions. The first comes from a small business owner who is looking for some advice to deal with the
current economic crisis. Business Owner: What would you say to budding entrepreneurs who are going to be operating in an
economic environment that is really in some ways unparalleled,
and what could they do to try to obtain
sufficient credit, so they don’t take an undue risk and in
effect pay a larger price for their failure? Host: This is the question we’re getting everyday Greg. Greg Alexander: My advice would be, do what your competitors are unwilling to do. Which is better on yourself. So if you can’t
get credit and you believe in your business opportunity, go to all your friends and family, look at yourself in the mirror, and place a down payment on yourself. Phil Town: Hey, good answer. I think, make sure you’re doing something that you’re very passionate about. I think we’ve
heard that and we’ll hear it a number of times. Be passionate about what you’re doing so you’re just creating a bad job for yourself, and also focus on what you’re talented at. Don’t just do something because you love to do it. I’d like to play in the NBA, but, hey. You know, you’ve gotta be talented, and when I think
talented, find something you could be the best in the world at doing. If that’s cleaning a house, then be the
best in the world at it, and you’re going to take someone else’s customers. Exactly. Host: Yea, but I think, part of what he’s saying is, credit is hard to
find right now. Phil Town: Bootstrap. I don’t think small businesses should be
about credit. I really don’t. I think you should just absolutely do it out of cash in working
capital for two reasons. First, it’s better financially for you, and
second, it’s gonna tell you whether you really have a real business or not. Max Ramberg: Well, together with that and the fact that the timing really is very good right now. To have started a business a year ago, and then found out that you are just
at the very beginning of a crash, What a tough time get started.
Now is a good time because we may be at the bottom or close to the
bottom and even from here, you go upwards. Host: yeah and you can get things cheap right now. You can get labor cheap, you can get furniture cheap, you can get all kinds of things. Phil Town: The only thing you can’t get right now is money. Max Ramberg: Well that may be true, but you miss the talent that you might not have been able to get a year
and a half ago. Host: Right. Exactly. Okay, let’s move on to the next question. If you’re targeting several market demographic groups at the same time, how can you tailor your message so that it doesn’t seem as if you’re trying to be everything to everyone? Host: Can you market to a lot of
groups at the same time? Max Ramberg: Oh, I think you can. I think you see that in a lot of industries. You see that in the food industry, and in the soft drink industry, you see that in the airlines industry,
all over. You can target to a lot of groups and
have a common message that works for a variety of different groups. Host: So I guess you take that message and you tweak it a little bit and advertise in different magazines or in different news channels… Phil Town: I like Harley-Davidson’s model for that, right? I mean, they have upscale rich guys riding their motorcycles,
they’ve got bad guys riding their motorcycles. It’s a pretty big demographic range there. As big as it gets, and they get away with it with one consistent message in their niche. Host: I think one of the issues is, with something like that, how do you keep it cool while you’re also appealing to these rich guys? Greg Alexander: Okay, so I’m gonna disagree with mine panelist here and I don’t believe in you can mass
market for a small business. I think, pick the most narrow niche you can find, and be the best supplier to that narrow niche.
And then turn those folks into your sales people by having them spread word-of-mouth to the people that might be like them. Host: Because you don’t have the resources to… Phil Town: Okay I’ve changed my mind too [Laughing] Host: That was good. It’s hard to change that guys mind. Greg Alexander: I’m on your side. Host: Because you don’t have the resources at first, I take it to go to a bunch of different areas? Greg Alexander: Yea. Exactly.
Phil Town: Stay with the focus.
Greg Alexander: Yea. Host: Are you staying where you
were? Max Ramberg: Well, no, I’m going to stay where I am, because I think you can market to a variety of different demographic areas and still be a small business. Host: Alright, stick tough.
Max Ramberg: Okay. Host: Not a flip-flopper like Phil over here. Phil Town: I can do the same thing. Host: Okay. Let’s move on to our emails. This first one comes from Arty Lauder, who says: I’ve always prided myself on offering health benefits to my employees and I pay 50 percent of them. Business is slow and I’m wondering if I
can reduce my portion of the benefit. What do you think that will do to morale? No doubt, no one is going to be happy. I’ve been funding companies that have had this kind of problem and there’s a number of ways you can do it. First off, your employee is paying 50 percent their
healthcare, put them in an HSA account. Suggest that to them, which is about 50% of what it cost, right?
And then second, offer up, if you can, if the business words this way,
employees will take time, unpaid time, in exchange for benefits. Like you could swap three or four weeks
unpaid vacation and get rid of health benefits and
people would do the swap in some businesses. Host: Like give them an option?
Phil Town: Yea. Oh. Also recognize, you’re cutting pay. Don’t fiddle around with it. You’re cutting pay. Host: Right Phil Town: And one way to do that would be to take a couple of people off the payroll, and then you don’t cut anybody. Greg Alexander: there’s only one person more important in the customer, and that’s your employee. Employees make it happen, so if you can
fund it, do it. Other companies aren’t going to do it and that gives you an opportunity to
attract the best people. Max Ramberg: Well I think the process there is to bring your employees into the entire process. Make them part-owner in in the benefit program and
discuss these issues with them. Discuss the problems that you’re having within the company and the employees, your going to find out, are going to be very supportive of
you and the company itself. Host: I think particularly in times like this, they’ll be so happy to have a job that if they understand what’s going on with
their company, they they might be willing to give up
even more just to keep the security of their job.
Max Ramberg: Yea. Host: Okay, let’s move on to our last email. This comes from Lisa Cohen, she wrote in needing some advice as well. She said: I’m out of the office a lot meeting with clients. How can I evaluate my staff for raises and reviews if I’m not in the office to witness their work first-hand a lot of
the time? Host: happens a lot of time small business owners, because they’re out doing sales. How do you know? Greg Alexander: I get in the office and spend time with the employees Phil Town: Or they might slip away. Nobody’s in the office, hey! Host: What do you know, I’m calling and nobody’s answering. Phil Town: This is an area where technology does help though. You know email and and technological
tools online can help you out a lot.
Host: Cameras. Kidding. Phil Town: [Laughing] That’s what we do.
Host: [Laughing] Okay no cameras. Max Ramberg: Yea, but nothing works
better than one on one and so, even though you can be in the office on
a regular basis, it’s absolutely essential just to meet with them on a
regular basis and an occasional basis of it she can and talk to them about their goals,
what they’ve accomplished. Host: You can set set benchmarks, and see during those meetings if they have reached those benchmarks. Max Ramberg: Right.
Phil Town: Yeah, I try to get measurable performance parameters if you can, as much as possible. Host: Well thank guys so much for all of your advice. Dad thank you for coming that thank you for coming on the program today. You know all of these questions come
from our viewers so any of you have a small business question you need help
with, here is your chance to have our experts give you some answers. Just address an email to [email protected]