Who should be the successor of a family owned business when the founders are no longer available, willing or capable of continuing to run it?  That’s definitely a mind over money matters choice. 

My friend and colleague Dawn Fotopulos, a much sought after small business advocate and coach is the Founder of Best Small Biz Help.com, The Solopreneur’s Lifeline(http://bestsmallbizhelp.com/meet-dawn-fotopulos/).  She says usually one or two people are in charge of the business and have been the ultimate decision makers and they must be willing to delegate authority before they’re ready to sell or turn the business over to be run by someone else.  Why?  Fotopulos says because such a transition requires a three year on-ramp/off-ramp time frame to do it successfully and suggests the following: 

• Think about succession at least three years before you want to transition
• Delegate authority and not just tasks to your key proven people
• Seriously consider non-family members as viable leaders of the business 

If you’re the founder of a family business, are facing this decision and considering appointing two people to run the company and use an accountant as a referee – Fotopulos says you might want to reconsider.  She is a firm believer that you can never have a 50/50 split in ownership. 

“It’s a recipe for disaster,” she says.  “Designating more than one owner in a succession plan doesn’t work.  Someone must ultimately be in charge.  That person needs to understand the mission of the business.  Although a business should be able to run independent of the founder,” she goes on to explain, “it only can when the owner delegates authority regarding decision making and not just delegate tasks.”

A succession plan takes time.  So does identifying the right person.  Mentoring a successor requires good, time consuming, on-the-job training, nurturing and giving adequate lead time for a smooth transition.  Most family business founders haven’t done that or identified their successor because they’re structured the business around themselves.  Even if the owner/leader has identified the person to succeed them, often they can’t let go or they don’t think far enough ahead to implement change and find that it’s a crisis that forces putting a succession plan into play.

Lost time is lost money.  Forward thinking about the transition of power is a bottom line issue.  Mind over money really matters when it comes to this decision.  It should be made from the mind of a good business owner rather than the heart of a hopeful parent/founder.

Fotopulos says the successor boss must be responsible for the business viability year in and year out.  The entrepreneurial generation (founders) made the sacrifices but need to be sure that when the second generation (adult children) takes over, their willingness or motivation often isn’t the same.  Thus the s suggestion to consider a longtime, loyal employee – a person who is considered your critical second in command – to become your successor.

When choosing the person to succeed you in your successfully run and profitable family business, as you consider who best can do that, remember:  It’s your money so take it personally (TM).  It applies here more than ever before.

Here’s to your health and wealth.

TAGS: Communication Skills, entrepeneurs, financial planning, Women and Money

It’s a fact:  family owned businesses are a huge part of our country’s economy. 

It’s a fact:  family owned businesses usually come with built-in problems. 

It’s a fact:  experts say family owned businesses (generally) fail not because of economic issues but because family life and workplace life can create turmoil. 

Family owned businesses account for 60% of the nation’s employment, 78% of all new jobs and 50% of the country’s gross domestic product.  But a lot can go wrong in a family owned business so it’s important that we all understand these businesses’ unique struggles and support them because only about a third survives into the second generation. 

Family business success depends on forward-thinking and planning. The problem with family owned business succession plans is that the well-intended founder – the parent who made all the sacrifices – remembers the lean years while in most cases, the adult child, would-be successor doesn’t.  Instead, the child only recalls seeing over and over that Mom or Dad (or both) took risks, worked the hours, made the sacrifices and got the business to break even and have free cash flow. That’s why many 20-30 year family businesses – viable when the parents hand it over (usually to the son) – are run into the ground in two years. 

As my long time friend and colleague Dawn Fotopulos, a small business advocate explains:  “The bottom line is – it’s so hard to get a business profitable but takes just an ‘eye blink’ to destroy it and decades of hard work.” 

Fotopulos’ business is to improve the viability of small business in the United States. (http://www.smallbusinesshow2.com/dawn-fotopulos.html) She’s committed.  She knows what she’s talking about and definitely knows what she’s doing when it comes to educating small business owners for success. 

