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Text 2: Family Business: the
Next Generation
David Zaudtke
Doug Ammerma
Introductions: In Chinese,
there is a saying that it is by no means easy for
a clan to remain its
prosperity over
three generations. It is not common for a clan to
remain a very humble situation
over
three
generations
either.
As
success
of
a
family
business
seems
to
be
checked
by
many
factors. In different generations, all
the background leading to success or failure would
change.
In terms of the succession to a
family business, success is decided by many
factors. The authors
of this text have
pointed out four factors. Do you agree with the
authors?
）
1.
America is
in the midst of
one of the
greatest wealth
transfers
in
the history of mankind. Over the next 20
years, an estimated $$15
trillion
in
assets
will be transferred
from one generation to the next.
2.
Much of this wealth transfer will be in
the form of family-owned businesses. But the
viability
of many of
these
transfers
is
questionable
.
The
fact
is,
most
will
fail.
Typically,
only
one
out
of
three
businesses
is
successfully transferred
to the second generation.
Survival of a
family business into the third generation is
a rare occurrence
.
3.
Thousands of family businesses, some of
the household names, will disappear over the next
decade. The sad
part is that many of
them could survive with proper planning. For many,
however, it may already be too late.
The proper time to start planning the
succession
of a family
business is not one, not three, not even five
years
ahead.
Indeed,
a
comprehensive
succession
plan,
which
includes
sophisticated
estate
planning
strategies, generally requires at least
a 10-year horizon to be properly
structured.
4.
Whether
large or small,
high-tech or low, public or private
,
every family-owned business is different. But
regardless of
how diverse
they are, four key elements must be in
place
before a business can be
successfully
passed from one generation
to another.
5.
Plan Your Succession
Management
Owners / founders
are extremely
driven and
dynamic
. Often they
excel
at more than one
skill
. In many cases,
production experts are also
marketing geniuses
or
skilled financiers. Replacing them may require
more than
one
person.
Therefore,
family
business
owners
should
determine
exactly
how
the
business
functions
by
creating
organizational charts
. Each
key member of the succession process should create
his or her own
chart. These charts
should then be compared.
The
differences will point to gaps in the management
structure
and
highlight
areas of
misunderstanding and differences in
perception
.
6.
Take Judy, for instance. Judy owns a
software company and has three children ---a
computer whiz
, a racecar
drive
and
one
with
a
business
degree
but
no
interest
in
the
company.
In
addition,
Judy
has
a
strong
management team in
plac
e
. In her case, she
should consider giving ownership to children, but
continuing to
have the management team
run the business.
7.
Finding people
from
within
the family, or from outside, to
fill those spots
may not be
easy, nor
happen
overnight
.
Therefore,
it
is
vital
to
develop
an
action
plan
and
timetable
early
in
the
process
in
order
to
allow
for
an orderly transition of
responsibilities.
1
8.
Few businesses, even family
businesses, grow without the help of loyal
employees.
More often than
not
,
they
hold
key
positions
in
management.
Therefore,
you
must
keep
your
employees
informed
about
long-range succession plans.
Key managers must
have a
clear picture of
where they stand and
what their
responsibilities
will be
in a succession-management
structure. Develop
a
compensation
and benefit
structure
that
is
sufficient
to
attract
and
retain
key
managers
as
well
as
to
motivate
them
to
perform
in
the
best
interests of the business and the
family
.
9.
There is also the matter of
timing
. The children you hope will take
over may be too young or
inexperienced
when
you
retired.
In
such
cases,
transitional
management
teams
may
be
formed
to
provide
interim
management
until the
children are properly trained and
seasoned
to be in a position
to manage the business
successfully.
10.
Define Family Employment
Practices
Establish a clear employment policy for
family members and
stick to
it. Most parents believe their children
should be treated equally. Company
executives, however,
must be
selected on
ability
. Selection should be
made on the needs of the business
rather than on the needs of the children.
11.
For
example,
Jim
owns
an
electric
company.
He
treats
his
three
children
equally---all
three
work
for
the
company
and
receive
the
same
salary.
All
three,
however,
do
not
work
equal
hours,
nor
are
they
all
dedicated
to
the
business. Instead of benefiting from
the equality,
there is
discord
and
resentment in the
company because only
one child really works.
12.
Parents
can
pass
on
their
legacy
to
their
children
without
necessarily
giving
them
control
of
a
company.
When the children
are not suited to take over the business-about 30
percent
of the time-other
methods can
be found for them to
share in the family wealth.
13.
However,
if
you
do
determine
that
a
child
will
carry
on
the
business,
you
should
be
sure
your
choice
is
capable. Ensure that he or she will
receive the right education and business
experience.
14.
Outside job experience is
extremely useful for children who will one day
assume
control. Working
outside
the family business can give
them valuable experience, expose them to differing
management styles and give
them the
confidence to know that their successes are their
own. Often they will receive better
mentoring
and
more opportunities to take
responsibility than they would in the family
business. Proving themselves outside
the
family
business
also
gives
children
greater
credibility
with
employees
when
they
do
eventually
take
control of the family business.
