Title: Helping family businesses outperform
Blurb: CAFE's Personal Advisory
Groups help entrepreneurs deal with the challenges of work and
Michael Galletti has a group of accomplished, seasoned advisors
that most entrepreneurs only dream of. Unlike lawyers, accountants
and employees, whose counsel can be colored by self-interest,
Galletti's Personal Advisory Group, gives him the straight goods.
And they don't cost a cent.
Galletti, president of Triangle Group of Companies, belongs to
the Canadian Association of Family Entrepreneurs, a non-profit
association of family business owners. All CAFÉ members
get assigned to a Personal Advisory Group of eight to 12 businessmen
who meet monthly to share thoughts on the challenges and opportunities
of running a family business.
"They are like my personal board of directors," said
Galletti, whose group includes executives from a wide range of
industries, including a paper merchant, electrical contractor
and a uniform supplier. "They've been a big help, especially
on matters related to the family."
Large public companies can pay big bucks to attract top directors,
but most small and medium sized enterprises have only one or
two; often just the owner and a spouse or friend. SME boards
often only hold annual meetings on paper, for legal purposes
and don't perform the advisory and oversight roles common to
public companies. CAFÉ's Personal Advisory Groups work
to fill the gap.
"Family business owners face a unique set of challenges
that most people can't imagine," Galletti said. "For
example what happens if you have four children, two of which
invest in the business and two who work there and of those, one
is incompetent? It's not easy. But chances are that other members
in your PAG will have faced comparable problems."
According to André Jolicoeur, president of Jolicoeur Uniform
Rental and a member of Galletti's group, confidentiality is a
key element of all meetings. "If members don't feel safe
talking about their problems, they'll keep to themselves and
won't benefit as much." That's especially true about family
issues, which tend to absorb a lot of the group's focus.
Family businesses have traditionally faced a much tougher rap
in North America, with its "rags to riches," ethos,
than in Europe, where they are more respected. But according
to one expert, in recent decades that's been changing.
"Despite society's bias against nepotism, there's increasing
academic evidence that family businesses outperform their peers,"
said Danny Miller, a professor at HEC Montreal and co-author
of the recently released book, "Managing for the Long Run:
Lessons in Competitive Advantages from Great Family Businesses."
Family businesses have several advantages, including a focus
on long-term thinking, because entrepreneurs typically want to
pass them down to their offspring. "If you are the CEO of
a big company and are worried about facing the investment community
next quarter, you might not invest in a piece of equipment that
could boost productivity down the line," Miller said. "Family
business owners often think in terms of years not quarters."
However according to CAFE's Montreal chapter president, one detail
typically off the table in Personal Advisory Group discussions
is a company's financial statements. "Some members voluntary
disclose them, but it's not required," said Robert Eiser,
who co-manages a graphic design firm. "However most group
members tend to be fairly open with each other and they have
a good idea about how other members are doing."
Another rule is that two companies from the same industry can't
be in the same group, since participants would be unlikely to
be frank about their challenges, if a competitor was sitting
across the table. The same thing applies with family members.
Eiser's father Victor Eiser, who runs Aliments E.D. Foods is
also a CAFÉ member, but sits in a different group than
his son. Husband and wife combinations are also split into different
Another often overlooked benefit of the Personal Advisory Groups
is the strong bonds that tend to develop over the years between
members. "When you live through the ups and downs of another
guy's business, it tends to bring you closer to him," said
Galletti. "So friendships form easily."
Another member of Galletti's group, Daniel Mack, sold his maintenance
company six years ago, but continues to attend group meetings.
"Even though you sell a business, other problems can pop
up; you still have to figure out what to do with the money,"
Mack said. "But hanging around is also a good way of giving
back to the organization which has helped me a lot."
Photo caption: The Canadian Association of Family Entrepreneurs'
Personal Advisory Groups give small business owners a forum to
exchange ideas and seek to unbiased advice from their peers.
Highlight this quote: "Despite society's bias against
nepotism, there's increasing academic evidence that family businesses
outperform their peers,"