“The disconnect,” says Dawn, “is that the parents who made all of the sacrifices understand there are going to be lean years and tend to be conservative about how they spend their money.  They loathe spending money but want to give their kids everything they didn’t have.  They spoil the kids and the kids are of the mindset that the business gave them a nice life and is always going to be there.” 

There’s such truth in Dawn’s assessment.  When it comes to family owned businesses, the second generation isn’t of the frame of mind to save for a rainy day.  “When they take over the business”, Dawn says, “the mindset is often first that they must have the biggest and the best of everything – equipment, furniture, expensive environment – that the business may or may not need!”  She says too often she sees them start to run the cash position into the ground. “So if they lose a client or end up in a tough economic environment,” Dawn told me, “they can’t stand economic shocks.” 

It’s your money so take it personally ™ absolutely applies here.  In the case of a family owned business that’s failing, Dawn says part of the dilemma is pride.  Many in this generation wake up and say, “I deserve to have the best” and put themselves first instead of the business. “The family business must be viewed and treated like the third entity it is,” Dawn explains.  “The one that provides for them and their family and those they employ.” 

Next week:  Who should be the successor in a family owned business when the founders are no longer available, willing or capable of continuing to run it?   That’s definitely a mind over money matters choice. 

Here’s to your health and wealth.

TAGS: family businesses, family money, succession plans, Women and Money, work life balance

I recently came across a study by the Guardian Life Small Business Research Institute predicting that about one-third of new jobs created over the next eight years will be at small businesses owned by women.

As a woman small business owner myself, I was really intrigued by this news. It also reminded me that many job seekers miss out on great opportunities because they overlook the potential to get a job at a (man- or woman-owned) small business.

In my podcast this week, I share my thoughts on the opportunities available in small businesses, how to find these opportunities and the pros and cons of working for a smaller organization.

As always, I look forward to your feedback and comments!

Listen to the podcast now.

Note: This post originally appeared on my “College to Career” blog at MyPath.com.

TAGS: Job Search, women entrepreneurs

When it comes to money – what kind of saver are you?

Several years ago I came across a great, straightforward answer to that question.  It was in financial education literature from the Federal Reserve Bank of Dallas which is one of the network of twelve banks and their branches that make up the Federal Reserve system (http://www.dallasfed.org/ca/wealth/pdfs/wealth.pdf)

The publication outlined four types of savers:

• The planner saver – a person who controls spending and budgets to save.
• The struggler saver – someone who has trouble staying afloat financially and finds it difficult to save.
• The denier saver – a person who sees no reason for a budget because they don’t see themselves in trouble financially.
• The impulsive saver – a person who unfortunately spends today like there’s no tomorrow because their attitude is that tomorrow will take care of itself.

So, what type saver are you?

To accumulate, grow and preserve your money takes discipline.  While it’s important to have a savings account, don’t forget to get on track to also have an “emergency fund“:  3-6 months worth of living expenses (12 months worth if you’re self-employed) in an account where you can easily access the money if there’s a critical need. 

Regardless the type saver you are – you can improve your savings goal by remembering this bottom line:  you must always earn more than you spend.  Or said another way, let spending less be your goal.  That’s a healthy state of fiscal readiness and takes your savings to another level: investing. 

If saving to invest and investing to build wealth is your goal – http://showmomthemoney.com/personalgrowth/7traits.htm take a look at what’s described as the traits of very wealthy people and how those traits translate into building wealth and sustaining it. 

Wealthy people tend to be:

• Persistent.  For anyone, on the way to achieving a goal, you will face obstacles, right?  Wealth  is achieved by negotiating one’s way around or through numerous obstacles persistently.
• Businessmen and women or investors in businesses.  Think about it.  The richest people we’ve heard about all own companies and when asked say – to create wealth, you must involve yourself in business because that’s where the money is.
• Innovative.  Innovation ensures you’ll be among the ones who come up with new ideas and new ideas can create wealth.  They tend to do what they absolutely love and love it so much that they forget they’re actually working.
• Leverage.  They know when to let go and they know not to try and do everything themselves.