15.
For those families that insist their
children begin their careers at the family
business, children should start at
the
level that their education and experience justify-
even if it means sweeping floors, operating a
machine on
the factory floor, etc. The
experience will be
invaluable
. In addition, working their
way up from the bottom
will increase
their respect among employees and management. In
our experience, children who develop in
this manner are twice as likely to
succeed than children who assume unearned
executive positions.
16.
Establish and
Maintain Family Harmony
Rivalries
and
jealousies
can be extremely
time-consuming,
not to
mention
destructive. Once children have
grown,
married
and
have
children
of
their
own,
they
are
considered
a
separate
family
with
different
-and
sometimes conflicting-
ideas. If the business is large enough, consider
seating an outside board of directors to
2
ensure that
the interest of the family and business are
properly balanced.
17.
Develop a
family business vision document to make certain
family members-as well as employees, suppliers
and customers-understand the future of
the company. Used
family council
meetings
to communicate to all
family members about the company and
issues facing it now and in the future.
18.
Companies and families that communicate
often, honestly and
on a timely
basis
increase their probability of
surviving and prospering.
19.
Plan Your
Estate
Poor estate planning
has led to the
demise
of
more family businesses than any other cause. In
many of these
cases, the
liquidity
needs caused by
estate
taxes
due
on the value of the family business are far
greater than
the business can
absorb
.
20.
In
most
cases,
life
insurance
may
be
an
effective
way
to
cover
estate
taxes.
However,
the
cost
of
life
insurance for a
business reinvesting most of its capital in
growing the business usually makes the insurance
an
impractical
solution
for
the
entire
estate-tax
dilemma
.
In
most
cases,
there
is
a
need
to
utilize
other
planning techniques to minimize estate-
tax costs.
21.
That was the case for a
grocery
store owner who
spent all of his capital on expanding the business
and not
buying insurance.
Unfortunately, he died after completion of the
renovations. There was nothing left to pay
estate taxes, so the family had to sell
the business.
22.
With the help of your advisors, find
ways to reduce or manage the transfer taxes.
Again, it is important to
start the
process as early as possible.
23.
These
are
the
four
must
< br>
elements.
However,
underlying
all
of
them
is
a
willingness
to
make
difficult
decisions and do what is best for the
business and the family.
24.
Dealing
with
succession
issues
may
cause
you
discomfort
or
even
great
pain.
However,
if
not
addressed
early in the
succession process, these very same issues will
come up later when it may be impossible to deal
with them. Remember, your ultimate goal
is the survival of the company so that your
children, employees
and community
continue to derive the benefits your company
provides.
25.
The best way to assure the
existence of the family business into future
generations is to deal with
issues
in a
comprehensive manner well before the
final succession is to take place. For the
overwhelming majority of
family
businesses, that means now.
Translate the following
paragraphs into Chinese:
1.
Owners / founders are
extremely driven and dynamic.
||
Often they excel at more than one
skill.
In many cases, production
experts are also marketing geniuses or skilled
financiers
. ||
Replacing
them may require more than one
person
. ||
Therefore, family
business owners should determine
exactly how the business functions by
creating organizational charts
. ||
Each key member of the
succession process should create his or
her own chart. These charts should then be
compared
. ||
The differences
will point to gaps in the management structure and
highlight areas of
misunderstanding and
differences in perception
.
2.
Few businesses, even
family businesses, grow without the help of loyal
employees
.||
More often
than not,
3
they
hold key positions in management
. ||
Therefore, you must keep your employees
informed about long-range
succession
plans
.
||
Key
management
must
have
a
clear
picture
of
where
they
stand
and
what
their
responsibilities will be in a
succession-management structure
. ||
Develop a compensation and benefit
structure
that is sufficient to attract
and retain key managers as well as to motivate
them to perform in the best interests of
the business and the family.
Translate the following
Chinese into English
1.
他不但是位出色的银行家和公认
的贸易专家，而且还是位经验丰富的企业主管
。
(
not to mention
)
2.
意大利一个和平组织的志愿者不
顾危险，已开赴伊拉克首都巴革达组成人体盾牌
shield<
/p>
，以
阻止
美国
轰炸该地
。
(
regardless of
)
3.
在这个家庭里，
没有人比朱蒂更能致
力于经营房地生意
。
(
be
dedicated to
)
4.
由于经济不景气，房地产经纪人
正处于或降低房价或减少销售量的两难境地
.
(
dilemma
)
5.
史密斯先生往往靠慎重投资而获
取巨额利润
。
(
more often
than not
)
6.
约翰在学校里各门功课的成绩都
不怎么样，但在体育方面倒是身手不凡
。
(
excel at
)
7.
有条不紊的职责交接是家庭企业
长期繁荣的一个条件
。
(
transi
tion
; long range )
8.
在制定投资计划之前，你最好对
投资前景有个清楚的了解
。
(
have
a clear picture of
)
9.
