The Hidden Gem in Family Business Meetings

StrategyDriven Entrepreneurship Article |Communication|The Hidden Gem in Family Business MeetingsI present to a variety of audiences around the country — university-based, family business centers, industry groups and professional groups. Invariably I’m asked, “What’s the one thing a family business should do to be successful?” I always respond that good communication is the most important thing to achieve, and family business meetings are the best way to achieve that. There are the obvious benefits, but there’s another incredibly valuable but hidden benefit you probably don’t know about.

First, let’s discuss communication. With good communication, family businesses can make it, and with bad communication they fail. Why? Businesses is about making a profit. The one who sells the most for the lowest cost, is better than the competitors, keeps all dealings within the boundaries of the law and keeps customers happy wins. And, everyone in the business wins. It’s a blend of hierarchy and teamwork, with everyone marching to the same objectives.

Families are about unconditional love and support. What happens when you throw a bunch of family members into a business environment? Conflicting feelings can crop up everywhere. Family members get their feelings hurt when they’re reprimanded or held accountable. So other family members will hold back their true thoughts in order not to create hurt feelings. Until they blow up.

A good system of communication fosters an environment where business issues can be stated to family members without feelings getting hurt.

Family business meetings are a great way to accomplish good communication. At the start of each of my presentations, I say to audience members: “Before we start, I’d like to ask everyone to pull out your phones and go to your calendar, then create a meeting at the beginning of the next quarter for one hour. Call it ‘Family Business Meeting,’ and have it repeat every quarter, forever. And when you’re done, please silence your phones.” People always ask what they’re supposed to talk about at a family business meeting, and I tell them to start every meeting with the same statement: “We are a family in business together, and that’s a hard thing to do. What are some of the things we need to talk about in order to run the business well and make sure the family is in harmony?” The rest will mostly take care of itself.

By doing this, these natural questions will come up:

  • How do other family businesses do it?
  • When is dad retiring?
  • Who’s going to lead the business in the future?
  • How do we get paid?
  • How will ownership be divided?
  • How do we deal with a family member who’s not performing at work?
  • Do we need a buy/sell agreement?

This is all really good stuff. If you’re meeting every 90 days for at least 60 minutes to talk about family business issues, you’ll be uncovering the important questions and be able to work on them over time to a mutually agreeable resolution. Remember, these are family business meetings, not business meetings or family meetings.

Huge potential benefits may also be gained from family business meetings in which you invite the whole family. Here’s the reason: In order to live your life, you must work to make money to have food and shelter, pay bills and so on. You may also get a sense of accomplishment though your work. However, when you’re faced with life questions or big decisions, or find yourself at a crossroads in life, who do you turn to? Typically it’s a family member — a parent, a sibling or your spouse. Now why would you want to bring another family member without any ownership into the family business meeting? The reason is that they’ve heard about what’s going on in the business for quite some time and have a clear perspective of how the other family members feel.

Imagine a family business with a father, two sons and a daughter. Imagine them meeting. Now imagine a family business meeting with the mother, spouses of the three kids and the fourth sibling who doesn’t work in the business. And now ask the question: “What are the things we need to be talking about and working on to have a good business and harmonious family?” By getting the perspective of the family members who don’t work in the business, the information can take you to places you never realized. It will also give you much greater insight into the unvoiced thoughts and perspectives of the family members who do work in the business.

Bringing all family members — including those who don’t work in the business — into a family business meeting one or two times each year can help uncover thoughts, concerns and perspectives of which you were previously and completely unaware. With this added information, you can ensure that you’re on the right track moving forward to continue building a healthy business and a happy family.


About the Author

Henry Hutcheson has 25 years of experience in business management and global family business consulting across a range of industries, and is a veteran of a family business himself. He is a frequent corporate and university speaker, as well as a columnist and writer for the News & Observer, Charlotte Observer, Nursery Retailer, The State, and Family Business Magazine.He has been quoted in the Wall Street Journal, Crain’s, and other business and trade magazines. His new book is Dirty Little Secrets of Family Business (3rd edition): Ensuring Success from One Generation to the Next. Learn more at www.familybusinessusa.com

5 Mistakes New College Grads Make as They Enter Entrepreneurship

StrategyDriven Entrepreneurship Article | 5 Mistakes New College Grads Make as They Enter EntrepreneurshipIt’s that time of year again. Thousands of qualified college graduates are getting set to enter the workforce. They were promised that their hard work and diligence will earn them an attractive job and a high chance of success. With ambition, motivation, and dreams, scores of young men and women will forge their way into the business world. Some of them have lofty goals of entrepreneurship. Many are under the impression that whatever works for high profile examples of successful leaders in business will also work for them. Public information and theory are often misleading, and so is attempting to imitate another company’s or leader’s blueprint. According to some experts, new college graduates often make five brutal mistakes as they try to navigate their own potential new enterprise.