It appears that wealthy people also share the philosophy that to whom much is given, much is expected – and therefore share the trait of giving back by supporting causes in which they believe.   Finally, they value and participate in continuing education since extremely wealthy people tend to believe that the greatest asset in the world is your mind.

Here’s to your health and wealth!

TAGS: improving savings goals, saving money, traits of wealthy people, types of savers

I was inspired by my colleague Carol Frohlinger’s The “Pink Elephant” in the Room (July 27th 2009) post about how important our personal perceptions and experiences when confronted with a difficult issue.  She went on to say that might be what happens when women are asked about their experiences in working with other women.

The phrase (pink) “elephant in the room” describes something that should be very obvious, something you’d certainly notice.  “Elephant in the room” is actually an English idiom for an obvious truth regarding a question, problem, solution, or controversial issue that though obvious, is ignored by a group of people and goes unaddressed, generally out of embarrassment or taboo.

One of the biggest “pink elephants” in the room for professional women these days – is the one in green that begins with:  “We’d love for you to be our keynote speaker” (workshop leader, seminar facilitator, panelist, consultant) and ends with:  “…but we have very little money, so we thought you might be willing to…”

This long ignored “pink elephant” is making the other members of the herd green with envy.  

How can this elephant not even get talked about?  How is it that this elephant doesn’t get researched, discussed, tweaked and resolved the way most of those other touchy, uncomfortable, “oh-do-we-have-to-go-there” pink elephants (issues) do? 

How can this elephant that asks women professionals to donate their services – same event, same time every year, extremely worthy causes but not paychecks – still be standing in the center of the room when the reason for the gathering is to talk about women improving their financial well-being or managing the marketing of their product and brand to improve their business bottomline?

How can this elephant not understand it needs to walk the thin pink line and pay women professionals for their services and promote that mindset within their organizations?

Women now have impressive social networks and access to other professional women through these connections.  But far too often, we’re still being asked to ask each other to provide our expertise without compensation, or below market value or without the other basic fee for services and terms of engagement automatically afforded our male counterparts.

Part of this has to do with expectations.  Our average guy counterpart just isn’t expected to do as many pro bono gigs as the average professional woman.  That’s why I think it’s time for women to change the old mindset by consistently and proactively committing to pay each other (and get each other paid) for our skills, expertise, knowledge, know-how, ideas and anything else that formerly fell under the  ”we thought you might be willing to” category.

Glinda Bridgforth, a long-time and well respected colleague of mine in the field of personal finance, agrees but says it’s also important that women ask for what we believe we deserve.   Bridgforth is President and CEO of Bridgforth Financial & Associates, LLC (http://www.bridgforthfinancial.com/) and offers these suggestions on how to determine what you’re worth, what your compensation should be. 

“It’s important to get as much information as possible from the potential client,” Bridgforth says.  “Ask what kind of budget they have for a speaker.  Ask who the other speaker candidates are to get a sense of the professional caliber of speaker being sought.  The responses to those two questions give you an indication of the kind of fee the client’s willing to pay.”    Her suggestions can helps you get and set a good ballpark figure instead of guessing and potentially low balling your services or blowing yourself out of consideration.

Bridgforth and I both agree that philanthropy and community service should be part of everyone’s work ethic and responsibility.  “Women can do pro bono or work for lesser compensation on occasion because it is a seed that is being planted which can bloom into some other area,” Bridgforth says.  “Perhaps it can come from someone in the audience who will hire you in the future at your full rate.  But clearly, the pink elephant (in green) is in the room.”

Let’s address the “pink elephant” in green.  Let’s not be embarrassed.  It’s time for women to collectively stop participating in the “pink elephant”-in-green-mentality that abuses, confuses or co-mingles female philanthropy with professional compensation. 

Here’s to your health and wealth.

Glinda Bridgforth is the author of “Girl Get Your Credit Straight” and “Girl Get Your Money Straight”.

TAGS: improving women's financial well-being, pay for professional services, pink elephant issue, Thin pink line issue

Does the date October 27^th, 1997 have any financial significance to you? 

