Best practices for lamily businesses

ll rfosr ARTTcLES eNl books written to LVladvise family businesses have focused on the various thorny problems and emotional entanglements that come from working with family members. Less focus has been placed on the unique business challenges that stem from the fact that most family businesses are relatively small and do not always have the best possible operating practices in place.

In fact, most of the operating practices a typical family business uses come from inherited wisdom, the school of hard knocks, and from textbook business principles that do not always take small business realities into account. Most of the challenges family business owners and managers face stem from the fact that ownership is highly concentrated, and usually in the hands of the people who are running the business. These leaders tend to operate in relative isolation and do not often receive independent input.

However, if family business leaders could step back from the day-to-day of running the business and look behind the scenes, they would see problematic business areas that need to be addressed with a set of best practices. Family businesses that employ best practices are often the ones that survive and thrive.

Here are three best practices for problem areas unique to small family businesses.

1. Creating a debt management system. This important best practice relates to a family's attitude toward debt. Most accepted principles about debt come from the people who are trying to sell money, and they may not have the business's best interests in mind. These princinles focus mostly on securitization and not as ruih on ability to repay. But debt is one of the few things that can kill a business, and this fact needs to be acknowledged.

Bottom line: A system must be set in place to ensure debt is managed effectively.

2. Managing cash. In a small business, the manner in which cash is used is a potential lightning rod of conflict. That's because most financial reporting systems are not formatted to highlight what happens to cash in the course of operating the business. It is fairly common for family business owners to reach the end of the year and have substantial earnings but no cash, having lost track of the cumula- tive effect of decisions made about cash throughout the year. ln addition, Town & Country president Craig Ward has joined the CNRG board of directors.

Also, some owners are insufficiently educated on the differences between expenses, cash outlays, accruals, balance sheet changes, capital expenditures, principal payments, and other aspects of accounting.

Bottom line: Famlly business leaders should place a high priority on cash management and ensure a positive cash flow after all obligations are met. They should take any larger-than-usual distributions out of the company after all the cash needs of the business and tax obligations have been satisfied. No one should ever borrow money to pay distributions to family members.

3. Long-term planning. Having a smart business plan provides great benefit to the family in terms of communicating direction and establishing expectations. It is also good for the business to align resources and provide a foundation for delegating authority and responsibility. The business plan does not have to be as elaborate as one might find in larger enterprises. It should spell out long- and short-term strategy. It should contain a multiyear financial forecast, including a balance sheet, a profit-and-loss statement, a capital-expenditure plan, and a cash-flow forecast.

If possible, the financial forecast should break down the overall business into its various lines and establish a netbefore-tax number for each. This puts a spotlight on aspects ofthe business that are doing well vs. those that are not.

Bottom line: Once developed, the plan should be communicated to everyone and reviewed monthly. It should clearly answer: Where are we going? What's expected of me? How does my contribution fit into the overall strategy?

As noted earlier, most family business owners operate in relative isolation and employ practices that are often based upon information that may be irrelevant. Adapting these operating practices into best practices will contribute significantly to a business's long-term business success.

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Goldsboro Builders Supply, Gotdsboro, N.C., has purchased the assets ot Moreheail Builders Supply, Morehead City, N.C. Established in1947, Morehead becomes Goldsboro's Sth location.

^.VNS_ Qg"rp.,-Vidatia, Ga., is opening its 7th Choo Choo BuildJt Mart in Jacksonvitte, Ft., ind is reopening its Richmond Hill, Ga., lumberyard as a roofing DC.

Pugh Hardware, Grand Saline, Tx., has been acquired from Matt Pugh by Matt Means, owner of Grand Saline Lumber, Grind datine.

Means has renamed the hardware store Means Home Center and is expanding and remodeling it to accommodate lumber and building materials.

Central Network Retail Group now operates 35 locations in six Southeastern states after acquiring 8-unit Town & Country Hardware, ChapetHiil, N.C.

ProBuild held a March 14 grand opening at its new 35,000-sq. ft. lumberyard in Morgantown, W.V. (Brian Massie, generalmgr.).

Marvin's Building Materials & Home Centers opened store #28 in late February in Fayetteville, Tn.-its first in the state.

Hawkeye Lumber Co., Oskatoosa, ta., has sotd its property and is liquidating after 111 years.

President John W. Porter attributed the decision to his age-62-and the recent loss of his son, Charles, to cancer.

Builders FirstSource has added a 40,000-sq. ft. DC on 8.2 acres in Jarrell, Tx., to serve the Austin market.

Eldredge Lumber & Hardware, york, Me., suffered $60,000 in damage March 1B when a paint-mixing machine caught fire.

Nickerson Sells Cape Cod Chain

Jan Nickerson has agreed to sell century-old Nickerson Lumber, which operates seven Mid-Cape Home Centers throughout Massachusetts, to entrepreneur Jeff Plank.