1. Recent college graduates think they know a lot more than they do upon graduation. Implementation is different to theory and ideas, so you need to be able to bring operational performance and many other skills to the table. Knowledge is one thing, but true execution will provide the experience you really need.

2. Many do not understand how funding works and the capitol needed in the initial phases of a business. Inexperienced people are misled when it comes to startup funding and what is needed to begin and grow a business. Often young founders don’t think about basic concepts like unit economics, which is selling something for more than what it costs to make. Even some very well funded startups tend to ignore this.

3. Raising funds does not equal success. Many young entrepreneurs are focused on the superficial belief that the more money they raise, the more successful their business is going to be. While it’s true that, everything else being equal, having more money to spend on your business is good, there is a lot more to it than that simple formula. Plenty of businesses fail because they raised too much money and it encouraged them to do things that didn’t make sense. Many other businesses fail because they raised money that they believed would fund all of their dreams of growth, but it wasn’t nearly enough. Other businesses fail because they raise the wrong kind of money, such as debt they can’t repay on time or equity that causes them to lose control of their business.

4. Inexperienced founders often overestimate their own importance and don’t appreciate the importance of the team they build around them. It is not easy to find skilled people who also happen to be a good fit for the culture and mission of your enterprise. This takes a lot more time, effort, and trial and error than many founders realize if they haven’t done it before. You need a great team to build a great team. But that the classic chicken and egg problem you have to solve. You have to be careful, and realize you will make mistakes, about who you hire early in the life of your company. Only offer substantial equity and responsibility to those who have proven themselves. Recognize your hiring mistakes and correct them quickly. Teams often don’t rise to the level of their best people. They often sink to the level of their worst people. Keep that in mind as you build your company.

5. Know and own your limitations. Young innovators especially, though it applies even to more experienced entrepreneurs, tend to lack self-awareness of their own weaknesses. These blind spots can be disastrous. Most highly successful people understand their weaknesses and surround themselves with others who can do what they cannot, who share a similar vision, and with whom they can collaborate. Inexperience can lead to overconfidence. This is an especially dangerous pitfall for early stage startups and new entrepreneurs.

Elizabeth Holmes and Theranos is a good example of a culmination of all 5 of these mistakes and what inexperience can do to a business idea. She raised $900 million. Her company was worth billions. She was on the cover of magazines and featured on TV shows and one of the best founders in a generation. But it ended in failure and she may go to prison for her behavior.

There are real world, and sometimes life altering, consequences for making these mistakes. Think through your decisions carefully and be aware of the risks you take as you pursue your exciting and hopefully rewarding entrepreneurial journey.


About the Author

StrategyDriven Expert Contributor | Christopher GreyChristopher Grey is the co-founder and COO of CapLinked, and enterprise software company offering an information control and risk mitigation platform for the sharing of confidential or sensitive documents and communications outside of the enterprise. Previously, he was a senior executive and managing partner in private equity and corporate finance for 15 years and directly involved in the deployment and management of billions of dollars of debt and equity investments in various industries. Christopher founded two companies, Crestridge Investments, a private equity firm that made debt and equity investments in micro cap and middle market companies, and Third Wave Partners, which made debt and equity investments in distressed situations, and was managing director of a subsidiary of Emigrant Bank, the largest privately owned bank in the country. Most recently, he is a co-founder of TransitNet, a platform for security token issuers offering title verification, chain of ownership tracking, and other post issuance tools for improving the security and reliability of security token ownership.

5 Effective Strategies for General Contractors to Cut Costs

StrategyDriven Managing Your Finances Article | 5 Effective Strategies for General Contractors to Cut CostsContractors need to devise ways to cut costs in order to remain profitable. With increased competition, the need to cut costs has become important now more than ever.

Eliminating people is not the right way to cut costs. This will only stifle the ability of your firm to make a profit. Instead, you should look for other ways to cut costs and boost profitability.

1. Cost Audit

The first step in cutting costs should begin with a complete audit of the existing expenses. You should consider ways to reduce operational expenses.

You can relocate the office to a location where the rent is lower. Also, you can consider the shift from in-house to cloud operations to cut overheads.

A lot of contractors subscribe to different software services yet don’t use most of them. Consider whether the services really add value to your business by saving time or improving efficiency. If not, it’s better to cancel the subscription.

2. Time and Contract Clause

Instead of Under-the-contract-price, you should consider adding the add-to-exceed clause. In the former case, the owner of the project only has to pay a fixed cost that includes overhead and profit. This is not necessarily the most cost-effective approach.

