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Tag: family business

Morefield Communications to bring on first non-family president

Wesley Kelly. PHOTO PROVIDED.

Morefield Communications’ fourth president is the first from outside the Morefield family since its founding in 1945.

Wesley Kelly, the Camp Hill-based business technology solutions firm’s incoming president, will take up his new role in late June after more than 21 years at the company.

Kelly joined Morefield in 1999 as a student intern and joined full-time as a Programmer Analyst after grading from Penn State University. Since then, he has held positions as operations manager and manager of converged engineering services.

Today, Kelly is executive vice president of sales and services at the company, a member of its Board of Directors and a shareholder.

Morefield Communications specializes in cloud and managed services, networking and infrastructure, IT support services and more. The Camp Hill firm has a second location in Altoona and employees across the state.

“We will strive to make the community better by making organizations successful through their use of technology,” said Kelly. “We want the next generation to benefit from their experiences at Morefield and see their work contribute to the communities they live in.”

Kelly replaces current Morefield president John Morefield, who will remain with the company as chairman of its board. He will also take on a role as client advocate.

“Wes has developed an unparalleled ability to lead over his 21-year tenure at Morefield,” said Morefield. “It is with a great sense of gratitude to Wes that I can transition into a new role at Morefield with the confidence that my grandfather’s vision, and the community we have collectively built over the past 75 years, will continue to grow in this next chapter under his guidance.”

Developing a succession plan is vital for family businesses 

Family businesses are a big and important part of the economy and account for more than 50% of U.S. GDP, and 35% of Fortune 500 companies are controlled by families and family owned companies are responsible for 60% of jobs in America.

A recent family business survey conducted by the National Bureau of Economic Research’s Family Business Alliance indicates that only 15% of the family businesses have developed and documented anything appearing to be a succession plan. This is troubling because succession of ownership and leadership is a critical issue for the long-term success of a business. 

Respondents to a Family Business Institute survey that asked why their business did not have a succession plan said that “time to deal with the issue” was a significant constraint. Other reasons included feeling it was too early to plan for succession, inability to find adequate advice or tools to start, finding the topic too complex, not wanting to think about leaving the business, and fear of conflict with family or employees

The undesirable result of not having a succession plan is evidenced by the great difficulty in surviving through multiple generations. A family business surviving to the second generation is a milestone event because only 30% make it through the second generation. Furthermore, only 12% make it through the third, according to PwC in “The Family Business Sector in 2016: Success and Succession.”

What Is Succession Planning?

Succession planning is a critical factor for the long-term success of any business and especially for family businesses. Leadership transitions in business affect the entire organization’s continuity, employee retention, client retention and returns on investment. It is essential to create and implement a process that creates visibility, accountability and greater integration of all facets of the business.

All business owners will depart their businesses at some point by design or by default. A succession plan

helps ensure that owners have control over how their businesses transfer to the next owner. Succession planning

is the process of developing a written plan for transition of ownership and leadership when an owner and/or

leader decides to leave the business either voluntarily, such as retirement, or involuntarily, such as death or

incapacitation. 

What needs to be done to prepare for succession planning for the family business? A suggested outline of a strategically structured process for family business succession planning is presented here.

FIRST: Start with seven actions to strategically structure a succession planning process. 

1: Begin the succession planning process early.

2: Clearly determine and communicate the purpose, goals, and extent of the leadership succession plan or program.

3: Clearly define the desired and required qualities of the new leader.

4: Develop a clearly focused leadership development strategy.

5: Develop a talent management process that will incorporate strategic thinking for specific development opportunities for future leaders.

6: Identify future leadership candidates by developing a system for assessing current and future leadership needs.

7: Identify a system for communicating information to ensure that the leadership succession and/or development programs are in line with strategic business needs.

Next: Follow an overall outline of the suggested planning process to create a succession plan. 

I: Goals & Objectives

  • Develop vision & mission statements for the business.
  • Develop a list of core values & guiding principles.
  • Develop short- & long-term goals for the business.
  • Identify the stakeholders for the business.
  • Develop a personal vision with personal goals.
  • Develop retirement goals.
  • Create a team of advisors for the succession planning effort

II. Exit Strategy

  • Develop options for departures from the business.
  • Review the developed options for the exit strategy from the business.
  • Select the most desired option for the exit strategy.

III. Business Valuation

  • Obtain professional advice to determine the value of the business.
  • Determine the value of the business.
  • Determine a current value of the business assets & liabilities.
  • Determine the goodwill value of the business.

IV: Business Structure

  • Identify and quantify business debt.
  • Recruit & retain productive employees.
  • Structure business to maximize value.
  • Document key processes & procedures used in the business.

V: Tax Considerations

  • Develop financial goals.
  • Identify tax implications of the current business.
  • Plan & implement tax strategy to minimize taxes.