Established by Nickerson's grandfather in 1895, the business includes home centers in Wellfleet, Orleans, South Dennis, Martha's Vineyard, and Middleboro; design showrooms in Hyannis and Plymouth, and a distribution facility in South Yarmouth.

He said he was the last Nickerson in a line of succession, and he considered selling the business to be the most effective way to continuing providing jobs to his employees and service to the Cape Cod community.

"When you represent the third generation, and there is no heir, it is important to plan for succession," Nickerson said. "As I told the employees and managers, it would have been easier not to plan, but then my estate would have liquidated the business and sold the assets. This alternative was unconscionable for me, because the employees would have been displaced and that would have a devastating effect on Cape Cod. This option was the best for the continuity of the business, the health and welfare of the employees, and for me, personally."

The deal was set to close March 28.

Tornado Downs Indiana Yards

Two lumber companies in New Pekin, In., are struggling to recover after a deadly tornado tore through the town March 2.

Worley Lumber Co. owner Rick Lanham has vowed to reopen once he can rebuild his shattered structures and repair his damaged equipment.

"I think I've got enough insurance," Lanham said.

The damage was even more severe at nearby Saroyan Hardwoods, which has been forced to lay off 17 of its 20 workers. It will take six months to restore its warehouses and dry kilns, and perhaps a year before operations retum to normal.

In the town of 800, the tornado killed five residentsWorley Lumber employee Joseph Babcock, his girlfriend, and their three children-and damased more than 200 homes.

Cedar Creek, Oklahoma City, Ok. has reiocated its Milan, Tn., DC to a new facility in Smyrna, Tn.

Miller Hardwoods, Milroy ln., suffered heavy damage from a March 4 fire of undetermined origin.

Sunbelt Forest Products Bartow, Fl., is now producing privatelabel Sunrise Decking line, #1 premium grade, radius edged 2x6 products treated with Viance's Ecolife non-metallic wood preservative/stabil izer.

Roseburg's composite panel plants, including Taylorville, Ms., and Simsboro, La., obtained Eco-Certified Composite certification from the Composite Panels Association.

Forest Products Supply Co, Kansas City Mo is now distributing Rosboro glulams, including the Rosboro X-Beam, Treated Glulam, and Custom Glulam.

Northern Crossarm, chippewa Falls, Wi is converting its coating operations to Eco Building Products' Eco Blue Shield technology.

Koppers Holdings will shutter its pole treating plant in Grenada, Ms., by July 31.

Gaiennie Lumber, opelousas, La,, now distributes AzEK products in Ar. La.. Ms.. and Tn.

American Lumber watden, N.Y. is distributing Terminal Forest Products' new Cascadra select knotty western red cedar decking.

Chicago Suburban, Forest Park, ll., is now distributing Pin Foundations' Diamond Pier.

Dairyman's Supply Co.'s DCs in Mayfield, Ky, and Gadsden, Al , will continue distributing all other Georgia-Pacific engineered wood products, following the dissolution of GP's Broadspan EWP line.

Holden Humphrey Co.. Easthampton, Ma.. now stocks IKO roofing build an outside worth living in

Rugby Architectural Buildinq Products' Atlanta, Ga., DC is noi, dirtribrtino AkzoNobel's Chemcraft wood coatings.

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Bart Swan, ex-Simpson Strong Tie, has joined Team MAX at PrimeSource Building Products, Aberdeen, Md.

Robert Prewitt is now an account mgr. at Dixie Plywood & Lumber, Garland, Tx.

Curt Stevens has been appointed c.e.o. of Louisiana-Pacific Corp., Nashville, Tn., effective May 4. He succeeds Rick Frost, who is retiring after seven years as c.e.o.

Matt Rock, ex-Bluelinx, has been named commodities buyer/traderstructural panels for Great Southern Wood Preserving, Abbeville, Al.

Kevin Measel has been appointed senior v.p.-store operations for Lowe's West division, replacing Jim Frasso, who is retiring after 17 years with the company. Senior v.p. Brent Kirby now heads the North division.

Marley Freesemann has joined the outside sales team at Woodford Lumber & Home, Clear Lake,Ia.

Matthew Boldt has been named lumberyard mgr. at Steele's Ace Home Center. Lowville. N.Y.

D. Wayne Trousdale has been promoted to chief operating officer of Cedar Creek, Oklahoma City, Ok. He was also appointed to the board of directors, along with Clark Wiens and Dave Bond.

Don Phillips has been promoted to v.p.-operations for House-Hasson Hardware, supervising the wholesaler's Knoxville. Tn.. and Prichard. W.V.. warehouses.

Rick Brinton has been promoted to general mgr. for the fence, rail and decking business at CertainTeed Corp., Valley Forge, Pa.

Bob Simpson, ex-Engineered Wood Systems, has joined Bluelinx, as engineered products market mgr. for the Carolinas. Craig Denniston. ex-Norandex. is new to outside sales in the Kansas City, Mo., area.