尽管雕塑费时，但是仍有一些人
以雕塑为职业
。
(
time
consuming
)
10.
这家电脑软件公司正处于从独
资经营到合资经营的转化过程中
。
(in the midst
of )
Questions:
Q1. What are the four suggestions do
the authors give for a successful transfer of a
family business?
Q2. The
authors make three suggestions as to how to
establish and miantain family harmony. What are
the suggestions?
1.
in the midst
of
= ( lit or archaic) in the middle
of, in the course of e.g.: The country is in the
midst
of economic reform. / A little
girl stood in the midst of her classmates,
crying.
2.
transfer
vt. =
give the ownership or control of sth to
another
; e.g.: The military government
is
refusing to transfer power to a
democratically elected civilian government. //
move sth from one
place to
another
e.g.: It took two trips to
transfer all Lillian's furniture to her new flat.
//
move
officially from one
job to another
: e.g.: The manager has
decided to transfer me to a new post in
Shenzhen Development Zone. //
change from one vehicle to
another
: e.g.: To get there you can
transfer from the No. 2 trolley bus to
the subway. //
transfer
n. =
handing over the possession or
control
of sth/ the move of sth from one place to another;
the act of moving from one job to another
e.g.: the transfer of family business /
the transfer of the ship's cargo onto the pier /
transfer fee
转会
费
//
c.f.:
transference
=
transferring or being transferred, e.g.: the
transference of heat from one
body to
another
3
trillion
: = one million million
兆，万亿
4
4.
asset
n. [pl.] sth or sb
that is valuable because they help to succeed
财富，资产
e.g.:
asset to
sb/sth
:
An outgoing personality is a definite
asset
to a salesman. / Good
health is a great asset. / His
asset
included shares in the
company and a house in Guangzhou.
//
c.f.: liabilities
= debts or financial
obligations
债务
5.
viability
n.
[U] = workability
可实施性
,e.g.:
The executive directors are currently
investigating the
viability of the
proposal you have put forth. //
viable
adj. that can be done
and will succeed
切实可行
的
e.g.: We are in favour of the program,
but we want strong assurance that it is viable.
||c.f.:
feasibility
可行性；
practicality
实际性
6.
questionable
adj. doubtful
and uncertain e.g.: The conclusion of the survey
is questionable because
the research
was based on a very small sample of people. //
c.f.:
problematic
7.
Survival of a
family business into the third generation is a
rare occurrence
. This sentence means:
It is not common that a family business
can survive long enough to be transferred to the
third
generation. //
survive
v. continue to live
or exist in spite of accidents, illness or
difficulties / survival n.
//
occurrence
: = event,
incident, happening e.g.: Robbery is now an
everyday occurrence.
8.
succession [U] n. = 1. taking one's place, coming
after sb/ sth
继任，
继承
(
头衔、
王位、
财产
) e.g.:
Who is in succession to
the throne? / Who succeeded Churchill? //
succession n. [U,C]= 2. number of
things or people coming one after the
other in time or order
一连串的、
接二连的：
e.g. a
succession of
wet days, defeat, poor
leaders // in succession e.g.: three championships
in succession // c.f.:
successive adj.
The school has won five successive games. || c.f.:
legacy
遗产
（
money
or property that
you receive from
someone after they die || heritage
(
文化）遗产
(important qualities,
customs, and
traditions that have been
in a society for a long time)
9. Indeed, a
comprehensive
succession plan, which
includes
sophisticated
estate planning strategies,
generally
requires at least a 10-year
horizon
to be properly
structured. This sentence means: Actually
owners need to form an overall 10-year
future plan for succession, which includes complex
and
careful planning strategies. //
comprehensive
= entire,
through //
sophisticated
means very advanced,
and more cleverly
designed or skillfully made than other thins of
the same type; having a lot of
knowledge and experience of clever,
fashionable thins and showing this by the way one
talks and
behaves, have lost natural
simplicity
高度发展的、尖端的、老练的、富有有经验的、世故的
e.g.:
sophisticated
electronic
equipment, a
sophisticated
businessman //
horizon
n. =
knowledge,
experience, interest
眼界、
见识
e.g.: a
woman of narrow horizons / Travel can broaden
one’s horizon.
10.
large or small, high-tech or low,
public or private:
Pay attention to the
use of parallelism,
which enforces the
emphasis.
11.
Regardless of
how diverse
they are, four key elements must be in
place
= But no matter how
different they are, four key elements
must be functioning. //
regardless
of
= in spite of , e.g.: A true
professional can work with anyone
regardless of age, race, or color. //
diverse
adj. = different,
various
不同的，多种多样的
: All the
members of the team come from totally diverse
backgrounds. /
diverse
culture // c.f.:
diversity
n. e.g.: a wide
diversity of opinion
众说纷纭的看法
//
diversify vt.
e.g.: We
must diversify our
syllabus to attract students.
diversify
into sth
兼营
:
Some publishers are now
diversifying into software.
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