VI: Legal Considerations

  • Retain professional legal counsel.
  • Develop a buy-sell agreement for the business.

VII:  Estate Plans

  • Retain a professional estate planning adviser.
  • Develop an estate plan.

VIII. Successor Selection

  • Develop specific criteria for successor(s).
  • Recruit and select successor(s) based upon identified criteria.
  • Communicate selection of successor to stakeholders.

IX: Successor Training

  • Develop a list of characteristics and skills needed by successor(s).
  • Develop a training plan for successor(s).
  • Develop a coaching/mentoring plan for successor(s).
  • Establish a timeline for successor(s) plan.

X: Contingency Plan

  • Develop a contingency plan (based on the “What Ifs?”).
  • Research & identify insurance needs (disability; personal life; critical illness; business; key person; etc.).\
  • Select & train a key employee to take over in case of emergency or unforeseen event.
  • Communicate the plan to stakeholders & advisers.

XI: Implementation Plan

  • Document the roles, responsibilities & expectations concerning the transition of ownership.
  • Identify a facilitator to make sure the process of succession is carried out.

XII: Timelines

  • Identify the management transition timeline.
  • Identify transition of ownership of your business timeline.
  • Identify the complete business exit timeline.

XIII:  Communication

  • Document the succession plan.
  • Document how to proceed with the succession plan in the event of an unforeseen event (accident, illness, death).
  • Document the transition or exit strategy to inform family, employees, clients, vendors, community & all stakeholders.

I leave you with this additional thought on succession planning.

“One of the things we often miss in succession planning is that it should be gradual and thoughtful, with lots of sharing of information and knowledge and perspective so that it’s almost a non-event when it happens.” Anne Mulcahy, former Chairperson and CEO of Xerox Corporation.

Glenn Ebersole is a registered professional engineer and is the Executive Director, Strategic Business Development/Marketing for RCS Construction – a woman owned general contractor firm – in Collegeville, PA. He can be reached at 610-415-1130 or [email protected] 

The difficulties of family succession planning

 

The decision to leave the family business in the hands of a relative can seem like an obvious solution, but experts warn that it can be complicated, emotional mess if you’re not careful.

For example, the founders of a family owned business are getting older and plan to give the company to their daughter. But that daughter may not love the business like her parents did, and the organization’s staff may not like having someone with less experience than them in charge.

Those possibilities can be avoided with careful estate planning, said Angie Stephenson, senior wealth adviser and COO of Domani Wealth in Lancaster.

When an owner is preparing to hand over the keys to their business, particularly if it’s to a family member, Stephenson suggests seeking external advice by developing a board of directors, or talking to a financial adviser.

“For our business owners, we are their sounding board,” Stephenson said. “We are frequently speaking to business owners about succession plans — where are they? What’s going on? Who’s their successor? How will they get liquidity for the company?”

A business owner’s family member can be involved with the company for years and have the skill necessary to be that organization’s next leader. However, owners need to ask themselves, are we forcing the company on that person? Do they truly want the role?

“When outside advisers interview the family members, what is frequently revealed is perhaps the family member feels obligated and they do not have the same passion to own and lead the business as the current generation may have,” Stephenson said.

The succeeding family member may care about the business and understand its products or services, but struggle as a leader if they weren’t trained properly. That new successor’s leadership can be challenged further by existing team members who may not accept a younger family member becoming their leader, she said.

The best examples of familial succession Stephenson has seen involved relatives who rose up the ranks at another company first, gaining valuable experience along the way, then brought that experience to the family business.

Just because a family member plans to run the future business, doesn’t mean that other members of the family won’t be getting an inheritance.

If a majority of the owner’s estate is the business, getting inheritance to the other family members can be left up to the new owner and create a difficult position for the family.

“If the child in the business has not planned to have the proper liquidity to buy out his or her siblings, it may be that the debt will be to his or her siblings for many years to come,” Stephenson said.

If no family members want to take over, the owner can sell. But selling can be difficult, too, if the buyer does not plan to keep the employees the owner has worked with for years.

Businesses generally sell for less if the owner stipulates in the sale that the employees must be retained by the new owner, said Stephenson. If a business owner hopes to make the most out of the sale, it is best to free the new owner to make the workforce decisions, including whether or not to move the company.

The Internal Revenue Service exempts anyone from paying a federal estate tax during the transfer of assets if their total estate value does not exceed $11.4 million or $22.8 million for a married couple. In 2025, that exemption will decrease to $5 million per person, meaning that anyone currently planning their estate could end up not being exempt from the tax, Stephenson said.

Team tested: Business owner undeterred by cancer scare

When Carolynn Doerr’s husband passed away six years ago, she decided it was time to downsize.

“I moved from a big house into an apartment,” said Doerr, who had a large family to help her.