Charlie Simmons, ex-Hycourt Supply, is new to inside sales at Apex Building Supply, East Syracuse, N.Y.

Bill Campoll, ex-Coastal Lumber, was named chief financial officer at WT Hardwoods Group, Lebanon, Pa.

Vern Tigges, ex-5th Avenue Lumber, is now in outside sales at Carter Lumber, Plain City, Oh.

Kirk Mills, ex-84 Lumber, is now managing director at Compass Supply, Atlanta, Ga.

William Harris, ex-Fullerton-The Builder's Choice, has joined the outside sales team at Scherer Bros. Lumber Co., Hopkins, Mn.

R. Scott Pomeroy, ex-Brockway Smith, is new to inside sales at Reeb Millwork, Hadley, Ma.

Tim Damron, ex-Chelsea Lumber, has been named St. Louis, Mo., regional sales mgr. for Jeld-Wen.

Kaitlin Callahan has been promoted to sales at Kamco Supply, Syosset, N.Y.

Jesse Josselyn has joined the sales force at Botello Lumber, Mashpee, Ma.

Cory Rougeaux, ex-84 Lumber, is a new contractor sales rep at CBS Builders Supply, Clermont, Fl.

Ty Babb, ex-Pella, is new to window & door sales at Buck Lumber, Charleston, S.C.

Steve Stallard has joined ECi Software Solutions. Fort Worth. Tx., overseeing business development for the LBM market.

Jim Cavanaugh, ex-ProBuild, was named president of Mill Creek Lumber & Supply Co., Tulsa, Ok. Steve Slater, ex-ProBuild, is now regional mgr. for Oklahoma City.

Josh Severson, ex-Lamperts, rejoined Fullerton-The Builder's Choice, Watertown, Mn., as assistant mgr.

Paul Morrisroe has been named senior v.p., chief financial officer, and secretary for Associated Materials, Cuyahoga Falls, Oh., replacing c.f.o. Stephen Graham.

Thomas Finucan has joined the sales team at Allied Building Products, Summerville, S.C.

Tim Ramsey has been promoted to plant mgr. at Osborne Wood Products, Toccoa, Ga.

Jeff Harper, ex-American Woodmark, is now continuous imProvement mgr. at HB&G Building Products, Troy, Al.

Gary Furst has been named v.P. of human resources, general counsel, and corporate assistant secretary of Do it Best Corp., Fort Wayne,In.

Matt Means, owner, Grand Saline, Tx., was named Man of the Year bY the local Chamber of Commerce.

Gary and Faye Wilson, owners of Wilson Lumber Co., Milton, Fl., recently celebrated their 40th wedding anniversary.

Kent C. Strait is visually grading boards at Mungus-Fungus Forest Products, Climax, Nv., report Hugh Mungus and Freddy Fungus.

Duralife Decking Revived

Former CorrectDeck executives have formed Integrity Composites LLC to acquire the Duralife composite decking line and Biddeford, Me., production facility from GAF Building Materials, Wayne, N.J.

GAF acquired the bankruPt Correct Building Products plant and other assets in 2009. but decided to discontinue them late last year.

Integrity will again manufacture decking, railing, porch and dock products at the 100000-sq. ft. plant.

"We are extemely pleased to be manufacturing and shipping stateof-the-art decking products to our customers and to have the oppodunity to work with key personnel, some of whom have been emPloYed at the facility since its inception," said general manager Jeff True. True had been c.o.o./v.p. of Correct. Integrity chairman Matt Bevin was president and chairman of Correct. BuiHinghoducts.om

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Finnforest Renamed Metsd Wood

Finnforest, with U.S. operations based in port Huron, Mi., has been renamed Metsii Wood, as part of a global rebranding by its Finnish parent company to unify its divisions.

Parent Metsiiliitto Group is now Metsei Group. Its fiber division, Metsd-Botnia, becomes Metsii Fibre, and M-real Corp. is expected to be renamed Metsii Board Corp. The wood supply operations will be known as Metsdliitto Puunhankinta in Finland and as Metsd Forest elsewhere. Metsd Tissue remains unchanged.

"Our restructuring initiated in 2005 is now finalized and we are well positioned for the future. This is the right time to strengthen our operations as a unified group. Competitiveness requires closer collaboration and lower boundaries between businesses. It also requires sharing best practices and making use of them," said Metsii Group presidenUc.e.o. Kari Jordan.

The group's new logo depicts a moose head nobly carrying a forest in its antlers and the word Metsii. a Finnish word for forest.

Indiana Yard Chilled by Fire Bombs

Authorities are investigating homemade fire bombs that were discovered early March 7 at a Columbus,In., lumberyard that lost its main building to a suspicious blaze six years ago.

The undetonated "Molotov cocktails" were found in Brands Inc.'s fenced back yard, where it houses a fuel tank and stores its building materials.

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