It was the day the Hong Kong stock market collapsed.  The Hang Seng Index plummeted, causing massive selloffs in financial markets around the world and initiating a 554-point plunge on the Dow Jones Industrial Average.  It was the day automatic trading curbs or collars as they’re also called — went into effect.  The protocols of those curbs have now changed, but back then, they would halt trading for half an hour if the market fell 350 points; for an hour if down 550 points. 

Those curbs or collars — had never been used before that day.  The Dow shot past the first collar.  Trading halted for 30 minutes.  When trading resumed, so did the freefall – like a hot knife through butter, the Dow lost another 200 hundred points.  Down 550, with less than half an hour left to the closing bell, trading was halted for the day.  The financial repercussions were felt around the world. 

Working that story as a financial journalist absolutely solidified my commitment to work from that day forward in ways to positively impact the financial futures of women because that day – investors, particularly women – needed to have had a plan in place to take advantage of  “the sale” – the bargain-hunting or bottom fishing opportunities that such an incident (market meltdown) creates. 

There’s nothing like a financial crisis to get everybody’s attention and change attitudes.  The current recession is the money madness everyone’s dealing with right now but the lessons hopefully learned from 1997 are being remembered:  reassess, reorganize and realign your financial plan to ensure your own financial future. 

Money has long been a gender-specific arena.  But, today’s women of all economic circumstances must learn the art of negotiating the best possible use of what money we have, and, the confidence to make a significant portion of that money grow for us into the future. 

When it comes to money, women have unique needs in three areas:  investment planning, retirement and business ownership.  We have lower salaries, longer life spans and fewer pensions.  Those facts add up to the need for a financial plan and action.  And, since we have a longer life expectancy, we need to seek a more balanced portfolio.  Money is power and we’ve simply got to become equal to the task. 

Twenty years ago, when my first marriage ended in divorce, I assumed all family debt in order to keep order in the timely and fragile area known as personal credit.  The job of reconstructing life – emotionally and financially – was enormous.  Post divorce the dollar reserves were small.  I’d made a lot of money and lived as many Baby Boomers did – with the confidence that there was more coming from where it had always come – my earning ability, which had been the primary support for the family.  My financial knowledge background was modest back then but my financial future needs were totally dependent on me figuring out how to do what needed to be done in a short amount of time.

Women face different life circumstances than men:  lower salaries, longer life span, fewer pensions, interrupted careers for care giving of children or elderly parents.  We need to realign ourselves in order to embrace change on our own behalf.  We cannot afford to wait for change to come.  We must become agents for change.

We women always have a plan – even in the midst of multi-tasking careers and managing home and family.  We have “what-to-do-if” scenarios for just about everything.  Not enough of us, however, have a clearly stated financial plan that allows us to take advantage of financial opportunities such as the massive selloff of October 27^th, 1997.   And, despite that missed opportunity – widely lamented by investors who weren’t positioned or able to respond to their advantage – how many of us in the nearly 12 years since then – have restructured our fiscal strategies to be beneficiaries rather than victims of market fluctuations and volatility? 

Here’s to your health and wealth.

TAGS: 1997, bargain hunting stocks, business ownership, current recession, gender specific money needs, Hong Kong stock market, investment planning, lower salaries, Market meltdowns, October 27th, pensions, personal credit, protocols, retiremet, trading curbs

This Saturday’s New York Times featured a front-page story about how the recession is prompting some people to start their own businesses instead of looking for new jobs. It’s an encouraging story if you’ve ever considered the option of creating your own venture, large or small.

While some people decide to dive headfirst into entrepreneurship, others feel more comfortable dipping in a toe, then an ankle, then a knee before swimming solo.  The choice is very personal and depends on your experience, finances and overall comfort with risk.  But, if you’re thinking even just a little bit about starting your own business, it’s never too early to take actions that will set you up for taking the plunge when you’re ready.  Here are some suggestions for first steps to take if you’re thinking about starting your own small business or becoming a full-time freelancer:

Find Real and Virtual Mentors. I guarantee you are not the first person to start a business in your industry. Use Facebook, LinkedIn, Twitter, DowntownWomensClub.com, Make Mine a Million $ Business, Yahoo groups and other networking organizations and websites to make connections with people who have started similar-sized businesses (though not potential direct competitors  — as you can imagine, it makes me really cranky when someone asks me for advice on how to start a business exactly the same as mine!).  Ask people how they got started and what advice and recommended resources they might offer.  You can also use the web to research successful entrepreneurs.  What do their websites look like?  What experience is listed in their bios or LinkedIn profiles?  What professional credentials do they maintain?  Take notes!