The transition jumpstarted her thinking about those who weren’t so lucky. And that led her to Caring Transitions, a Cincinnati-based franchise that helps people transition to new living arrangements and takes the stress out of moving.

“I thought it was a great fit,” she said.

She launched the business in 2015 with a mantra of “failure is not an option.” Three years later, her mantra was put to the test when learned she had a rare form of cancer.

But the small staff she had assembled helped her keep the business going — and growing — as she dealt with her diagnosis.

“The key to success is having the right people in place,” said Doerr, stating that when she was hiring, she sought people who were service-minded. “I looked for people who had worked with seniors or children in their previous jobs. Maybe they’ve cared for a mother with dementia, so they can relate to people. Caring is in our name; that’s what we strive for.”

How it began

Doerr started Caring Transitions with just her daughter, Corinne. It is based in Silver Spring Township, Cumberland County.

“We did everything ourselves,” said Doerr.

“Everything” could often be a handful.

“Let’s say we have a couple who is downsizing. We would meet with them to discuss space planning and help them make the decisions on what to keep, what to donate and what to sell at an estate sale. We then pack up their belongings and arrange for the moving company to come in,” said Doerr.

After the move, Doerr and her staff do all the unpacking. “We then make their beds, hang their curtains, get their lights set up, set up the television, remove the packing materials and then deal with the house,” said Doerr, adding that they go so far as to refer a Realtor, if requested.

Before long, however, she was able to hire new employees. “In 2017, we got to the point where I no longer had to be at every job location,” she said.

It turned out to be a good thing because a medical diagnosis was about to change the life of the energetic businesswoman.

Dealing with diagnosis

In 2018, Doerr began feeling ill, with severe stomach problems. When she consulted a doctor, she learned she had an enlarged uterus and was diagnosed with leiomyoscarcoma, a rare type of cancer that affects smooth muscle tissue.

Doerr started on chemo in June with little success.

“They sent my tumor out to do molecular testing and determined that I had an ALK gene mutation in January of 2019. By this time, I could barely stand and the tumor was extremely enlarged,” she said.

With such a diagnosis, one may hardly conceive that Doerr would consider herself lucky, but her trusted staff allowed her to rest easier.

“When this happened, I was just stepping away from all the work and it couldn’t have happened at a better time,” said Doerr, adding that her team of 12 was amazing. “When I was in chemo, there were dark days and I couldn’t have done this without them; they are not only my employees, but my friends,” said Doerr.

And they kept the company on an upward trajectory.

In her first year, Doerr won the “Shooting Star award” for placing in the top 25 of 215 Caring Transition franchises, a ranking based on sales. The following year she placed in the top 20, then came the diagnosis. “Our goal last year was to grow 30 percent and we only hit 10,” said Doerr, adding that she’s still glad to have experienced growth.

Back on track

The good news is that Doerr has been feeling better, or to use her words, she “feels like a million bucks.” She attributes the turnaround to a

Carolyn Doerr, center, owner of Caring Transitions, credits members of her team for assistance during her battle with cancer. Doerr was photographed at her home office on Friday, April 5, 2019 in Mechanicsburg. From left, Candace Boyer, Doerr, Jess Waller, Ron Maher, Laura Moon, Marri Lamoureaux, Kelly Unsworth, Deb Andree, Dot Erickson, Mel Wevodau. (Photo: Markell DeLoatch)
Carolyn Doerr, center, owner of Caring Transitions, credits members of her team for assistance during her battle with cancer. From left, Candace Boyer, Doerr, Jess Waller, Ron Maher, Laura Moon, Marri Lamoureaux, Kelly Unsworth, Deb Andree, Dot Erickson, Mel Wevodau. (Photo: Markell DeLoatch)

doctor’s insight.

“After the gene mutation was found, I was re-diagnosed as having ALK positive inflammatory myofibroblastic tumors, which is even rarer than the initial diagnosis,” said Doerr, adding that the gene mutation that she has is very common in lung cancer.

Now that her doctors know how to treat her, she has been put on a new medication and it’s back to business as usual.

Her customers include Wayne Wachsmuth. The 84-year-old Newville resident owned a five-bedroom, 3,000-square-foot house but downsized to 1,700 square feet. Caring Transitions sold what wouldn’t fit in the new space at an estate sale.

“In some cases, the proceeds from the sale may pay for their services,” said Wachsmuth, who learned about Doerr’s services through a brochure.

Following a consultation, Wachsmuth hired the company. Four employees spent a day and a half packing up at his old house.

“They were very easy to work with and talk to and we had a good time,” he said, adding that the moving company gets stellar marks as well. “From the time they arrived and later unloaded was about four hours and that included a lunch break,” said Wachsmuth, who relied upon the service to organize him and his wife in their new home. “They worked like beavers and we told them where to put things; everything was where it should be and we really couldn’t have been more pleased.”

