I had the privilege of visiting Bremen Castings last week to interview the company for a BizVoice article. Having been a family business for seven decades, the company's executives know a thing or two about how to keep the lights on as time passes. Outlined on the Midwest Handling Wholesaler site, here are Bremen Castings president JB Brown's four gems to live by for family businesses:
- Honor Thy Father: A large percentage of family-run businesses do not make it past two generations, so the key to longevity is ensuring the business is managed with effective leadership. When there is a strong management team, a solid business plan can be implemented which takes into account the highs, lows and future direction and goals of the company.
- Cash is King: Since family members are often the majority stock holders in a family business, strong cash flow is imperative to ensuring stocks (and voting power) stays within certain hands rather than being sold for a liquid dividend. “No company is going to survive very long without generating a positive cash flow,” says Brown. “We keep tight books and prepare for the hard times by getting ahead of the curve.”
- Instill an Estate Plan: Some owners of family businesses become so engrossed within their companies; they forget to look at the big picture and understand how various situations can affect both the business and the family’s assets. “A defined estate plan is essential for smooth functioning of both the family system and the business system,” adds Brown.
- Enlist Outside Expertise: Although the brunt of the business may belong to the family, it is important to enlist non-family members onto a board of directors to help with important decisions regarding the company’s future. An outside board can instill a sense of accountability and perspective on everything from conflict resolution to financial planning.