Understand the Essentials. It’s not the most exciting part of starting a business, but it’s crucial to research any licenses, taxes and insurance you’ll need to go solo, and I recommend doing this sooner rather than later.  Start a list or folder to keep track of everything, and don’t be afraid to ask experts for help, especially an accountant and a lawyer.  You can look to freelancers unions, entrepreneurial websites (my faves are StartupNation.com, FastCompany.com, Inc.com and Entrepreneur.com) and the Small Business Administration for free or low-cost help determining what “official” steps are required. Above all, be sure to find independent health insurance. Never take the risk of being uninsured.

Learn How to Market Yourself. One of the most important requirements of entrepreneurship is the ability to sell yourself and your ideas.  Even before you launch your own venture, you can begin working on this aspect of self-employment: Join high-profile committees of industry organizations to make yourself visible to members (who may be future clients of your new business). Volunteer at a nonprofit organization related to the business you’d like to start. Take professional development classes online or at a community college to enhance your business skills and industry expertise. Start a blog on a topic related to your entrepreneurial interests. Start posting comments and articles on Twitter that establish your expertise in the area of your choice. Check out the Personal Branding Blog for ongoing tips on marketing yourself.

Read up. Many, many, many people have written great books on how to start and run businesses of all shapes and sizes. Here are some of my personal favorites for young entrepreneurs.

Free Agent Nation: The Future of Working for Yourself

The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything

Getting Started in Consulting

Six-Figure Freelancing: The Writer’s Guide to Making More Money

The E-Myth: Why Most Small Businesses Don’t Work and What to Do About It

If you have more how-to-be-an-entrepreneur books you’d recommend to aspiring entrepreneurs, please share in the Comments section!

Each of the above activities will increase your leadership experience, expand your network and, perhaps most importantly, build your confidence that there is a world outside of full-time employment.  The plunge into entrepreneurship could even take place sooner than you thought possible.  Or, if you find yourself resisting these actions, it may be a sign that you’re not quite ready to leave the regular paycheck pool, even if it is hard to find a job right now. Either way, self-employment is an option that many people consider at some point in their careers, so it’s always worth a bit of exploration.

A version of this post originally appeared on the Lindsey Pollak Career Blog.

TAGS: entrepeneurs, Generation Y

I had all sorts of kind words and compliments lined up to congratulate and celebrate you youngish Baby Boomers.  10,000 of you a day are turning 50 for the next ten to twelve years or so.  Then I reminded myself that I’m your financial cheerleader – and since you can’t take kind words and compliments to the bank – let me provide some loose change ideas instead because as I like to say – “Lose change adds up to folding money.”  You can bank on that.

If you’re in your 50s – when it comes to personal money matters – welcome to crunch time! 

In the fifth decade of life you need to do with your money what you’re hopefully doing with your mind and body:  firming it up in general but your retirement options specifically.  Here’s the reason why.  Although the whole idea of what retirement is is being re-thought by the 79 million of us who are known as Baby Boomers (“Encore: Work That Matters in the Second Half of Life ” by Marc Freedman), at this age, you’re actually thinking about doing it one of these days!  So now really is the time to decide what kind of retirement lifestyle you want – and plan accordingly.

Here’s how.  The closer you get to this thing called “retirement”, the more you need to scale back on doing anything too risky with your money.  Your asset allocation should be 50% stock and 50% fixed income.  This mix let’s your retirement savings grow in the market but with a safety net of sorts with fixed income.  If, however, you’re behind in your savings, you may need to be a more aggressive investor – in other words, take more risk even in your mid-50s in order to make up for lost time and the more recent losses due to the state of our economy.  Crunch the numbers – from social security, pension and all your other income streams – to determine how to best allocate your assets.  Look for online calculators to help you do this (http://www.bankrate.com/brm/news/retirement.asp).