Instead, you should consider the time and materials contract. This is a type of contract consist of the following three terms.

  • Actual material costs
  • Actual direct labor costs at a specific hourly rate
  • Agree on add-on to cover profit and overhead

The main benefit of this type of contracting is flexibility. This cost structure allows you to adjust requirements, replace features, and cater to changed user requirements without taking a hit on the bottom-line.

3. Seek Multiple Bids

When working with a sub-contractor, you should consider multiple bids. This may take additional time, but the effort will be worth it in the end.

You may have to send lots of emails and hammer the phones. But this will allow you to lock in on subcontractors that offer services at the least costs. This extra work will help in significantly reduce the internal expenses.

4. Inspect Your Schedule

You should keep an eye on your schedule for any potential stacking or acceleration of activities. Compressing the schedule will allow you to squeeze cost advantages. Time is money and any time that is saved will have a positive impact on the company’s bottom-line.

5. Financial Prequalification

You should prequalify all subcontractors to reduce the risk in case of cost escalation. This is particularly important if the subcontractor will bear most of the risks. It will help in absorbing any deviances in a project that result in increased cost.

By financial prequalification, you can get assurance that the subcontractors will be able to absorb any costs overruns. Some of the criteria that you should consider include pipeline, days of cash, and work in progress.

The above tips can help in greatly reducing the contracting costs. Consider adding an escalation clause in all your projects as well. This will pass on the risk of cost increase to the project owners.

How To Find People To Connect With In Your Industry

StrategyDriven Entrepreneurship Article |Connection in Business|How To Find People To Connect With In Your IndustryWhen it comes to owning your own business, one of the best things you can do in terms of growth is to connect with people in your industry. When people say ‘it’s not what you know, but who you know’, they are 100% right. Connecting with people within your industry could not only lead you to incredible opportunities, but also to making some lifelong friends that understand what you’re going through on a daily basis. It will help grow your business, give you a better understanding of the industry and allow you to enjoy what you do even more than you already do. With that in mind, here are a number of ways to find people to connect with in your industry:

Use LinkedIn To Search For People In Your Industry

One of the best ways to find people that are in the same industry as you is to use LinkedIn. As a social network that has been designed for professionals, this is a great way to connect with people that follow the same line as work as you. Whilst you may find it difficult to build your connections up at first, once you start having meaningful interactions with people your followers will grow. Once connected, you can regularly engage with the content they share or open up a private discussion in their messages. For a guide to using LinkedIn as a business owner, you can visit this site here.

See Who Else Is Using Your Popular Industry Hashtags

Within your industry, the chances are there will probably be some popular hashtags that are used. The best thing to do is do some research into what hashtags your competitors are using on popular social platforms, following them so you can interact and engage with people in your industry. If you’re looking to follow more people in your industry, you can scroll through the hashtags and connect with people that you think sit perfectly within in your niche. Whilst it does take time, it is one of the best ways to connect with people in your industry. For a guide to finding people using hashtags, you can visit this site here.

Use Public Directories And Search By Occupation

If you want to find people in your industry but you don’t feel as though they will have a strong presence on social media, it may be worth using public directories to search by occupation. With directories that provide both email and phone numbers, you will be able to reach out to anyone that you feel may be a worthwhile connection. For an example of a public directory page, you can visit the Aubrey Ferrao page here.

Think About Attending Industry Events And Conferences

Finally, attending industry events and conferences is one of the best ways to connect with new people. You will have plenty of options to meet with people in person, giving you much more of a starting point that if you were to meet someone online. It may be daunting, but it’s the best way to find people that have things in common with you.

Learn about the Penalties for Mortgage and Real Estate Fraud in Florida

StrategyDriven Entrepreneurship Article |Real Estate Fraud|Learn about the Penalties for Mortgage and Real Estate Fraud in FloridaThere has been a substantial rise in the number of cases related to real estate fraud over the past couple of years, particularly as the real estate market has started to flourish once again. The reason for this increase in real estate fraud is mainly because the pay off is substantial for the scam, but the penalties for this crime are also extremely harsh.

To ensure that you’re always on the right side of the law, and learn to protect yourself from real estate fraud, we are going to break down exactly what is real estate fraud, and what kind of penalties are attached with it. You can also check out this great article for more information.

Understanding Real Estate Fraud

There are different kinds of real estate fraud, with the common theme being that they are all designed to take advantage of their victim and leave them helpless. If you’re working in the real estate industry, and notice any of the red flags, you shouldn’t hesitate to take legal action against the perpetrators. If you’re in a position where you can commit fraud, you should stop. Committing real estate fraud in Florida comes with harsh penalties, and you will be registered as a convict for the remainder of your life.