Doerr, who offers a free initial consultation, said the price varies and the cost is based on how long it takes to do a job. “Moving and packing is charged by the hour,” she said.

Moving forward

Carolyn Doerr, owner of Caring Transitions, battled cancer and is regrowing her hair after chemo, but still keeps a wig tree in her home office. (Photo: Markell DeLoatch)
Carolyn Doerr, owner of Caring Transitions, battled cancer and is regrowing her hair after chemo, but still keeps a wig tree in her home office. (Photo: Markell DeLoatch)

Doerr said she loves helping people and being able to control her own career.

“It feels really good at the end of the day to know that we may have made a difference for a senior, or for someone else who needed a little extra help during a major life transition,” she said.

As for the future, Doerr says it’s unclear due to her diagnosis.

“But, you know, no one’s future is certain,” she said, adding that what’s important right now is making the most of her time. “I have faith that I’ll have plenty of time to grow my business and make Caring Transitions a well-known name, but it’s really out of my hands,” she said, adding that she knows most people don’t talk about the importance of faith and religion when it comes to running a business, but she believes that it’s important to have faith in all areas. “It’s the stuff that keeps you going day after day,” she said.

Guest view: Lessons for sustaining family-owned business

When a family business thrives under second-generation ownership, the secret to success is in the foundation laid by the first generation.

My recruiting and staffing firm, Abel Personnel, carries the name of my father, Franklin Abel, who co-founded it as Abel-McConnell Personnel in 1969. In those days, women interviewed for “women’s jobs,” so they hired my mother, Dottie Abel, to help for two weeks. She stayed for 18 years and continues to have an advisory role.

Related:

Temp firm carries on after founder’s death

My dad passed away in December 2018, just shy of Abel Personnel’s 50th anniversary. In the months since his passing, I’ve had time to think about the legacy of integrity that he and my mom created. They taught me seven lessons from yesterday for navigating the business climate of today.

Lesson One:  Ethics before profits

Create an environment where nobody checks their ethics at the door. Never allow anyone to feel pressured to make a decision that’s not in the best interests of the client. Chasing quotas doesn’t foster long-lasting relationships. Talk to your employees, get to know them, and always reinforce a company culture of support and responsibility.

Lesson Two: Hire based on a strong work ethic instead of specific experience

I can teach the skills we need, but work ethic, positive attitude, strong communications and empathy are innate. I look for diversity of experience, rarely hiring people who work for other staffing firms. I want team members who understand business from a wide range of perspectives.

Lesson Three: Understand financials

This might seem self-evident, but when a business passes from one generation to the next, the financial foundation must be solid. What you learn in college is just the start. You need to know your company. My dad taught me about accounts receivable, accounts payable, payroll, and all the fundamentals that assure a business can turn on the lights and pay its people, week in and week out.

Lesson Four: Take a genuine interest in people

My dad would strike up conversations in airports and restaurants as naturally as breathing. With that example before me, I pushed myself to establish connections with strangers and deepen ties to acquaintances. Along the way, I learned the value of building relationships from the ground up.

Lesson Five: Diversify

I was in business for 19 years when my parents asked me to join the firm as marketing manager. It meant breaking out of my shell and using the Yellow Pages – remember them? – as a tool for cultivating new clients. The work wasn’t suited to my personality at the time, but I persisted because my dad stressed the need to diversify. We had a fabulous relationship with a client who provided the bulk of our revenue, but he reminded us they could vanish at any time. My job was to help the business prepare for that day.

Lesson Six: Deliver excellence

In my business, we work with clients, organizations with staffing and recruiting needs, and candidates – the people we find to fill those jobs. Good service requires staying attentive to the needs of all. My parents taught me not to think about just getting the deal done, but always considering what was right for the client, candidate and company. In our case, that means taking the time and effort to ensure you’re sending the right job candidate.

Lesson Seven: Lead by example

Never expect employees to do something you won’t do yourself. Make a call. Pick up trash. Plunge the toilet. Anything that contributes to a functioning workplace deserves your attention. My parents never expressed this belief in words. They taught it by example.

Final thoughts

Together, these lessons boil down to what I call the “employer-employee mentality.” In a healthy relationship, each side supports the goals of the other. Employees who perform with distinction deserve rewards and recognition for advancing the company’s mission.

When employers invest the time to create a positive, supportive and ethically-grounded environment that never loses sight of their clients’ needs, the outcome is a successful business that can bridge the generations and meet the challenges of our modern, evolving economy.

Deborah A. Abel (Photo: Amy Spangler)
Deborah A. Abel (Photo: Amy Spangler)

Deborah A. Abel is president of Abel Personnel, which includes Abel Executives and A+ Teachers, which provides and supports qualified substitute teachers, school nurses and classroom aides for Central Pennsylvania school districts. She can be reached at 717-561-2222 or [email protected]