Title: Helping family businesses outperform
Blurb: CAFE's Personal Advisory Groups help entrepreneurs deal with the challenges of work and family


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 groups.
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,"

 

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