Types of Fraud

Real estate fraud comes in many different types, all of which are connected to the different stages of processes involved in real estate. These may include the following:

  • Rental fraud
  • Land fraud
  • Fraudulent loan origination
  • Illegal flipping
  • Equity skimming
  • Home improvement fraud

If it seems like a scam, it’s probably because it really is a scam.

For instance, one of the main types of fraud involved in real estate is the foreclosure rescue. This fraud involves businesses preying on families facing foreclosure, desperately trying to keep their homes. Businesses in this type of fraud will try to convince families that their homes can be saved if they sign a temporary title transfer to the business.

The business will pay only a fraction of the real worth of the house on the market for this. This is essentially a leaseback, where the family can remain in the home and pay rent to the business for the length of the transfer title.

However, the business will sell the home, as soon as they get the title from the owners, which leaves the owners stuck in payments that they were paying on their mortgage.

Mortgage Fraud

One of the most common types of real estate fraud found today is mortgage fraud, which focuses mainly on mortgages, where people are already vulnerable and in debt. Mortgage fraud essentially has two main types, which include:

  • Fraud for housing
  • Fraud for profit

The main difference between the two types is based on who is getting conned: the lending institution or the homeowners.

Fraud for housing is committed by potential homeowners with the intention of maintaining or acquiring home ownership.

Fraud for profit is committed by people in the industry, who have in-depth knowledge of the mortgage system and know how to steal money. Their goal isn’t to acquire home ownership.

There is an extensive range of potential frauds that are found in these two types of mortgage fraud, which include:

  • Inflated purchase price
  • Silent second mortgages
  • Employment income falsification
  • Mortgage elimination programs
  • Occupancy claims by non-occupants
  • Kickbacks

For instance, mortgage elimination programs are one of the most common fraud-for-profit scams. Homeowners are convinced in these programs that their mortgage can be wrapped up quickly if they pay a premium for the services. This doesn’t happen obviously, and the homeowners end up with even more debt than they started with.

A common house-for-profit scam is the inflated purchase price. For example, you’ve got two different purchase contracts, and one of them is a fake with a sales price that is significantly higher. You’ll be committing mortgage fraud if you send the fake contract to the lender so that you can get a higher appraisal value.

Penalties for Mortgage and Real Estate Fraud

You’ll be facing some serious penalties and convictions if you’re charged with either mortgage or real estate fraud. To give you a clearer idea, we are going to discuss how fraud is defined in Florida law and then discuss the penalties you may face in such cases.

Florida Laws on Fraud

Statute 817.545 governs mortgage and real estate fraud in Florida state law. Under the rules of this law, a person is guilty of mortgage fraud if they have acted knowingly, and plan on defrauding, while:

  • Misrepresenting facts to try and get a loan
  • Help in misrepresenting facts
  • Gain material proceeds by misrepresenting facts
  • Filing documents during the mortgage process that misrepresents facts

If you misrepresent information in the real estate and mortgage process, willingly and knowingly, or attempt to gain any material benefit due to misrepresentation, you’ll be charged with committing fraud.

Documents to Consider

Before we go ahead, it’s important that we discuss what documents can be used for misrepresentation of facts in the mortgage process. These may include the following:

  • HUD-1 settlement statements
  • Residential loan applications
  • Inspection reports
  • Appraisals
  • Mortgage documents
  • Deeds

Personal documents that are required in the loan application can also be used for misrepresentation of facts, and they include:

  • Relevant disclosures
  • Employment verification
  • Income verification
  • Bank statements
  • W2 forms
  • Payroll stubs
  • Tax returns

You’ll be charged with committing fraud if you have misrepresented information on any of the documents mentioned for mortgage loans, acquiring real estate, or for material gain.

Penalties for Fraud

You can face all kinds of penalties if you’ve committed real estate fraud in Florida, and you’ll face harsher penalties if you’re charged at the federal level. It’s a good chance that you’ll face penalties for several laws since the crime includes federal and state laws.

Real estate fraud is charged as a felony in most cases, even if the sum is under $1,000. You’ll be charged with a third-degree felony if the sum is below $100,000, and anything above that figure will be a second-degree felony.

Penalties will be given out based on the type of offense, and they include fines, prison time, restitution, and probation. You could also end up paying fines for up to $1 million for real estate fraud if you’re prosecuted at the federal level.

You may also face prison penalties, and the length of the sentence will be longer if you’re charged at the federal level. It can go up to 30 years in jail, and you’ll also be paying restitution to any third-parties that suffered financially because of the fraud.