Since women still on average live longer than men and will therefore need money for a longer period of time, it’s very important to remember to actively continue saving for retirement.  Your money mantra should be – save as much as you can and be sure to track your assets more closely the closer you get to retirement. 

Many of us age 55 and older are taking care of aging parents, dealing with their end-of-life issues and what may be required of us emotionally and financially to help them.  So it’s easy to let our own future money needs get side tracked.

Get back on track by downsizing your housing costs – possibly relocating to a smaller home.  Get back on track by buying long term care insurance if you haven’t already because if you purchase it in you 50s, it’s still affordable. 

And finally, get back on track by downsizing your generosity.  Despite what your heart might say, this is the time in life where you must stop giving money to relatives and children.  I know – that’s a tough one.  But unless you’re independently wealthy – you’ve reached a point where you can no longer afford to lend a “money helping hand” because you’ll have little time to recoup any loses for loans that become gifts.

Next Thursday:  Women over age 55 control 65% of the country’s wealth (http://www.silvervixens.com/node/92) but often don’t give themselves credit for being able to make good money choices.  I’ll have some specific money moves for women of a certain age – 55 and older. 

Here’s to your health and wealth.

February is Black History Month.  Did you know that …  In the early 1900′s a woman named Madam C.J. Walker was considered by some to be the first self-made American woman millionaire?  Madam Walker was an African-American businesswoman – the wealthiest African-American woman in America in the early 20th century.  She revolutionized the hair care and cosmetics industry for African American women.  Madam Walker fully recognized the power of her wealth and success.  She promoted her business by speaking to women’s groups which empowered other women in business.  Her story is inspiration to women entrepreneurs of all ages and backgrounds.  http://inventors.about.com/od/wstartinventors/a/MadameWalker.htm

TAGS: aging parents, bankrate, black history, downsizing, encore careers, future money needs, loaning money, longevity, madam cj walker, Money in Your 50s, retirememt, women entrepreneurs

This is the second post I wrote to help entrepreneurs- both the finalists in the Yahoo Seeds for Success Program as well as The Think Pink Line readers. :

In addition to the negotiation planning process I wrote about earlier, I also offered some suggestions to the Seeds For Success finalists about negotiation process. Among them:

1. Create your business’s “standard” way of doing things and use that as a way to kick off a negotiation. For example, a “Usual Terms and Conditions” one-pager that you can use to describe the ways you do business. This is not to say that you can’t change any or all of these but it can make opening the conversation easier and can keep you on track so that you remember to bring up the things that are important for you to discuss.
2. Choose the method you’ll use to negotiate. Think about the people with whom you will be negotiating and plan a strategy. For example, one of the business owners is planning a trip to China to meet her suppliers in person later this year. While email has had to suffice in the meantime, she wants to build the relationship by spending some time fact to face.
3. Strike the business deal first, then ask your attorney to document it, advising you of the legal issues you should consider. Don’t delegate negotiating the business part of things to your lawyer – that’s not her expertise.

Paying attention to the negotiation process won’t solve all the issues that you’ll be negotiating about, but my experience is that it can certainly help!

This post also appeared on Shine, Yahoo’s new destination site for women.

TAGS: business owners, entrepeneurs, negotiation skills, playing to win, small business

Lois and I are both serving as mentors for the three finalists in the Yahoo Seeds for Success Program – how much fun it is to talk with such enterprising, energetic women!

Each of the entrepreneurs I spoke with was very clear about the myriad of opportunities to negotiate ─ with suppliers, service providers, independent contractors and, of course, customers and prospective customers.

For these three businesses as well as every other start-up I know though, when it comes to negotiation, it can seem as though it’s a clear case of David v. Goliath. So the question is:

How do you negotiate effectively when the other party has more leverage? (more…)

TAGS: business owners, entrepeneurs, negotiation skills, playing to win, small business